uieiit oi exclusive supply areas, will make a substantial contribution. 

 But lurther reduction in systemic costs can be achieved by elimination 

 ol redundant resources and the realignment of supply areas. 



In any gi\en area, the least-cost combination of resources will involve 

 maximizing the number of the largest feasible plant sizes. Taking the 

 upper limit of projections in this and an earlier study ^'* — 70 million 

 pounds annually at 100 percent of cajiacity — as the present technologi- 

 cal limit, one plant of tliis size would sulfice if usable volume i' in the 

 area was 70 million pounds. If volume in the area were less than this 

 level, one plant of a smaller capacity would provide the best adjust- 

 ment. If volume exceeded 70 million pounds, one 70 million pound plant 

 plus one additional smaller plant, rather than two or more medium 

 sized plants, would provide the least-cost combination. In an area where 

 volume exceeded 140 million pounds, two large plants and one smaller 

 plant would be optimum. 



The least-cost system for an area might place certain plants at a com- 

 petitive disadvantage. Hence, in practice, if usable volume would sup- 

 port more than one large plant, such plants would tend to approximate 

 each other in size. The competitive position of a small plant would be 

 enhanced if it concentrated on fowl, with larger plants concentrating on 

 broilers where economies of scale are greatest. 



At the time data collection for the study of live poultry assembly was 

 begun there were 28 commercial poultry slaughtering plants ^'^ oper- 

 ating in i\ew England, excluding those engaged in processing specialty 

 items. By mid-1959, only 21 were still operating. Figure 8 shows the 

 areas lying within 10, 25, and 50 miles of these plants and the areas 

 where there are two or more plants within 10 and 25 airline miles. This 

 illustrates the extensive overlapping of supply areas which can exist in 

 the present environment. 



In contrast. Figure 9 shows how exclusive supply areas could be de- 

 vised for a more limited number of firms of larger average size than at 

 present. Such a system assumes eventual moliility of capital investment, 

 a distinct possibility with rapid depreciation of plant equipment and 

 the pressures of intra-regional and inter-regional competition. The re- 

 alignment of supply areas results in 10 commercial plants — excluding 

 those handling specialty items and those oriented toward supplying both 

 the Kosher and poultry store trade. 



Since preceding comparisons in this report were based on the 1957 

 system, the cost estimates in Table 13 are presented in these terms. 

 Residual demand for live poultry outside New England and for live and 

 processed birds through the older marketing channels is held constant. 

 The difference in the cost estimates relates to the substitution of the 

 exclusive supply areas and reduced numbers of plants of larger average 

 capacity for the commercial assembly and processing structure existent 

 in 1957. The reduction in systemic costs could approximate 35 percent, 

 or a savings of $8,000,000. To a considerable extent, the exclusive supply 



16 Ibid. 



17 "Usable volume" may be defined as that available from producing units of a 

 size sufficient to warrant assembly or purchase by commercial plants. Excluded 

 would be small and mixed lots which might better be handled through alternative 

 marketing channels. 



1^ Annual volume exceeding one million pounds. 



38 



