ESTIMATION OF PRODUCTION EFFICIENCY FOR BROILER PRODUCTION FARMS IN BEHERA GOVERNMENT: A FIELD STUDY

Abstract

Since poultry production represents a great importance for Egypt's economy, estimating capacities that realize the minimum average costs for broiler production farms has been the goal of this study. To achieve that, production cost function in the long run has been estimated. As for data, the research used primary data collected from a cross section random sample of 74 broiler farms distributed over Abo Homos, Itie ElBarod, Shabrakhet, and Delengat Districts in Behera Governorate. The research applied statistical and econometric analysis methods including multiple linear regression based on OLS in order to estimate the cost functions for broiler farms in different mathematical forms. Derivatives of broiler farms' cost functions have also been estimated, like average cost functions, from which the Economies of Scale for broiler production have been inferred, in addition to marginal costs, elasticity of production costs, optimum size of production, as well as broiler supply function in the long-run. Results showed that elasticity of production costs has been estimated at 0.323 and 0.184 and 0.409 for the three farm capacities, respectively, which means that broiler production is still at the stage of increasing returns to scale. This result is confirmed by the fact that many of broiler farms in the sample have not yet reached optimum production capacity, estimated at 13.681 and 25.004, and 30.311 tons, respectively; whilst average actual production for the three farm capacities amounted to 10.279 and 20.988 and 30.961 tons per annum, respectively. It can therefore be noted that there is a clear difference between the actual scale and optimal economic scale that minimizes the cost of production. Based on the achieved results, the research offered some recommendations that may contribute to improving the economic efficiency of broiler production farms in Behera Government, the most important of which is rationalizing economic resource use, and replacing the low-yielding breeds with high-yielding ones in order to reach the optimum size of production that minimizes the average cost per ton of broiler production. In addition, broiler production and marketing polices should be revisited in order to raise income earned by broiler producers and realize value added from livestock production.