J. Sci. Technol. (Dinajpur) Vol.

8: 213-226 (2010)
ISSN 1994-0386

ECONOMIC ANALYSIS OF BROILER PRODUCTION IN A

SELECTED UPAZILA OF MYMENSINGH DISTRICT
M.A. Hossain1, M.M.H. Sikdar2 and M.H. Rahman3

ABSTRACT

This study aimed to determine the cost, return and profitability of broiler production in a selected
area of Mymensingh district. It was mainly based on primary data of 60 samples, selected
purposively from nine villages under Trishal Upazila. For the analysis of data, tabular and
production function technique were used. This study revealed that the average raising cost of
broiler per farm per year was estimated at Tk. 4,64,991. It was found that the variable cost per
farm per year stood at Tk. 4,22,545 which accounted for 90.87 percent of total cost. The total fixed
cost per farm per year accounted to Tk. 42,446. It is evident from the study that the gross return
per farm per year stood at Tk. 5,90,491. The net return over total cost per farm per year was
calculated at Tk. 1,22,500. Finally the findings revealed that broiler production was a profitable
enterprise. Cobb-Douglas production function was also applied to explore the specific effect of the
factors on broiler production. It was observed that most of the included variables had significant
impact on broiler production. Out of six variables included in the function, three variables had
positive impact on return.

Keywords: Variable cost, Total fixed cost, Gross return and Net return

INTRODUCTION

Agriculture still dominates the Bangladesh economy. Eighty percent of the 145.46 million inhabitants
of Bangladesh depend on agriculture. The area of this country is 1,47,570 sq. km (BBS, 2007). As a
developing country, poverty, unemployment and malnutrition are the major problems of Bangladesh.
Forty four percent of this country‟s population live below the absolute poverty line and the number of
landless poor people has been increasing by 3.7 percent per annum (GOB, 2009). Poultry is one of the
most important sub-sectors of agriculture in Bangladesh. The rural people have been keeping
indigenous chicken for centuries under semi-natural conditions mainly for their domestic consumption
with very little commercial motives. At present, a large number of poultry farms have been established
on commercial basis in and around the cities and towns and are operating under intensive
management. Poultry meat can efficiently and rapidly fill in the shortage of body requirement. At
present a total of 0.15 million commercial farms have been established throughout the country. About
6 million people are engaged directly and indirectly in poultry industry. About 3500 million of eggs,
250 million of broiler day-old chick, 25 million of layer day-old chick and more than 200 million
tonnes of poultry feed are being produced per year in the country (Rahman,2004). A number of mills
have started producing poultry feed by this time and more entrepreneurs are coming forward to
establish feed mill and poultry processing plants.

Bangladesh is a densely populated country. Malnutrition and hunger are serious problems in this
country. Fifty percent of the new born are low birth weight and more than 90 percent of the children
(aged <5 years) suffers from mild to severe forms of malnutrition. Egg, meat and milk, the three
1,3
M.S. in Agricultural Economics and Professor, Dept. of Agricultural Economics, Bangladesh
Agricultural University, Mymensingh-2202, Bangladesh; 2Assistant Professor, Department of
Statistics, Patuakhali Science and Technology University, Dumki-8602, Patuakhali, Bangladesh

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important protein foods originate from the poultry and livestock sector. On an average every person
should consume at least 100 eggs, 43.5 kg. of meat and 90 litre of milk per annum to prevent
malnutrition. Therefore, it is essentially needed to increase the production of eggs, meat and milk and
there are good prospects to increase the production of poultry and livestock products.
Broiler farming has a great potential for providing additional income to both male and female of rural
and urban areas through creation of employment opportunities. Broiler, however, has a shorter life
cycle and its production requires less capital compared to other meat producing animals. Since the
majority of the people irrespective of caste or religion prefer chicken, its demand is very high. As a
result, the prices of those products have gone up. Having received the signal of higher price and
demand in home market, recently a tendency to establish small-scale commercial farm is observed
among some people both in rural and urban areas. Poultry is no more a backyard farming now. It is
shaping up as an industry. So an efficient production system is required for supporting commercial
broiler farming in the country.
It is difficult to set up commercial dairy, sheep and goat farm for want of capital, inadequate lands for
producing fodder, technological problems and so on. Raising of poultry can solve these problems to a
significant extent. The relative merit of poultry raising are noted below:
i) People are accustomed to raise a small number of poultry in their houses.
ii) Poultry raising is one of the best ways for earning within the shortest possible time.
iii) Unemployed youngmen, women and widows can look after poultry very easily.
iv) Poultry farming can be started with small capital.
v) Poultry can be adaptable very easily in all climatic conditions. Hence, high yielding variety of
chicken for eggs and broiler can be imported from foreign countries.
vi) Small area of land is required for raising chicken. Hence it would be one of the profitable business
as for small farmers and landless labourers.
vii) All by-products such as bone meal, blood meal, wheat and rice bran can more efficiently be used
by raising poultry.

