Profit Efficiency of Layer Production in Brong Ahafo and Greater Accra Regions of Ghana

Abstract

This study assesses the profit efficiency of layer production in the Brong Ahafo and Greater Accra Regions of Ghana. The study specifically used farm level data to estimate the level of productivity of various inputs, profit efficiency levels, identify determinants of profit efficiency and further identified and ranked major constraints to layer production using Henry Garrett’s ranking technique. A multi-stage sampling technique was used to collect cross-sectional data from 300 layer producers in nine districts in the two Regions during the 2011/2012 production year. Using the single-stage maximum likelihood estimation method, a translog stochastic frontier profit function and farm-specific inefficiency models were simultaneously estimated using FRONTIER 4.1c. The results show that prices of feed and price of labour (wage) are the most significant factors negatively affecting profit levels of layer producers in the study area. All the input variables responded positively to layer output. The findings also show that layer production is characterized by increasing returns to scale. The results show that on average, the layer producers are 54.23% profit efficient revealing that layer producers are not operating on the profit frontier. Moving to the profit frontier, layer producers would on the average, be able to reduce their cost by 45.77% to achieve the optimal profit and production, given current method of operation. The results further indicate that training in poultry farming, membership of farmer based organization, provision of extension service/contact, interaction of age and experience, gender, experience, age, housing type and mortality rate are the main factors that significantly explain the variations in profit efficiency among layer producers in the study area. High cost of feed, high cost of medicine and vaccines, difficulties in accessing subsidized yellow maize, and high cost of day old chicks, are the major constraints to layer production identified in the study area. The study therefore concludes that layer producers in the study area are profit inefficient. This therefore suggests that policies directed at these factors could significantly improve profit efficiency of the layer producers. The study recommends that layer producers should reduce their inefficiency level in order to achieve higher profits. Also, the study recommends that extension agents and other NGOs should constantly encourage layer producers to form associations in order to create the platform for sharing of technical knowledge among the experienced and younger farmers. In addition, intensive technical training in poultry production and management through frequent seminars and workshops should be organized by MOFA and GNPFA in partnership with training institution for layer producers in order to enhance their skills and capacity of production. It is also recommended that policies and programs aimed at drawing the youth into layer production should be pursued by giving them incentive packages. Policy makers should specifically focus on enacting policies that will enable layer producers get feed at a lowest cost, easy access subsidized yellow maize and other form of inputs. Layer producers are also advised by the study to consider adopting the battery cage system of housing in their operation.