Suniniarv 



In recent years, evisceration of poultry in country plants in New Eng- 

 land has been increasing. Additional plants are converting from selling 

 New York Dressed birds to selling the eviscerated product. 



Previous work has suggested the existence of substantial economies of 

 scale in dressing. This study determines the nature of scale effects on costs 

 in plants preparing an eviscerated product. 



Economies of scale are much more pronounced for plants processing 

 broilers than for those processing fowl. Under standard conditions, and 

 with each of 10 sizes of model units operated at 100 percent of capacity, 

 unit costs in processing broilers decline from 5.1 cents per pound ( live 

 weight basis) at 150 birds per hour to 2.6 cents per pound at 10,000 birds 

 per hour. About 75 percent of the decrease occurs between the smallest 

 (150) unit and the 2,400 size. 



In contrast, unit costs in processing fowl decline from 4.0 cents per 

 pound at 120 birds per hour to 2.6 cents per pound at 6.000 birds per hour. 

 About 85 percent of the decrease occurs between the smallest (120) model 

 and the 480 size. Because of the aggregate volume of fowl available and its 

 seasonal and area distribution, it would be impractical for large plants to 

 have fowl as the major product. 



Small plants can enhance their competitive position by utilizing fowl 

 and other heavy market classes, whereas larger plants usually should con- 

 centrate on broilers. Smaller plants may also prove economical in some 

 non-commercial poultry areas, or in situations where the operating margin 

 of the firm can be widened by advantageous buying and selling prices and 

 practices. 



In the short-run, use of depreciated and low-cost resources and sub- 

 standard practices may offset some of the inherent economies of scale. But 

 over a longer period, economic pressures will force a continued reduction 

 in the number of smaller plants and more attention by all plants to the 

 effects of size on costs. Nevertheless, adjustments which individual units 

 make will be affected by institutional and area considerations, including 

 costs of assembling and distributing and the degree of integration involved. 



The present processing system for New England contains substantial in- 

 efficiencies. These relate both to the practices of individual firms and to 

 structural features. 



About 240 slaughtering and eviscerating plants, and a number of addi- 

 tional establishments eviscerating prior to the retail level, processed 427 

 million pounds of poultry in 1957 at an estimated cost of S17.7 million. 

 If all evisceration were done in slaughtering plants and if these plants oper- 

 ated at levels of efficiency comparable to the model units described in this 

 bulletin, processing costs could be reduced to $16.1 million. 



However, one-fourth as many units, but of larger average size and with 

 capacity operation at model levels of efficiency, could have processed the 

 same volume for $14.1 million. In future years, economic forces will cause 

 reductions in unit numbers and increases in unit size. If output were ex- 