Only a few studies have been conducted on broiler farming like Tohura (2004) conducted a study on
economics of small-scale commercial Broiler farming in Sadar upazila of Rangpur District. Bairagi
(2004) examined contract farming in a form of production which establishes relationship between
agribusiness firms and the farmers.The present study is therefore, exploring a new dimension which is
very important at present situation to know the economic analysis of broiler production. Moreover,
this study was conducted using latest data to get recent information regarding production and will help
both the researchers and the farmers concerned with broiler farming.
The overall objective of this research is to investigate various socio-economic aspects of broiler
farming in a selected upazila of the country. The specific objectives of the study are as follows:
i) To identify the major socio-economic characteristics of broiler farmers;
ii) To determine the costs, returns and profitability of broiler enterprise;
iii) To determine the factors affecting on returns and to measure resource productivity in broiler
production;
iv) To identify the social, economic and technical constraints faced by the broiler producers in
practicing improved broiler farming; and
v) To make some suggestions for policy guidelines and recommendations for development of broiler
production.

The following hypotheses were considered and tested to direct the study:
i) There is no effect of factors employed on gross returns of broiler production.
ii) There is no inefficiency in allocating the resources for producing broiler birds.

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MATERIALS AND METHOD

Data: For this study, primary data were used. To collect the primary data from the farmers of
study area, a purposive sampling technique and personal interview method was followed. In
total of 60 broiler farms were selected for the study. Considering the objectives of the study
and limitations of the research with respect to time, manpower and other facilities, some areas
of Trishal Upazila in Mymensingh, was purposively selected for the study. Recently a large
number of commercial broiler farms have been developed in the selected areas. For this study
the back-dated data were collected during the months from January to March, 2006.
Analytical Technique: The data were analyzed in accordance with the objectives of the study.
Tabular analysis is a technique that is generally used to find the crude association or variations
between variables. Tabular techniques were applied with the help of some statistical measures like the
sum average, percentage, etc., to show the comparative performance of broiler farming. Profitability
analysis was done on the basis of variable cost, fixed cost, etc. The following profitability equation
was applied in the study.
n
  Pb Qb  PL QL -  ( PXi Xi) - TFC
u
where,
∏ = Profit (Tk./year/farm);
Pb = Per unit price of live broiler (Tk./kg.);
Qb = Quantity of live broiler (Kg./year);
PL = Per unit price of used litter and excreta (Tk./kg.);
QL = Quantity of waste litter (kg./year/farm);
PxI = Per unit price of i-th (variables) inputs used in the broiler farm (Tk.);
XI = Quantity of i-th (variables) inputs used in kg.;
TFC = Total fixed cost involved in broiler farm (Tk./year).

Specification of the Cobb-Douglas production function

The Cobb-Douglas production function was used in the present study. Cobb-Douglas production
function was used as this model provides a compromise between (i) adequate fit of the data, (ii)
computation feasibility, (iii) sufficient degrees of freedom unused to allow for statistical testing. The
model took the following shape:
The function was estimated as follows:
Where,
Y  ax 1b1 x b22 x 3b3 x b44 x 5b5 x 6b6  Ui
InY  Ina  b1 In x1  b2 In x2  b3 In x3  b4 In x4  b5 In x5  b6 In x6  Ui
Y = Gross return (Tk.)
a = Constant or intercept value
x1 = Cost of feed for ith farm (Tk./kg//yr.)
x2 = Cost of day-old chicks for ith farm (Tk./yr.)
x3 = Cost of hired labour for ith farm (Tk./yr.)
x4 = Veterinary expenses for ith farm (Tk./yr.)
x5 = Cost of electricity for ith farm(Tk./yr.)
x6 = Cost of litter for ith farm (Tk./yr.)
U = Error term
i = 1, 2, 3 ...60
b1, b2, b3, b4, b5, b6 = Regression co-efficient of respective variables.
In = Natural log.

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RESULTS AND DISCUSSION

Socioeconomic Characteristics of Broiler Farmers: The socioeconomic characteristics considered

in the present study were age, education, occupation, family size, land ownership, sources of family
income, etc. Age distribution of Broiler Farm Owners: Age distribution of broiler farm owners is very
important in maintaining profitable operation of a farm business. The selected broiler farmers were
grouped into five categories according to their ages. The different age groups of the broiler farm
owners are presented in Table 1.1.

