The Impact of the Use of Agricultural Accounting on the Financial Performance of Broiler Industry: A Comparative Evaluation Approach on Broiler Industry in Jordan

Ali Al-Sharafat

doi:10.5539/jas.v8n12p164

Abstract

The main objective of this study was to introduce a comparative analysis to demonstrate the impact of the use of agricultural accounting on the financial performance of broiler farms in Jordan. Broiler farmers in Jordan constituted the study’s population. A sample size of 65 broilers farms was randomly selected. Simple random sampling (SRS) procedure was followed. A structured questionnaire was used to obtain data from the interviewed farmers. Returns, costs (fixed and variable), net income and other related financial items were the main items covered in the survey. Data were collected during the period from March 15th 2014 to January 30th 2015. The financial performance of the investigated broiler farms was assessed using financial indicators related to benefit-cost analysis procedure. To achieve study objectives, the Net Present Value (NPV), the Internal Rate of Return (IRR) and the Benefits-Costs ratio (B/C) were used. The sample was divided into two categories, the first category consisted of 33 farmers who were adopting agricultural accounting procedures, and the second category consisted of 32 farmers who were not adopting any agricultural accounting procedures or they were adopting minimum level of these procedures. The results of this study revealed that broiler farms adopting agricultural accounting procedures were significantly higher in their financial performance. The values of the three financial indicators (NPV, IRR and B/C) for broiler these farms were positive, high and acceptable compared to farms without or with minimum level of agricultural accounting procedures. Agricultural accounting procedures keep farm efficient, so it is recommended to introduce proper strategies to improve broiler farmers agricultural accounting skills for Jordanian broiler producers. Also, a vital issue to be taken in consideration is to develop agricultural accounting procedures to be utilized by broiler farm managers or owners. Effective management of a farming operation today requires that farm accounting records be kept and updated so managers can make informed decisions affecting the profitability of their farms.

Highlights

Agricultural Accounting plays an essential role in the success of the agricultural sector productivity in general and in broiler productivity in particular
The first group consisted of 33 farms which were adopting agricultural accounting procedures, and the second group consisted of 32 farms which not adopting any agricultural accounting procedures or adopting a minimum level of these procedures
The results of this study revealed that the financial performance of broiler farms adopting agricultural accounting procedures was much better

Summary

Introduction

Agricultural Accounting plays an essential role in the success of the agricultural sector productivity in general and in broiler productivity in particular. Modern agricultural accounting implies change from the traditional historical cost model and, in most cases, requires biological assets to be measured (Elad & Herbohn, 2011; Lefter & Roman, 2007). This change has been responsible for the debate on agricultural accounting (Argilés, Garcia-Blandón, & Monllau, 2011). Undutimi (2013) reported that agricultural accounting modernization considers importance of keeping accounting records by farmers. Yaaghubi et al (2009) reported that farmers success in managing their agricultural activities implies the use agricultural accounting principles

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Conclusion