Short-Run Average Costs 



Output of mills often drops over short periods because of seasonal 

 fluctuations in broiler production. During such periods of reduced out- 

 put the capacities of mills do not change. However, production costs per 

 ton generally rise because fixed costs of mill ownership and management 

 stay the same, and efficiency in the use of labor is impaired. The effects 

 of such short-run changes in output on average cost for each size of mill 

 are shown by the dotted curves in Figure 3 and are given in Appendix 

 Tables D-1 through D-4. Costs were determined for each mill with out- 

 put of broiler feed at 40, 60, 80, 95 and 100 percent of capacity. Breeder 

 feed tonnage is held constant because the production cycle for breeders 

 is not affected by short-run changes in broiler production. 



V. Cost of Bulk Feed Distribution 



New England feed manufacturers have two methods for distributing 

 bulk feed to farms. Mills located in the feed consuming areas rely on 

 direct mill-to-farm shipments by truck. Other firms with mills located 

 substantial distances from feed consuming areas use railroads for the 

 movement of feed to distributing centers. The feed is stored locally and 

 transhipped to farms by truck. 



The trend is toward increased direct mill-to-farm distribution. Mills 

 are constructed at strategic locations in major feed consuming areas and 

 bulk distribution is usually confined to a 50 to 70-mile radius. 



The purpose of this section is to develop the costs of direct mill-to- 

 farni bulk feed distribution. Costs are determined for six of the eight 

 model feed mills discussed in the previous section for each of three levels 

 of poultry production density. 



Procedure 



The procedure involves establishing and standardizing a number of 

 different factors which affect distribution costs. These factors include 

 the number and volume of distribution operations, poultry production 

 densities, location and distance from the mill of the poultry production 

 units, technology and technical input-output relationships for deter- 

 mining total inputs by each firm. A schedule of the number and size of 

 daily deliveries is developed from a number of assumptions and condi- 

 tions pertaining to the conduct of the operation, feeding practices, feed 

 input-output relationships, and flock sizes. The number of trucks and 

 drivers required are calculated for each firm size and density level, and 

 standardized costs are applied to the results. In addition, inputs and costs 

 are estimated for other requirements such as administrative personnel, 

 garage, and so on. With all costs determined, analyses are made to deter- 

 mine how changes in firm size and production density affect feed dis- 

 tribution costs and investment. 



1. Number and Size of Firms, Production Densities, and Location 

 of Poultry Production Units^ — Six feed manufacturing mills vary- 



1 This section adapted from W. F. Henry and C. R. Burbee, op. cit. 



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