The effects of feed and energy costs on broiler farm decisions: A dynamic programming approach

Samantha L. Padilla, Lenis Saweda O. Liverpool‐Tasie and Robert J. Myers

Agricultural Economics, 2021, vol. 52, issue 2, 249-264

Abstract: We explore the decision‐making process of commercial poultry enterprises facing rising input costs in Nigeria. Using a cross‐sectional dataset and a 1‐year weekly panel of farm inputs and prices, we employ a discrete time, discrete control and state space dynamic programming (DP) model, disaggregated by farm size, to determine optimal decisions. In the presence of high feed costs and increased energy use, the optimal strategy for medium‐sized farms is to sell and exit the industry. However, it remains profitable for large firms to stay in the sector. The findings indicate that broiler farms need larger batch sizes to withstand input price increases and rising energy costs. While Nigeria has seen a rapid growth of commercial livestock enterprises, the sensitivity of the poultry industry to changes in feed prices is a major threat to the sector and highlights the importance of acquiring higher batch sizes and employing other risk management tools, such as contracts to forward price input.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/agec.12617

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:agecon:v:52:y:2021:i:2:p:249-264

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0169-5150

Access Statistics for this article

Agricultural Economics is currently edited by W.A. Masters and G.E. Shively

More articles in Agricultural Economics from International Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().