Available resources existed in the forni of submarginal dairy farms, sur- 

 plus labor, an established hatchery industry, and the close proximity of 

 the large metropolitan consuming areas of the Northeast. 2 



The recent and continuing developments in technology have created 

 tremendous gains in labor productivity in the production of broilers. 

 New types of equipment in the form of automatic feeders, waterers, heat- 

 ing equipment, and ventilation controls allow the family unit to produce 

 flocks as large as 25,000 to 35,000 broilers. New developments in breed- 

 ing and nutrition enable a grower to produce four to five flocks a year. 



In an effort to reduce production costs and improve quality, inte- 

 grators are looking to the producers for new housing with central heat 

 and insulation, along with modern equipment, to replace the old con- 

 verted dairy barns, laying houses and outmoded equipment. Further- 

 more, in an effort to reduce broiler assembly and feed distribution costs, 

 integrators want to contract with full-time growers who can raise large 

 flocks rather than with smaller part-time growers. 



These developments in the industry focus attention on the problem of 

 the potential of the contract grower to accumulate capital from his 

 broiler producing operations. If the contract growers cannot accumulate 

 capital to renovate or replace their existing plants, integrators will be 

 forced to seek investment capital or to use their own to develop the re- 

 quired production facilities. 



The study reported here was made to appraise some of the factors in- 

 volved in the production phase of northern New England's broiler in- 

 dustry as they affect the capital accumulation potential of contract 

 growers. The capital accumulation potential was measured using vari- 

 ous prices and payment plans under several assumptions as to technol- 

 ogies and grower consumption expenditures. 



The study involved long-run decision making; the results will be of 

 little value in the day-to-day management of producing units. Moreover, 

 since each existing farm is unique as to its labor, buildings, and location, 

 this report cannot help either producers or integrators set a value on 

 these features of existing farms. It does, however, show the value of and 

 required payments to all resources that may be put into broiler produc- 

 tion in the future. 



Procedure 



This study was limited to the economic problems of the contract 

 broiler grower in northern New England. Analysis of physical produc- 

 tion input-output data provided the basic relationships for appraising 

 economic returns of the producing unit. 



First, physical input-output data from contract growers within inte- 

 grated firms were analyzed to determine the trends in productivity of 

 output and the restrictions on size of operation. Variables studied were 

 feed conversion, rate of growth, and labor used in producing broilers. 



Second, other factors that affect costs and returns of the production 

 unit were studied, including the decision making power of growers and 

 integrators, variations in output, fluctuations in prices, size and location 

 of production units, and the types of contracts used in contract broiler 



2 Saunders, R. F., Contract Broiler Growing in Maine, Maine Agricultural Experi- 

 ment Station Bulletin 571, 1958, p. 7 



4 



