Systemic Efficiency 



Substantial opportunities exist for increasing efficiency and reducing costs 

 in the processing system. These can be achieved both by effecting efficiencies 

 within individual plants and by altering the structure of the industry. 



Cost estimates and capacities of model plants can be used to test the 

 efficiency of the present processing system against alternative model systems. 

 Two types of comparison are used here as measures of systemic efficiency; 

 i.e.. aggregate dollar costs of processing specified outputs, and numbers of 

 units required and their potential capacity. 



Table 11 shows the numbers of plants of each of the 10 model sizes used 

 in this study which would have been required to process the 1957 New 

 England chicken output. The total processing cost for each level is also 

 presented. The^e calculations assume that 100 percent of the sales off farms 

 would be eviscerated in processing plants. 



About 427 million pounds (live weight) of the 1957 New England chicken 

 output of 467.9 million pounds I live weight) was slaughtered within New 

 England. About 2.5 million pounds of live poultry moved into New England 

 and 46.1 million pounds of live poultry moved out of the area. The volume 

 of live poultry bought by household consumers is insignificant, i" 



Of the 427 million pounds slaughtered in 1957 within New England, 

 84 percent was in lo large plants. Of the remainder, 12 medium-sized plants 

 accounted for 9 percent and 28 small plants for 3 percent. The balance of 



4 percent, or 15.5 million pounds, was handled by 175 very small plants and 



5 plants processing specialty items such as Rock-Cornish birds. ^'^ 



About 290 of the 427 million pounds of slaughter was eviscerated in the 

 same plants. The estimated aggregate dollar cost of processing for the 

 present (1957) system, prior to the retail level, is estimated as $16.7 mil- 

 lion. An additional volume of 20.0-25.0 million pounds was eviscerated by 

 plants prior to the retail level at a cost of about SI million. ^'^ Character- 

 istics of the present system are summarized in Table 12. 



If all the slaughtering plants in New England had been operated at 100 

 percent of capacity in 1957, 28 percent more volume could have been handled 

 through the system. The 18 large plants alone could have accommodated the 

 entire volume slaughtered in 1957 in the area (Table 12). In practice, 

 attainment of 100 percent of capacity is difficult, but improvement of pres- 

 ent rates of operation is neither impossible nor unlikely. Large plants as a 

 group have led the way toward controlling supply by participating directly 

 in contract growing programs or in informal arrangements. Hence, they 

 are much closer to achieving capacity operation than smaller plants. This 

 fact further increases their competitive advantage in processing under stan- 

 dardized conditions. 



1" These data developed from information obtained in a study of the assembly of 

 live poultry now in progress. 



18 The following intervals determined size classification: 



Large: slaughter in excess of 8 million pounds annually. 

 Medium: slaughter between 1 and 8 million pounds annually. 

 Small: slaughter between 150.000 and 1 million pounds annually. 

 Very small: slaughter less than 150,000 pounds annually. 



1^ This indicates more than two-thirds of New England slaughter was eviscerated 

 prior to the retail level by 1957-58. A sample taken in 1955-56 indicated about two- 

 fifths of volume eviscerated prior to the retail level. 



37 



