Comparison of variable (operational) cost structures of broiler production in Accra/Tema and Kumasi areas

Abstract

The paper examined the composition of the total variable cost of 20 farms and compared the operational cost of producing broiler in the Accra/Tema and Kumasi areas and by scale of operation. On the average, costs of feed and day old chicks form about a half and a quarter, respectively, of total variable cost for broiler production. There is no statistically significant difference between the mean variable cost for producing a broiler in the Accra/Tema area and in the Kumasi area and also by the scale of operation, suggesting that the variable costs of producing a broiler are similar. Also, there is no price incentive in moving broiler products between the two areas for sale. The statistical test also suggests the gross profit per bird produced is significant. However, the poultry farms located in Accra/Tema area and who hold larger broiler size face higher variable cost variability and selling price variability than their Kumasi counterparts. The estimated coefficient of variation for each of the study areas is less than 30 percent. Poultry farmers would need to monitor closely feed items and their cost in order not to overrun the variable cost of their farms. The poultry farmers should develop their local markets to increase sales and gross margin incentive, since there is no incentive to develop markets in other producing areas.