Profit efficiency among layer chicken keepers in Dar es salaam, Tanzania
Loading...
Date
2023-05
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Sokoine University of Agriculture
Abstract
Chicken products viz., meat and eggs are increasingly becoming an essential component of
diets in urban centers of many countries with no exemption to Tanzania. Over recent years,
Tanzania has experienced a mismatch between the demand and supply of chicken eggs. This
is highly contributed by urbanization, rising population, and rising purchasing power and it
has been accompanied by the fast-growing poultry sub-sector. However, little is known
concerning the marketing and profitability and profit efficient of the poultry product
particularly eggs as the majority of studies conducted on poultry focused on the technical
and management aspects of the chickens not to mention the broiler part. When local
production fails to fulfill domestic demand, the question on whether producers are efficient
arises. Understanding the profit efficiency of any economic activity would be a significant
step toward improving its productivity while ensuring its sustainability. Hence the
objectives of this study included: profitability analysis and assessment of profit efficiency
and its determinants among layer keepers in Dar es Salaam, Tanzania. To achieve these
objectives, first, 127 layer keepers from all five districts of Dar es Salaam City were
proportionately selected at random. Then information on farm-specific inputs and outputs
quantities and prices and socio-economic and institutional characteristics of the sampled
layer keepers were collected using a structured questionnaire. The collected data were
subjected to analysis where the gross margin approach was used to assess the profitability of
layer keeping followed by the OLS linear regression in determining the factors that
influence profitability. The study further assessed profit efficiency and factors affecting
levels of profit inefficiencies among layer keepers in the study area by using the Stochastic
Trans-log Profit Frontier model. The study findings on the profitability analysis revealed
that layer keeping was profitable in the study area with an average gross margin of 3483
TShs per tray of eggs, and still, there is potential to stimulate and increase the profitability
as many producers have less than average gross margin. The main components of the
production costs were feed costs (54.12%), housing costs (16.60%), day-old chick costs
(9.41%), and Labor costs (7.22%). The study further discovered that some layer keepers had
the lowest gross margins due to their relatively small flock sizes, which resulted in fewer
eggs being produced, and their limited access to market data on tray prices, which led them
to sell their eggs at the lowest possible price at the farm gate. The results in the Stochastic
Profit frontier model revealed that the profit efficiency in the study area ranged from
13.79% to 91.75% with a mean of 61.68%. The mean level of efficiency indicates that there
is a chance to increase profit efficiency by 38.32% only by improving the technical and
allocative efficiency. The study established that the costs of feeds, drugs, capital inputs
(such as building and equipment), and other inputs (including water, electricity, and
transport) are the most significant factors that reduce the profit of the layer producers.
Alternatively, the cost of bird stocking (d.o.c) and labor price have a positive impact on the
layer producer profit level. Socio-economic and institutional factors such as age, sex,
experience, household size, extension services, and location of the farm both had a
significant influence on the profit efficiency levels of the layer producers in the study area.
Based on these findings, the study identified a need to come up with a policy to control the
volatility of the feed prices or to subsidies them as has been done in other agricultural inputs
such as fertilizers and seeds. The study also identified a need for a policy guide on the
marketing of eggs (grading them) in terms of their external quality characteristics to create
and add value. The study further recommends that policy institutions develop institutional
support to increase credit and extension or veterinary services accessibility among layer
keepers and layer keepers should be encouraged to form associations for enhancing their
chances of accessing these services, particularly credit from financial institutions through
group lending.
Description
MSc. Dissertation in Agricultural and Applied Economics
Keywords
Layer chicken, Chicken keepers