An econometric study of the competitive position of Hawaii broiler industry

Afifi, Hani Ali
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The major objective of this study was to appraise the competitive position of the Hawaii broiler industry in the face of the probable declines in the air freight rates. The aggregate demand for local fresh broilers was found to be generally more elastic than the demand for mainland frozen broilers (1950-1966). This implies, that the quantity of the local broilers purchased is more sensitive to price change within the usual range of prices. The average total cost of producing one liveweight pound of broilers range from 13 cents (North Carolina) to 30 cents (Hawaii). Feed is the major cost item representing, on the average, 66 percent of the total costs. Reasons for high production costs in Hawaii lie in less technically efficient farms by U. S. Mainland standards and high prices for most of the productive services such as feed, chicks, and production equipment. Processing costs in Hawaii are considerably higher than those in the mainland: Hawaii's 11 cents to the mainland's 3-4 cents a pound. Labor is the largest item of processing costs as it represents 53 percent of the costs. The major reason for high processing costs in Hawaii is due to the fact that plants are operating at less than full capacity for less than a full week. It appears that technical economies that can be realized through contracts are small even under the assumption of "all in-all out" production. In the present situation achievements of these levels are thwarted by the demand of the processors who must cater to the demands of the markets for the different classes and weights of meat birds. These demands force local producers to raise broilers, fryers and roasters from each brood. This practice lowers efficiency considerably and substantially increases the fixed costs of production. Productive efficiency as well as economic efficiency measurements indicate that if all local farms were to follow the economic and the technical practices of the most efficient farm defined in this study, production cost will still be 26 cents per 1iveweight pound (approximately 36 cents per ready-to-cook pound). Given the processing costs of 11 cents per pound, production and processing costs will be 47 cents per pound. The empirical results of the "Transportation Models" indicate that the state of Alabama is the optimum source of broilers for Hawaii's consumers. Hence, to compete effectively at projected jumbo rates of 8 cents per pound, Hawaiian producers and processors must be able to reduce costs of production and processing to 42 cents per pound. Reductions in production costs are doubtful because broiler feed prices have gone up since 1961. It is not clear whether attempts to reduce feed costs may match cost reduction resulted from purchasing large quantity of feed. In addition to that the stored feed will lose some of its nutritive value. Moreover, the economies of scale is not a very promising approach to reduce production costs. Adjustments in the processing sector are more likely possible, for example, operating only one of the mechanized plants at full capacity (1,200 birds per hour) and possibly more operating days per week, would satisfy the local needs.
Thesis (Ph. D.)--University of Hawaii, 1969.
Bibliography: leaves [118]-124.
xii, 124 l illus
Poultry industry -- Hawaii
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