Study On The Cost-benefit And Efficiency Of Broiler Production In China

After three decades of sustained and rapid development, China’s broiler industry has become an industrywith the highest level of industrialization, market and scale in animal husbandry, which plays animportant role in solving the employment of rural labor force, increasing farmers’ income, improvingresidents’ dietary pattern, and adjusting and optimizing the livestock industry structure. However,China’s broiler industry is confronted with many problems and challenges, such as increased diseasecomplexity and difficulty of control, the soaring cost of farming, antibiotics and heavy metal residueproblems, and barriers in exports, and so on. In the mean while, with the continuous improvement ofpeople’s living, domestic chicken meat consumption grows rapidly. And a large amout of chickenproducts from foreign countries flood into domestic market, which makes the trade deficit becomebigger. Thus, under the circumstance of unfavorable external environment in the broiler industry,whether China’s broiler industry can adapt to the new situation, protect the domestic market, andenhance international competitiveness has become the key issue to be solved in the current developmentof broiler industry. Therefore, reducing the cost of broiler production and improving productionefficiency is to become an important task of the current stage of developing international competitivebroiler industry.This paper introduces the general situation of China’s broiler production, and systematicallyanalyzes the cost and benefit of different scale broiler production. By using the cost variance model, thefactors which affect the cost difference among provinces and regions are emprically analyzed. Based onthe theorecical hypothesis of cost minimization, the translog stochastic frontier cost function isestablished to estimates the cost efficiency, and factors influencing on non-efficiency of China’s broilerproduction cost are also empirically analyzed. The profit function model is also established in this paperto analyze the degree of supply response of broiler production to the changes of market prices andproduction environment.The research shows that:1. China’s broiler industry has developed rapidly as a whole, but there also exists inter-regionaldifferences. Specifically, firstly, there is a rapid increase in the number of broiler stock and slaughter,the broiler production and its percentage in meat continue to grow, and per capita chicken meatconsumption also has a notable increase. Secondly, China’s large-scale broiler production developsrapidly, and medium and large-scale broiler farms in China have become the main mode. In addition,there is also a big regional difference in the development of China’s broiler industry, and thegeographical distribution of broiler industry has already been formed, that is, China’s broiler productiontransferring from the eastern region to the central region of China has become the trend, broilerproduction in western region develops slowly but has a great potential.2. Feed cost accounts for the largest proportion of broiler production cost; the cost-benefit differs indifferent scale.First, the total cost of the large, medium and small-scale broiler has the trend of ascent and the average annual growth rate is fast. The total cost of broiler production in large-scale is the largest, whilethe medium scale is the lowest. Chick cost, feed cost and labor cost in the large-scale households aremuch higher than those in the medium scale and small scale. The total four costs including fine fodder,chick cost, labor cost and medical and epidemic prevention fee account for above90%in total cost, andfine fodder accounts for the largest proportion. In addition, broiler production had a ascend trend as awhole, but it is not stable.3. The regional difference of China’s broiler production cost is significant, mainly due tointer-regional difference of production and technical level.The main reasons causing regional differences of broiler production cost in China lie in: Firstly, asa comprehensive reflection of production level and a technical level, the differences of FCR (feedconversion ratio) is an important factor leading to the big differences in costs of broiler production,whose coefficient is0.6272, indicating that the higher the FCR is, the higher the unit production costs is.Secondly, effect of differences in labor cost on broiler production cost is-0.0919, and according to theefficiency wage theory, the upgrading labor cost will improve labor efficiency, thus contributes toboosting the economic benefits of the breeding enterprises. Thirdly, the impact of difference of broilerfeed cost on broiler production cost is very significant, but the impact of chick cost on production cost isless than that of feed cost.4. The average cost efficiency of broiler production is in the middle level, there is still much roomfor improvement.The cost efficiency of China’s broiler production is not high as a whole, and all provinces havevarying degrees of cost inefficiency; the change in the average cost of the national broiler productionefficiency is relatively stable, with little fluctuation. Most provinces are located in the middle efficiencygroup while the number of provinces located in high efficiency group is much less. Cost efficiency ofcentral region is the highest among the three regions, while cost efficiency is not high in those provincesof western region.Feed conversion Ratio is the main factor affecting cost inefficiency, and its positive impact on thecost non-efficiency is much larger than the other variables. Disease factor not only increases the cost offarming, but also enhances the risk of broiler farming, which reduces the cost efficiency. The costefficiency in different regions differs significantly.5. There exists a lag in China’s broiler short-term supply, and the long-term supply elasticity isgreater than the short-termsupply elasticity.The short-term supply elasticity of broilers is inelastic. The impact of feed price on broiler (-1.8845)is bigger than other factors, followed by the price of labor and chicks (elasticity values are less than1).In the short term, the rise in output price will increase the use of the variable input factors, and exceptfor the rise of feed price, the changes of broiler price and other inputs prices will not cause largefluctuations in broiler production. The long-term supply elasticity is greater than the short-term supplyelasticity, which implies in the long term, the farmers can adjust their production according to marketdemand. In addition, the responses of broiler production to input prices are more sensitive in the long run, especially for the feed price. And the effects of labor price and quasi-fixed capital prices on broilerproduction can not be ignored, which are both significant.Finally, some relevant suggestions and recommendations are proposed:1. to vigorously advancethe scale of production and standardization of broiler breeding;2. to strenghthen the application ofanimal science and technology into broiler breeding to reduce production cost;3. to improve the costcontrol ability of broiler breeding enterprise to reduce the cost inefficiency;4. to strenghthen the diseaseprevention and control and monitoring of drug residues to reduce the loss caused by disease risk;5. totake efforts to reduce discharge and pollution, and to save resources and reduce energy consumption.