Summary and Conclusions 



The spatial activities of broiler assembly and chick and feed dis- 

 tribution are an integral part of the typical broiler producing and 

 marketing firm. The purpose of this report is to investigate how these 

 costs are affected by changes in firm size and volume and increases in 

 broiler production density. 



The unit cost of each activity was derived for six firms ranging in 

 size from an annual volume of 4.15 million pounds of live broilers to 

 69.16 million pounds, with broiler production density at three levels. 

 The densities considered were 1,000, 5,000, and 25,000 pounds of 3.5 

 pound live broilers per square mile per year. A model was developed 

 and budgeting was used to derive the resource requirements and the 

 cost for each activity. 



Broiler assembly is the major spatial cost, followed by feed and 

 chick distribution. As firm size, and thus volume handled, is increased 

 at any one of the three density levels, the unit broiler assembly cost 

 increases. The unit feed distribution cost also increases continuously 

 with increasing firm size at the two lower density levels. At the highest 

 density level, the unit cost decreases slightly and then increases with 

 increases in firm size. The unit chick distriliution cost decreases over 

 a range of firm sizes before it begins to increase. 



At the 1,000 and 5,000 pound density levels, the total unit spatial 

 cost increases with increasing firm size. The cost increases from 1.425 

 cents a pound for a firm handling 4.15 million pounds of live broilers 

 to 2.095 cents for a firm handling 34.58 million pounds at the 1,000 

 pound density level. At the 5,000 pound density level, the cost increases 

 from 1.007 cents a pound for the firm handling 4.15 million pounds to 

 1.463 cents for the firm handling 69.16 million pounds annually. At the 

 highest density level considered, the cost at first decreases from .816 

 cents a pound for the firm handling 4.15 million pounds annually to .786 

 cents a pound for the 12.45 million pound firm. Further enlargement in 

 firm size results in increasing unit cost up to .963 cents a pound for the 

 firm handling 69.16 million pounds. 



With constant firm size and increases in production density, a firm 

 can reduce spatial costs substantially. Increasing density from 1,000 to 

 5,000 pounds per square mile per year offers reductions ranging from 

 $17,000 for the firm handling 4.15 million pounds to $303,000 for the 

 firm handling 34.58 million pounds a year. Reductions are not as 

 substantial when density is increased from the 5,000 to the 25,000 pound 

 level. The annual reductions range from $8,000 to $138,000 for the above 

 range in firm sizes. The two larger firms processing 51.87 and 69.16 

 million pounds would have reductions of $239,000 and $346,000 respec- 

 tively. 