Table 1.1 Age distribution of broiler farm owners

Age group (years) No. of farm owners (N=60) Percent
17.01-20.00 20 33.33
20.01-30.00 29 48.33
30.01-40.00 7 11.67
40.01-50.00 2 3.33
50.01-60.00 2 3.33

It is clear from the table that of the 60 sample owners none of the broiler farm owners belongs to the
age below 17 years. The table also shows that the owners of these broiler farms were relatively young
men. The highest part of the farm owners fell into the age group of 20.01 to 30.00 years which was
48.33 percent, while 33.33 percent of broiler farm owners fell into the age group between 17.01 to
20.00 years, 11.67 percent in 30.01-40.00 years and 3.3 percent of the broiler owner were same
between the two groups.
Educational Level of Broiler Farmers: Education plays an important role for a broiler farm owner
and helps a farmer to have day to day information about the existing modern techniques together with
changes in various management practices. It enables a man more capable to manage scarce resources
and hence to earn maximum profit (Miah,1990).
The educational level of the broiler farmers was categorized into five categories, i.e. (i) illiterate, (ii)
upto primary, (iii) upto SSC, (iv) upto HSC and (v) Graduate and above. The educational of the broiler
farm owners of the study area is presented in Table 1.2.
Table 1.2 shows that most of owners of the selected broiler farms were well educated. It can be seen
from the table that only 6.67 percent owners were illiterate; 21.66 percent owners had primary level;
36.66 percent owners were secondary level; 16.66 percent higher secondary level; and about 18.33
percent were educated upto graduate level.

Table 1.2 Educational level of the owners of broiler farms

Educational level No. of farm owners Percent
Illiterate 4 6.67
Upto primary 13 21.66
Upto SSC 22 36.66
Upto HSC 10 16.66
Graduate 11 18.33
All 60 100.00

Family Size of the Broiler Farm Owners: In the study area, family size has been considered as one
which has a total number of people living together of the same head of the family. The family member
includes wife, sons, unmarried daughter, father, mother and brother. The total number of persons of all
families were divided into four age categories according to their family size. The different family size
of broiler farmers is presented in Table 1.3. Table 1.3 indicates that 13.33 % families of broiler farm
owners consisted of 1-3 members; 35% families consisted of 4-5 members, 43.33 % families consisted
of 6-7 members, 8.33 % families consisted of 8+ members. in Trishal upazila. The average family size

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Table 1.3 Family sizes of the broiler farm owners

Family members of broiler farm owners
Family No. of Male Female Total
members farm Percent Average
group family Number Percent Number Percent Number Percent family size

1-3 8 13.33 14 7.78 10 5.72 24 6.77 3.00

4-5 21 35.00 51 28.33 54 30.85 105 29.58 5.00
6-7 26 43.33 95 52.78 87 49.71 182 51.26 7.00
8+ 5 8.33 20 11.11 24 13.72 44 12.39 8.80
All
60 100.00 180 100.00 175 100.00 355 100.00 5.95
farms

of these categories of broiler farm families consists of 3.00, 5.00 and 7.00 members, respectively. The
overall average family size was 5.95.
Occupational Status of the Broiler Farm Owners: The work in which a man is engaged throughout
the year is known as his main occupation of that person (Ray,1998). In the selected area, the broiler
farm owners were engaged in different occupations along with broiler farming. The occupational
status of the study area of broiler farm owners is given in Table 1.4.

Table 1.4 Occupational status of the broiler farm owners

Broiler farm owners
Sectors
No. of farm owners Percent
Agriculture 32 53.33
Business 17 28.34
Services 11 18.33
All 60 100.00
The occupational status of the selected broiler farm owners are presented in Table 1.4. The table
suggests that about 53.33 percent of sample broiler farmers were engaged in agriculture. Moreover
28.34 % and 18.33 % farmers were involved in business and service respectively.
Income Level and Other Sources of Income: Annual family incomes of broiler farm owners are
divided into two sources, i.e., (i) agriculture and (ii) non-agricultural source. Agriculture sources
which included crops, fisheries, livestock (excluding broiler income), vegetables etc. and another non-
agricultural sources which included business, services, etc. were the sources of income of broiler farm
owners. Annual family incomes of broiler farm owners are shown in Table 1.5.
Table 1.5 Average Annual family income of broiler farm owners
Sources Items Income (Tk./yr.) Percent
Crops 42,535 33.64
Fisheries 37,733 29.84
Agriculture Livestock (excluding broiler income) 5,882 4.65
Vegetables 1800 1.42
Sub total 87,950 69.56
Business 17,000 13.44
Services 17,390 13.76
Non-agriculture
Others 4,100 3.24
Sub total 38,490 30.44
All - 126,440 100.00

Table 1.5 indicates that the family income derived from agricultural sources were greater than those of
non-agricultural sources. On an average annual family income from agricultural sources for broiler

