iiig 69.2 million pounds annually through a hroiler planl with a capacity 

 of 10.000 birds per hour would cost .1l)l.o2o.00(). Costs for the same volume, 

 processed through two plants of 5.000 broilers per hour capacity, would 

 total $1,978,000, or $150,000 more. 



Figure 5 shows a relatively smooth economies of scale curve except for 

 the 1.200 broilers per hour plant. Although the average cost per pound at 

 capacity (1,200) is lower than at capacitv for the 600 size, the introduction 

 of many types of mechanized equipment produces a slight deviation from 

 a smooth, theoretical curve. However, these points apparently represent 

 optimum levels for plants of these capacities. The combinations of labor 

 and capital chosen, insofar as the dressing operation is concerned, are 

 least-cost combinations determined by the partial budgeting technique.^ ^ 

 The 1,200-size may not be an optimum capacity for the level of mechan- 

 ization employed. Observation of plants which approximated this capacity 

 when the study was begun indicates a shift toward larger sizes. 



When the average cost curves for the 10 model plants are plotted in rela- 

 tion to percent of capacity (30 to 130 percent), unit costs are successively 

 lower, almost without exception, for each percentage level as plant size 

 increases. Relative advantages are minimized at 100 percent of capacity, 

 but widen below and above this level (Figure 6). This suggests that each 

 succesively larger plant has an advantage over the next smaller unit. Net 

 differences in unit costs provide a measurement of the savings or increased 

 revenues which the firm with the less efficient plant must accomplish by other 

 means if it is to remain competitive. 



Fowl 



Economies of scale accruing to successively larger plants are consider- 

 ably less with fowl than with broilers. The smaller number of head per 

 hour are more than offset by the difference in weight per bird. Hence, aver- 

 age cost per pound for processing fowl in any plant is lower than for 

 broilers. 



The total unit cost difference from the high-cost (120 fowl per hour) 

 plant to the low-cost (6.000) plant is only 1.386 cents per pound. Almost 

 85 percent of this saving occurs between the 120 and 480 fowl per hour 

 plants. Between the 480 and 6.000 sizes, unit costs decline onlv 0.313 cents 

 per pound, with a net difference in annual volume of 65.4 million pounds 

 (Table 3). The difference in unit costs for fowl is substantiallv less than 

 the 1.161 cents per pound savings between the comparable plants process- 

 ing broilers which have a net difference in annual volume of 65.1 million 

 pounds. The total dollar savings in processing a given quantity of fowl 

 through a single larger plant rather than two or more smaller plants would 

 still be substantial. 



The larger plants would experience great difficulty in obtaining required 

 quantities of fowl because of the smaller aggregate supply and its marked 

 seasonality. Assemblv costs would soon become prohibitive in most periods 

 of the year. Hence, the discussion of economies of scale in processing 

 fowl and other heavy birds become somewhat academic excluding plants 

 with capacities of 3.000 per hour or less. Fxcept in a typical situation and 

 for smaller plants, such market classes are likely at best to be a sup})lemenl 

 to supplies of broilers. 



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17 



