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Potentiality of Vertically Integrated Poultry Contract Farming System in Bangladesh:profitability and Productivity Analysis

Ismat Ara Begum
Assistant Professor, Dept. of Agricultural Economics, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh. E-mail: ishameen@yahoo.com

Abstract/ Executive Summary:

The paper examines the potentiality of vertically integrated poultry contract farming system in Bangladesh on farm income through profitability and farm productivity. Although government provides various favourable policies for poultry sector development but till now meat deficiency is 89.5 per cent of the total requirement. This is largely because of lack of necessary backward and forward market linkages. Vertically integrated contract farming could be one possible solution in this case. With effective management, vertically integrated contract farming system can be a means to develop markets and to bring about the transfer of technical know-how and to generate farm income in a way that contributes to farm profitability and productivity. Primary data were collected from 50 sample farmers of ABFL (Aftab Bahumukhi Farms Limited), the pioneer of vertically integrated farm which is situated at Kishorganj district of Bangladesh. Twenty five (25) independent sample farms were also selected from Gazipur district, the poultry region of Bangladesh. Results indicate that the use of production contracts is associated with a substantial increase in profitability, factor productivity, and represents a technological improvement over independent farm production, which would help to alleviate poverty.

Keywords: Potentially,Vertically integreted, Pouyltry, Farming system

Location: Bajitpur and Kuliarchar

Start Date: 00-12-2001

End Date: 00-11-2002

Program Area: Socio-economic and Policy

Commodity: Poultry

Objectives:

To examine the vertically integrated contract farming system in poultry sector aiming to determine farm productivity through contracting

Methodology:

Primary data of 50 sample farms for vertically integrated contract farming were collected from two Thana- Bajitpur and Kuliarchar located in Kishorganj district in Bangladesh. In order to fairly spread the sample over the entire study population at first a list of all 560 contract growing farmers was prepared with the help of officials of ABFL to obtain a representative sample and then the farmers were categorized according to their farm sizes as noted below: 1) Small farmers raising 1200 birds, 2) Medium farmers raising 1201 up to 2000 birds, 3) Large farmers raising more than 2000 birds. According to this criterion in the study area among 560 farms 202, 280, and 78 farms were small, medium and large farms respectively. Fifty-contract broiler farms were selected from 560 farms by using stratified sampling method, by the ratio of the observation, consequently 18, 25 and 7 were small, medium and large farm respectively according to bird holdings per batch. For a comparative analysis, the Gazipur district (as it is declared by Government of Bangladesh as poultry region) was selected purposively and accordingly 25 commercial poultry farms were selected randomly from two Thana of the district. The period of investigation covered one year beginning from December 2001 to November 2002. Data were collected from December 2002 to January 2003.To determine the comparative net return gain from contract broiler farming system and independent farming system, per bird basis comparative study has been done here. In this study, cost items consisted of feed, hired labor, vaccine and medicine, transportation, litter, equipment and machinery, housing, land use cost, interest on operating capital and miscellaneous. On the revenue side, gross return, net return, rate of return were determined and analyzed in this study. A Cobb-Douglas regression model was used to accomplish the production function analysis of poultry farms. In order to see the influence of all variable inputs, viz., day-old chicks, feed, labor, vaccine and medicine and fixed capital stock on gross output, production function was fitted taking these as independent variables and contracting system as a dummy variable. The purpose of introducing dummy variable was to consider the role of contract farming in regression analysis

Source of Information: Bangladesh J. Agric. Econs XXIX, 1 & 2 (2006) 107-117

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Results indicate that the use of production contracts is associated with a substantial increase in profitability, factor productivity, and represents a technological improvement over independent farm production, which would help to alleviate poverty.

Knowledge Management: Journal