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farm owners were Tk.87,950. On the other hand, average annual income from non-agricultural sources
for broiler farms were estimated at Tk. 38,490.
Distribution of Operated Land under Own Ownership: According to Yang (1962), farm size is
computed by the entire land area operated by a farmer. It is measured by adding the area rented and
mortgaged-in from others and deducting the area rented and mortgaged-out to others. In the present
study on the basis of land types the broiler farm owners were classified into eight categories, namely
(i) homesteaded area, (ii) pond area, (iii) Garden, (iv) Own cultivated land, (v) rented in, (vi) rented
out, (vii) mortgaged-in and (viii) mortgaged-out. Operational land areas of the owners of broiler farms
are presented in Table 1.6.
Table 1.6 Land ownership patterns of the broiler farm owners
Land type Average land area (decimal) Percentage
Homestead 26 7.42
Pond 57 16.28
Garden 7 2.00
Own cultivated 235 67.14
Rented in 12 3.42
Rented out (27) -
Mortgaged in 13 3.71
Mortgaged out (4) -
Total 350 100.00
Source: Field survey, 2006. (Note: Rented out and mortgaged out land were excluded.)
Table 1.6 indicates that cultivated area owned by broiler farm owners were 235 decimals which was
67.14 percent of total land. It is measured by the own cultivated area, adding with the area of rented in
and mortgaged in land excluding the rented out and mortgaged out land.
Profitability of Broiler Farming: In the present study, the total cost of broiler production was
estimated at Tk. 4,64,991 per farm per year. Table 2.1 represents the total costs of broiler production.
Total variable cost and total fixed cost were Tk. 4,22,545 and Tk. 42,446 that were 90.87 and 9.13
percent of total cost, respectively. On the other hand total costs of raising broiler per farm per year
were estimated at Tk.4,64,991. The item-wise costs of broiler production are discussed below.
Variable Cost
Feed cost: It was the largest cost item of broiler farms. In this study the average feed cost per farm
per year was calculated. Most of the farmers used ready made feed which included fish meal, bone
meal, rice bran, wheat bran, oil cake, oyster shell, minerals, salt, vitamin, etc. and some used hand
made feed. The purchased feeds were valued according to the average prices actually paid by the
owners of the broiler farm. It is evident from the table that feed cost was the major important
component which was Tk. 2,42,862 and covering 52.23 percent of total cost (Table 2.1).
Day-old chick cost: Day-old chick cost was another crucial cost item for broiler raising. The farmers
of the study areas mainly collected day-old chick from hatcheries through their local agents. The local
hatchery imported parent stock from breeder farm and produced hybrid chicks for local commercial
farms. It appears from Table 2.1 that the annual expenditure on day-old chick were calculated at Tk.
1,40,093 which covered 30.13 percent of total cost. The farm gate price of per day-old chick was
estimated at Tk. 17.47 (Table 2.1).
Labour cost: Labour cost is an important component in broiler enterprise and this has implication for
income and employment generation. In calculating the cost of farm operation, the services of both
hired and family labour were taken into consideration. Family labour includes the operator himself and
other working members of the family while the hired labour includes permanent hired labour, labour
employed on daily contract basis. The cost of family labour was estimated on the basis of the principle
of opportunity cost. It is revealed from Table 2.1 that the cost of hired labour per farm per year for
8,018 birds was Tk. 1,499 which covered 0.32 percent. On the other hand, family labour cost was
calculated at Tk. 2,245 which covered 0.48 percent of total cost.

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Veterinary expenses: The broiler farm owners in the study area were very careful about the
possibility of their broiler diseases. Vaccine, medicine, doctor‟s fees were the major component of
veterinary expenses. Table 2.1 shows that average veterinary cost per farm per year was Tk. 22,922 for
8018 birds comprising 4.93 percent of the total cost.
Electricity cost: It is another important cost for broiler enterprise. Electricity is needed for
maintaining temperature inside the broiler house or for protecting the birds from hot and cold climate.
It is evident from the Table 2.1 that the annual electricity cost was Tk. 3,499 which covered 0.75
percent of total costs.
Litter cost: Litter cost is another important item for broiler production. In selected areas paddy husk
was used as litter. The average litter cost per farm per year amounted to Tk. 6,096 which was 1.31
percent of total cost.
Table 2.1 Total costs of broiler production per farm per year
Cost items Unit Unit price Per farm Percentage of
Quantity Total cost total cost
A. Variable cost 422,545 90.87
a) Feed cost Kg. 17.00 14,286 2,42,862 52.23
b) Day-old chick cost No. 17.47 8,018 1,40,093 30.13
c) Hired labour Man-day 1,499 0.32
d) Veterinary service Tk. 22,922 4.93
and medicine cost
e) Electricity cost Tk. 3,499 0.75
f) Litter cost Tk. 38.00/bag 160 6,096 1.31
g) Transportation cost Tk. 5,574 1.99
B. Fixed cost 42,446 9.13
h) Housing cost Tk. 35,792 7.69
i) Family labour Tk. 2,245 0.48
j) Tools & equipment Tk. 2,782 0.60
cost
k) Interest on land Tk. 1,627 0.35
value
Total costs (A+B) Tk. 4,64,991 100.00

