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Gateway to poultry production and products

Economic aspects

Across regions, poultry production is quickly becoming more intensive, geographically concentrated, vertically integrated and linked with global supply chains. In many countries, commercial broiler production is characterized by the contract growing system. In such system, production units are owned and operated by contract growers, who are typically supplied by an integrator with the chicks, feed and medication they require, and are paid according to their production and production efficiency. The grower’s contract is essentially a means of cost- and risk-sharing with the integrator. The grower benefits from economies of scale and reduced transaction costs, and also reduces the risks associated with large price fluctuations. The integrator gains the opportunity to be more flexible in adjusting the production volumes in response to changes in the season or in domestic or export demand. Contract growing provides employment and income opportunities for smaller poultry producers, but countries need to establish regulations that prevent contract growing from facilitating the introduction of negative externalities to growers, poultry workers, local communities and the general public.

Despite these rapid structural changes, small family poultry flocks still represent a vital source of income for poor rural households. Poultry production is generally considered as supplementary to other livelihood activities, but poultry is actually a form of saving and insurance, and contributes to income diversification. Birds can easily be sold for cash (poultry is often described as farmers’ “petty cash”) and serve as a buffer  against shocks such as bad harvests. As poultry flock grows, surplus birds may be bartered for goats, thus further improving a poor family’s livelihood and food security. In Senegal, for instance, a small goat is worth five to six hens. Bartering poultry is common in economies with currencies that are unstable or scarce.