Farm-Size Heterogeneity and Profitability in Broiler Production: An Illustrative Simulation Framework for Dinajpur District, Bangladesh

Abstract

Broiler production is one of the fastest growing sub-sectors of agriculture sector in Bangladesh and also is one of the significant sources of rural income and employment in Bangladesh. A typical simulation of profitability of broiler farms in three representative categories in terms of farm size is developed from literature and the impact of farm size, farmer training, input utilization and exogenous shocks (feed-price inflation and mortality due to heat stress) are investigated. The current Bangladesh evidence is almost exclusively based on one-shot cross section surveys of fixed samples, where the profitability is measured at one place, at one time, and where the samples are not easily extrapolated to other counterfactuals of scale, training, or shocks. With parameters of cost, revenue and effects of input factors broadly consistent with published studies of broiler production in Bangladesh, we simulate representative small, medium and large operations (100 representative small, medium and large units respectively) and create nine interrelated exhibits on production performance, cost structure, profitability, input effects, training returns and sensitivity to feed-price and heat-related shocks. Medium-scale operations have the highest benefit-cost ratio (adjusted for an internal cost-accounting discrepancy in the original data) of the three size-classes, and feed and training are the most important positive associates of output, whereas the combined effect of feed-price and heat-stress shocks reduce simulated net returns by approximately 25 percent. The paper presents a transparent and reproducible structure for simulations for future primary surveys to examine and/or use. Results indicate that priorities should be feed-market stabilisation, access to more training, and climate-risk instruments, but these findings need to be validated with empirical evidence.