Table 2.2 Feed cost per farm per year

Broiler farm (per year)
Types of feed
Quantity (kg.) Price (Tk./kg) Total cost (Tk.)
Starter 5,043 17 85,731
Grower 7,143 17 121,431
Finisher 2,100 17 35,700
Total 14,286 17 2,42,862
Transportation cost: Cost of transportation included expenses on transportation for purchasing day-
old chicks, feed collection, paddy husk collection, veterinary services, collection of market
information, etc. It is evident from Table 2.1 that transportation cost per farm per year stood at Tk.
5,574 which covered 1.99 percent of total cost.

Table 2.3 Annual veterinary expenses per broiler farm per year
Items Veterinary expenses (Tk./yr.) Percentage
Vaccine 5,861 25.68
Medicine 14,461 63.37
Doctor‟s fee 2,500 10.95
All 22,822 100.00

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Fixed cost
Housing cost: Farm house plays an important role in broiler farming. The aim of housing is to protect
broiler birds from sunshine, rainfall, cold weather, storms, wild animals and also for comfort. In the
study areas most of the firm houses were tin shed pucca floor fenced by the iron net. Table 2.1 shows
that total housing cost per broiler farm was Tk. 35,792 representing 7.69 percent of the total cost.
Tools and equipment cost: For successful broiler farming tools and equipment are necessary. The
major tools and equipment used by the broiler farmers were feeds brooder, spade balance, electrical
instruments, syringe. Tools and equipment cost was determined by applying straight-line depreciation
method. The tools and equipment cost per farm per year was Tk. 2,782 which covered 0.60 percent of
the total cost.
Interest on land value: It is evident from table 2.1 that interest on land value per farm per year was
Tk. 1,627 which covered 0.35 percent of the total cost
Return from Broiler Production: The main aim of the commercial broiler farms, like all other business
is to earn profit by selling broiler birds. The subsidiary aim of these farms is to meet the demand for
home consumption of meat. In this chapter gross return, gross margin, net return and benefit cost ratio
have been calculated.
Gross return: Gross return was determined by adding income earned from sale of live broiler, used
litter and birds excreta.

Table 2.4 represents that on an average, price per kg. live broiler received by the broiler owners was
Tk. 64.84. On the other hand, prices per sack used litter and excreta were Tk. 11.00. The gross returns
per farm per year for 8018 birds were Tk. 590,491.

Table 2.4 Gross return from broiler production per farm per year
Per farm/year
Items Unit Unit price
Quantity (Kg.) Value (Tk.)
1. Live broiler Kg. 64.84 9,090 5,89,413.00
2. Used litter & excreta Sack 11 98 1,078.00
Total (1+2) - - - 5,90,491.00

Gross margin: Gross margin is defined as the difference between gross return and variable costs. It is
evident from Table 2.5 that gross margins per farm per year were Tk 167946.

Table 2.5 Gross margin, net return, benefit cost ratio broiler farm per year
Margins & Returns Per farm/ Year Percent
A. Gross return 590491
B. Total variable cost 422545 90.87
C. Total cost 464991 100.00
D. Gross margin (A-B) 167946
E. Net return (A-C) 122500
F. Return per taka invested 1.397
(Variable cost basis) A÷B)
G. Return per taka invested 1.269
(Total cost basis) A÷ C

Net return: Net return on total cost was arrived at by deducting all the costs from the gross return.
Table 2.5 shows that net return per broiler farm per year stood at Tk 1,22,500.
Benefit cost ratio: Table 2.5 shows that on an variable costs and total costs were 1.397 and 1.269.
It is evident from the study that the benefit-cost ratios of broiler farming were 1.39 on variable cost
basis, and 1.27 on total cost basis. The figures imply that broiler farming generates 39 percent profit

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on variable cost basis and 27 percent profit on total cost basis. Thus it emerges that broiler farming is a
profitable enterprise.

Functional Analysis The estimated Co-efficient and related statistics of the Cobb-Douglas
production function for broiler production are presented in Table 2.1. Major characteristics of
the models are noted below:
i) For testing the significance level of individual co-efficient 1 and 5 percent probabilities were used.
ii) Total variation of output was measured by multiple co-efficient of determination (R2).
iii) Goodness of fit for different types of inputs was measured by F-values.

