riiift' course?' (if aitioii mas lie upeii to the small plant operator relative 

 to changing status: li) expaiul the size of his own plant to obtain econ- 

 omies of scale: (2) combine with other operators to achieve efficiencies 

 through greater volume and/or specialization: (3) become a part of an 

 integrated organization. Declining numbers of live buyers and processors 

 may afford remaining firms, particularly smaller ones in low-volume, more 

 distant producing areas, the opportunity to expand volume. Under some 

 conditions several small operators might find it advantageous to combine 

 to: fa) pool resources and utilize a larger centralized eviscerating |)lanl 

 fed by several small dressing plants; (b) establish a new corporation to 

 carry on straight-line evisceration: (c) eliminate duplications in supply 

 and distributing areas; (d) each specialize in performing specific func- 

 tions such as assembly, processing, and distributing. 



Initiation of a production (growing) program for broilers, other young 

 meat chickens, and/or turkeys would provide increased, more stable, and 

 more uniform live poultry for the plant. This could help lower costs. Fur- 

 ther developments could include hatchery and feed mill operations in the 

 integrated organization. 



T^ocational considerations play an important part in the prospects of 

 many small plants. The existence of large areas of "non-commerciar' poul- 

 try production enhances the possibility that small plants can survive in 

 them. Large firms may find it to their advantage to by-pass such territory. 

 This may leave small operators without much competition and with relative- 

 ly favorable operating margins for the smaller, scattered, and mixed lots 

 of poultry found in these areas. High assembly costs for large firms and 

 live buyers can enhance the competitive advantage of the small operator 

 located in the area and may offset, in part, higher plant operating costs. 



Selling prices of processed poultry in "non-commercial" poultrv produc- 

 ing areas, particularly if they are deficit, may become more closely re- 

 lated to wholesale-lot selling prices at large plants plus inbound handling 

 and transportation costs. In addition, small firms may widen their overall 

 operating margin by engaging in local distributing to jobbing and retail 

 outlets. 



Unit costs derived in the economies of scale analysis assumed uniform 

 wage rates and credited value to all labor required at the prescribed rates. 

 Resources and practices were also standardized. In practice, factor prices, 

 such as wage rates, may be lower in some smaller plants. The use of sub- 

 stantial amounts of family labor may also reduce the cash cost component 

 especially if wages paid family members are lower. Existing plants may 

 be able temporarily to use buildings and equipment already depreciated 

 (»r acquire them at a portion of new cost. So long as they do not engage in 

 interstate commerce and become subject to compulsory Federal Inspection, 

 operate in areas where State and local regulations are less stringent, or 

 are not adversely affected by buyer reaction, costs can be curtailed some- 

 what. Use of second-hand crates and less ice in packing for nearby buyers 

 may also reduce costs. However, most of these measures should be viewed 

 as short-run expedients. 



Most smaller plants currently operate at a lower rate of capacity than 

 larger plants. To the extent that they can solve their supply problems, they 

 can improve their present position. Concentration on market classes other 

 than broilers may offer such an opportunity for small plants. This may 



42 



