sizes and numl)er of trucks. Least cost-conil)inations of trucks, labor and 

 other resources were chosen to derive cost curves for specified vohimes 

 of pouhry per mile of truck travel, as illustrated in Figure 5. 



(9) The shrinkage in live weight which occurs in hauling was not 

 included as a cost item in this report. Shrinkage is less for short than 

 for long hauls. Thus, reducing the length of haul would result in cost 

 reductions in addition to those shown in this report. In practice, shrink- 

 ages resulting from different lengths of haul are averaged out in paying 

 prices or transfer values of live birds. Moreover, there is a definite need 

 for a new study of the precise relationship between shrinkage and length 

 of haul under present conditions and with the modern type of broiler. 



Figure 5. Poultry Assembly Costs Related to Annual Volume and Pounds 



per Mile of Truck Travel 



CENTS PER POUND(LIVE BASIS)- 



0.3 



ACTUAL COSTS 

 FOR SAMPLE FIRMS 



— 100 

 —200 

 —.500 



1 

 J- 



3000 



10 20 30 40 50 60 



ANNUAL VOLUME ASSEMBLED (MILLION POUNDS^ 



70 



(The number on each solid lined curve indicates the pounds of poultry obtained 

 per mile of truck travel) 



Effect of Firm Size on Costs of Live Poultry Assembly 



Using tlic assumptions and methodology previously described, costs 

 of asscml)ling live poultry are hereafter analyzed in terms of a set of 

 10 model firms. Net differences in the unit costs provide a measurement 

 of the savings or increased revenues which the firm with the less efficient 

 operations must accomplish by other means if it is to remain competi- 

 tive. 



This analysis does suggest that costs of assendjling live poultry can 

 be reduced from present levels by increasing firm size and thus achiev- 

 ing the dcsiral)lc characteristics of new type firms and by increasing 

 the density of the sujiply area. Moreover, the cost patterns outlined 

 help explain the reasons for the rapid concentration of poultry assembly 



22 