Table 3.1: Estimated values of co-efficient and related statistics of Cobb-Douglas production
function for Broiler farms (N=60)
Broiler farm
Explanatory variables
Co-efficient t-value
Intercept 0.61 0.49
Feed (X1) 0.59** 3.37
Day-old chicks (X2) 0.28* 2.24
Hired labour (X3) 0.02 0.25
Veterinary expenses (X4) 0.24* 3.17
Electricity (X5) -0.25 -1.88
Litter (X6) 0.12 1.13
2
R 0.713
2
Adjusted R 0.680
F-value 21.963 **
Returns to scale 1.00
Note: ** Significant at 1% level and * Significant at 5% level

Interpretation of the estimated Results: Feed (X1): It can be seen from Table 3.1 that the regression
co-efficient of feed (X1) cost was positive and significant at 1 percent level. This indicates that there is
an opportunity to increase the gross return per farm by spending additional amount of money. An
increase of 1 percent in money spent on feed keeping other factors remaining constant, would result in
an increase of return by 0.59 percent (Table 3.1).
Day-old chicks (X2): The regression co-efficient of expenditure on day-old chicks cost was positive.
The co-efficient was significant at 5 percent level for broiler farms. The result of the analysis indicated
that 1 percent increase in day-old chicks cost, keeping other factors constant, would result in increase
in an the gross return by 0.28 percent for broiler farms (Table 3.1).
Hired labour (X3): The regression co-efficient of hired labour (X3) cost was positive and insignificant.
Since labour is used redundantly, this type of result does not seem to the unusual.
Veterinary expenses (X4): The regression co-efficient of veterinary expenses (X4) was positive and
significant at 5 percent level. The regression co-efficient of veterinary expenses implies that 1 percent
increase in veterinary expenses, keeping other costs constant, would result in an increase of gross
return by 0.24 percent.
Electricity (X5): For electricity cost, the regression co-efficient was negative and insignificant.
Litter (X6): The regression co-efficient of litter cost (X6) was insignificant.
The Co-efficient of Multiple Determination (R2): The co-efficient of multiple determination (R2) was
0.71. It suggests that 71 percent of the variation in the gross returns was explained by the independent
variables included in the model.

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F-value: The F-value of broiler production (21.96) was highly significant at 1 percent level implying
that all the included explanatory variables were important for explaining the variation of income of
broiler production.
Returns to scale: Returns to scale of broiler farms were computed by adding co-efficient of
regression of broiler farms. The sum total of all the production co-efficients of the equation for broiler
production was 1. This indicates that the production exhibited constant returns to scale.
The overall performance of Cobb-Douglas production function model for broiler farms was
satisfactory as indicated by the estimated R2 and F-value. The estimated values of the model, however,
confirm that the variables like feed, day-old chicks, veterinary expenses, etc. had significant impacts
on the gross return of broiler farms.
Resource Use Efficiency: To accomplish the aim of profit maximization i.e., for efficient allocation
of resources, one should use more of the resources, so long as the value of the added product is greater
than the cost of added amount of the resources in producing it. The resources are considered to be
efficiently used to maintain the maximum profit when the ratio of marginal value product (MVP) to
marginal factor cost (MFC) approaches one; or MVP and MFC are equal for each input. The marginal
value product (MVP) is obtained when the marginal physical product (MPP) is multiplied by the
product price. The price of one unit of input is called marginal factor cost (MFC). The optimum use of
a particular input would be ascertained by the equality condition of MVP and MFC:
The marginal productivity of a particular resource represents the additional to gross returns in value
term caused by an additional one unit of that resource with other inputs being held constant. The most
variable, perhaps the most useful estimate of MVP is obtained by taking resources (X i) as well as gross
return (Y) at their geometric means (Dhawan and Bansal, 1977). Since all the variables of the model
were measured in monetary unit in the function represented the MVP, which was computed by
multiplying the production co-efficient (elasticity, in this particular case) of a given resource with the
ratio of geometric means of the output and input variables.
dy Y(G.M)
  bi
dx i
X i (G.M )

Y  Mean value (GM) of gross return in Tk.

Xi  Mean value of ith input in Tk.

i  1, 2, 3, 4, 5, 6
where,
G.M = Geometric mean
Hence, this MVPs indicate the value product in Taka. Per Taka input cost can be used to express the
ratio of MVP and MFC. The criteria of resource use efficiency is that a ratio equal to unity indicates
the optimum use of that factor, a ratio more than unity indicates that the gross return could be
increased by using more of the resource and the value of less than unity indicates excess use of

MVP
1
MFC
Y(G.M)
Therefore MVP (Xi)  bi
X i (G.M )
resource which should be decreased to minimize the loss. The estimated MVP of different inputs are
presented in Table 3.2.

