Measuring the Profitability of Small Scale Poultry Producers through Contractual System in Bangladesh

Abstract

The present study was undertaken to assess the system of broiler production under contractual agreement of feed mill with the small scale broiler producer in different locations of Netrokona district in Bangladesh. The study also explored the causes why broiler farmers entering in this contractual system. The study evaluates the profitability of small scale broiler producers as well as the feed mills who were engaged in contract with the farmer. The present study was based on the primary data which were collected from five feed mills who are utilizing contacts and 60 contract broiler producers using stratified random sampling. Descriptive statistical techniques were used to estimate cost and returns of broiler farming. The study revealed that on an average, total cost of raising broiler per farm per year and per bird per batch were Tk. 10,90,389 and Tk. 175 respectively. The gross return from broiler production per farm per year and per bird per batch was Tk. 13,44,737 and Tk. 208 respectively. Net returns of broiler production per farm per year and per bird per batch were estimated at Tk. 2,54,348 and Tk. 33 respectively. Moreover, it is evident from the study that the benefit cost ratio of broiler farms was 1.23. So, it is clear from the study that production of broiler under contractual system was profitable and the contract farmers were getting benefit. On the other side, feed mill sales center who are engaged in contracts were also benefitted by keeping extra profit in all credited inputs of broiler production by practicing the system. Cobb-Douglas production function analysis was used to determine the major factors namely age, education, family size, feed cost, day old chick cost, labor cost, medicare and additives cost and training of the producer affecting the gross return of broiler production. But the main influencing factors for broiler production were feed cost, day old chick cost, medicine and vaccine cost, education and training of the broiler farmer. The study also identified some problems related to contractual system and, production and marketing system of broiler production. Finally on the basis of the findings, some recommendations were made for the development of poultry production in Bangladesh. It may concluded that with effective management, contract farming system of feed mill’s can be a means to develop production of broiler farming and marketing the output in a way that is profitable for the both farmer and the feed mill.