Marketing New England Poultry 



5. Effects of Firm Size and Production 

 Density on Assembly Costs 



By 

 William F. Henry and Clark R. Burbeei 



I. Introduction 



The purpose of this study is to determine the net effects on hroiler 

 assemhly costs of changes in the size of assemhly firms and in the den- 

 sity of hroiler production. Such information can then he used hy cur- 

 rent or prospective commercial assemblers in their business decision 

 making. 



A previous study in this series described the structure and perform- 

 ance of the broiler industry in New England as it now exists.- It in- 

 dicated that (1) most of the poultry is assembled by large commercial 

 firms, (2) the assemhly of most of the poultry is done or contracted by 

 firms that have decision-making powers over placement of chicks and 

 time and location of processing, (3) the small "old type" firms are stead- 

 ily losing out to the large "newer type" firms, (4) some small live poul- 

 try dealers and slaughterers have specialized and limited markets to 

 which they can profital)ly cater at high prices, and (5) the large com- 

 mercial assemblers operate in the areas of high broiler production den- 

 sity. Because of this set of conditions, the analysis showed that the per- 

 formance of firms in labor and truck productivity improved with in- 

 creased size of firm; and consequently, that hauling costs per pound 

 dropped as firm size increased. This is understandable because the larger 

 firms in the New England region assemble from commercial broiler 

 growing areas where density of broiler production is high. 



If firms face the same production density in the broiler supply areas 

 from which thev assemble, then as firm size increases and other factors 

 remain constant the costs of assembly per pound should also increase. 

 This increased cost will be due to the influence of the greater distances 



1 Respectively Agricultural Economist, Agricultural Experiment Station, University 

 of New Hampshire and Agricultural Economist, Animal Products Branch, Marketing 

 Economics Division, Economic Research Service, U. S. Department of Agriculture 

 stationed at the University of New Hampshire. 



2 G. B. Rogers and E. T. Bardwell, MARKETING NEW ENGLAND POULTRY, 

 4. Structure and Performance of the Assembly System, University of New Hampshire, 

 Agricultural Experiment Station Bulletin No. 476, April, 1963. 