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Table 3.2 Marginal value products (MVPxi) and marginal factor cost (MFCxi) of different inputs
included in production function
Geometric Ratio of MVPxi to
Variables (Tk.) Co-efficient MFC
mean MFCxi
Gross return (Y) 463846.98
Feed cost (X i) 234040.62 0.594 1.00 1.177
Day-old chick cost(X2) 127249.75 0.283 1.00 1.03
Hired labour (X3) 1389.09 0.029 1.00 9.68
Veterinary service and medicine
18910.10 0.249 1.00 6.107
(X4)
Electricity cost (X5) 2869.73 -0.250 1.00 -40.40
Litter cost (X6) 4023.16 0.1227 1.00 14.06

Table 3.2 indicates that the ratios of MVPx i of feed, day-old chick, hired labour, veterinary services
and medicine and litter cost in broiler production were positive and more than one which indicated that
more profits could be obtained by increasing feed, day-old chick, hired labour, veterinary service and
medicine, litter cost use, etc.

On the other hand, the ratios of MVPxi and MFCxi of electricity cost was negative and more than one
which indicated that the level of profit will be reduced by the application of these inputs.

Problem and Some Suggestions: In this section, an attempt has been made to identify the
major problems faced by the selected broiler farm owners. This chapter also shows the
suggestions made by the selected farm owners.

Economic Problems
a) Money problem: Cash capital is an important input for establishing and operating broiler
farming. Table 4.1 represents that 58 % broiler farmers mentioned this problem. Some farmers
borrowed money from other people or „mahajan‟ against high interest. For this reason farmers faced
the problem of loan repayment.
b) High price of day-old chick: High price of day-old chick was another problem of broiler farming.
Table 4.1 shows that 95 % farm owners reported this problem. In the study area the average cost for
day-old chick(DOC) incurred by farmers was Tk. 17.47 per chick but farmers expected that price in
the range of Tk. 12 to Tk. 13.
c) Higher price of feed: Higher feed price is one of the major problems of broiler farming. Table 4.1
shows that 92 % of farmers reported this problem. Farmers were collecting feed from local agents.
Local agents give feed against high rate price. Because the farm owner paid money for feed after he
gets gross return.
d) Uncertainty of profit: Farmers are not sure of their profit margin. Risk and uncertainty is a major
factor for broiler production. Table 4.1 represents that 37 % farm owners reported this problem.
e) Lack of credit institution: Farmer did not receive institutional credit. They had to solve this
problem by receiving loan from individuals with high interest rate. Table 4.1 represents that 80 % farm
owners could not expand their poultry farm due to lack of financial resources.
Marketing problems
a) Rumour: The broiler farmers of Bangladesh are affected by various rumour. For this reason the
popularity of broiler is decreasing. Now a days it was affected by the rumour of bird flu. As a result
demand for broiler decreased unexpectedly and price of broiler fell down. The owners of broiler farms
had to incur tremendous losses. Table 4.1 shows that 97 percent farmers reported about this problem.

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b) Power price of broiler: Lower price of broiler is the most important marketing problem. Farmers
complained that they were not getting reasonable price. Sometimes the price of broiler was lower than
the cost of production. Table 4.1 shows 90 percent farm owners reported this problem.
c) Late payment: Late payment is another problem of broiler farming. The owners bought inputs
from various intermediaries who did not pay all value of the product in cash. For this reason they
could not start the activities for next batch. Table 4.1 shows that 42 % farm owners faced this problem.

Table 4.1: Problems faced by the broiler farm owners

Number of responding
Problems Percent (%) Ranking
farmers (N=60)
A. Economic problems:
a) Money problem 35 58 4
b)High price of day-old chick 57 95 1
c) Higher price of feed 55 92 2
d) Uncertainty of profit 22 37 5
e) Lack of credit institution 48 80 3
B. Marketing problem:
a) Rumor 58 97 1
b) Lower price of broiler 54 90 2
c) Late payment 25 42 3
C. Technical problems:
a) Growth problem 53 88 1
b) Electricity problem 35 58 2
c) Lack of training facilities 28 47 4
d) Broiler housing problem 21 33 5
e) Non-availability of parents
19 32 6
stock
f) Non-availability of day-old
32 53 3
chicks
D. Social and natural problems:
a) Problem of theft 2 3 4
b) Out break of diseases 45 75 1
c) Pollution of environment 37 62 2
d) Predatory animals 4 7 3

A. Technical problems
a) Growth problem: Broiler birds are very sensitive to weather. If the birds are affected by
diseases, they ultimately lose weight. Most of the farmers (88%) were facing the same growth problem
(Table 4.1).
b) Electricity problem: It is another important factor of poultry farming. Some farmers use oil lamp
and some use electricity of Rural Electrification Board (REB) and the Bangladesh Power
Development Board (BPDB). Table 4.1 represents that 58 percent farmers faced this problem in
broiler raising. Load shedding is an important problem for hampering better production.
c) Lack of training facilities: The broiler farmers reported that they lacked modern knowledge on
broiler farming. Farmers‟ performance would be improved it they could be trained by livestock
officials.
d) Housing problem: Farmers did not know how to make proper housing facilities. For this reason
birds did not get good aeration and faced too many crises. Proper housing facilities could help to attain
better production. It was revealed that 33 % of broiler farmers felt that they had poor conception about
poultry housing (Table 4.1).

