Marketing New England Poultry 



2. Economies of Scale in Chicken 



Processing 



by 

 r.eorge R. Rogers and Edwin T. Rardwell" 



I. Objectives and Melliods of Study 



The developments of new technology in poultry processing, a widening 

 mass-market demand for chicken, and structural changes in the industry 

 have focused increased attention on the enhancement of efficiency through 

 increased volume. This report analyzes the economies of scale inherent in 

 chicken processing, and the effects which such conditions could have on the 

 efficiency of ihe New England industry and individual firms within it. 



Expansion of plant capacity is likely to be considered by management in 

 many processing plants. Hence, the inclusion of plants with a wide range 

 in capacity ( f 50 to 10,000 broilers per hour) will provide a measurement 

 of the effects of expansion. In 1956 when this study began, the largest 

 New England plants approximated 5,000 broilers per hour in capacity. By 

 early 1958, some plants were approaching 7,500 per hour. The minimal 

 level (150 broilers per hour) separates plants oriented toward supplying 

 wholesale and jobbing outlets from those engaging in direct-to-consumer 

 and retailer selling. 



Economies of scale in New York Dressing broilers and fowl were sug- 

 gested by an earlier analysis of selected major cost items. However, it was 

 anticipated that inclusion of all cost items and addition of the eviscerating 

 operation might affect the position of processing units of various sizes. ^ 

 Thus, this report examines the question of economies of scale in plants 

 producing eviscerated broilers and fowl. 



Ltilization of excess holding space in the feeding station is of major 

 importance in the transition of plants from dressing to straight-line eviscer- 

 ating. In the analysis of plants producing New York Dressed poultry, hold- 

 ing capacity was provided for a full day's volume. Most plants operating 



* Mr. Rogers is Agricultural Economist, Market Organization and Costs Branch. 

 Marketing Research Division, Agricultural Marketing Service, U.S.D.A., stationed at 

 the University of New Hampshire. Mr. Bardwell is Cooperative Agent, New Hampshire 

 and Massachusetts Agricultural Experiment Stations and Agricultural Marketing Ser- 

 vice, U.S.D,A., stationed at the University of New Hampshire. 



1 Rogers, G. B., W. F. Henry, A. A. Brown, E. T. Bardwell, and D. L. Deoss, 

 Economies of Scale and Current Costs in New York Dressing Broilers and Fowl, 

 University of New Hampshire, Agricultural Experiment Station, Agricultural Economics 

 Research Mimeo No. 20. March 1958, p. 8, 15-16. 