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e) Non-availability of parent stock: Parent stock was not available as many hatcheries failed to
easily parent stock. For this reason supply of day-old chick ultimately decreased. Table 4.1 shows that
32 % hatchery owners faced this problem. This problem was faced by broiler farm owner indirectly.

f) Non-availability of Day-old chicks: Non-availability of adequate number of day-old chicks is

another important problem. Table 4.1 shows that 53 % of farmers reported this problem.

B. Social and natural problems

Social and natural problem was the most important problem of broiler farming. The farm owners of
broiler were facing some social and natural problems. These are:
a) Problem of theft: It is evident from Table 4.1 that 3 % farm owners reported this problem.
b) Outbreak of diseases: Outbreak of diseases is a serious problem for the development of broiler
farming. During the last few years, a number of broiler diseases were observed in Bangladesh. In the
area the farmers faced in very dangerous diseases. Such as, Gumbroro, Ranikhet, Fowl pox, Fowl
cholera, Coccidiosis. Most often broiler farm owners had to bear a tremendous loss due to Ranikhat
and Gumbora. Table 4.1 shows that 62 % of farmers reported this problem.
c) Pollution of environment: In the selected area the broiler farm owners faced this problem that
the chicken polluted the whole environment of the surrounding areas of broiler farms. It generates bad
smell which leads to a quarrel with the owners of farm. Table 4.1 shows that 62 % of broiler farmers
faced this problem.
d) Predatory animals: It is evident that from the Table 4.1 that 7 % farm owners faced the problem.

Measures Suggested by Broiler Farm Owners

In order to overcome the problems of broiler rearing and to make the broiler farming more profitable
the broiler farmers put forward some suggestions.
i) In a selected area the farm owner said that feed cost was the largest cost item for the broiler farm.
In this situation Government should control the high price of feed. Government should give incentives
to the private feed manufacturing factories as it becomes necessary to reduce the high price of feed.
ii) Many farmers faced the availability of Day-old chick problem. They went to the local agent for
the day-old chick. But the day-old chick was not available. Most of respondents suggested to set up
mini hatcheries and necessary arrangements should be made for easy availability of day-old chicks.
iii) To get rid the problem of shortage of fund, the providing of short term loan for broiler farming
should be made on easy terms and conditions by government and NGO‟s.
iv) Government and private research centers should come forward to identify the reasons for not
taking desired weight of broiler and they should give suggestions on the basis of the research findings
to solve this problem.
v) Most of respondents suggested that government should increase veterinary services by supplying
necessary vaccine and medicine at lower price and by establishing new veterinary care centers.
vi) In the selected area the farmers suggested that public media‟s like television, radio, news paper
should play active role against the rumours regarding broiler birds.
vii) Government should take steps to ensure the stable and reasonable price of broiler by ceiling price
schemes and providing price incentives.
viii) The respondents suggested that government and NGO‟s, BRACK , should take proper steps
like training of broiler rearing, especially young boys and girls, providing fund to rural disadvantages
for broiler rearing.

CONCLUSION

Raising of broiler was a profitable business in the study area. On the other hand, there is a wider scope
for the development of broiler farming in this country. The financial benefits obtained from broiler
farming suggests that the enterprise is helpful in employment generation and poverty alleviation which

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are now the major concern of the planning process of the country. From the outset of the large-scale
commercial poultry revolution in Bangladesh, this segment of livestock sub-sector is playing a key
contribution to the national economy in the forms of generating local income, poverty alleviation
employment creation for the unemployed youths and destitute women and improving the nutrition
level of the low-income people. A number of problems and difficulties were found in keeping broiler
birds in study area. To overcome the difficulties of broiler keeping and to make the business of broiler
keeping more profitable in the country, the following recommendations are put forward for the
improvement of existing production of live broiler.
i) Government does not have any framework to step up the poultry sub-sector. To achieve and
enhance the present growth of poultry industry and fulfill the need of private entrepreneurs and NGOs
formulation of a separate “National Poultry Development Policy” is required to formulate
immediately.
ii) Feed standardization and quality control act of poultry feed need to be formulated immediately.
iii) Necessary steps need to be taken to reduce the price of day-old chicks. Again government should
give adequate financial support to establish more hatcheries throughout the country.
iv) Price stabilization and/or floor price schemes should be chalked out to make sure that broiler
producers receive the minimum level of profits.
v) Production, monitoring and formation of quality control system for local hatcheries are needed by
government department to ensure the higher quality of day-old chick.

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