A Model for Estimating How Variability of Biological Parameters Affects Economic Factors in an Integrated Turkey Farm
Gregory Yom Din
Open University of Israel - Department of Management and Economics
Agro Technology Ltd., Israel
affiliation not provided to SSRN
March 28, 2010
Turkey meat is marketed as a healthier alternative to red meat but the necessary investment in integrated turkey projects is 65% higher than for similar broiler projects. This explains the importance of rigorous evaluation of new turkey farms, including their sensitivity to biological parameters. We present a method of evaluating poultry projects that takes simultaneous variability of several biological parameters into account, using a bio-economic model, stochastic simulation, and an integrated turkey farm in Russia as a real-life example. The algorithm based on the Cholesky decomposition of the covariance matrix was used to generate a multivariate normal random vector of biological parameters. The bio-economic model takes into account simultaneous variability of major input biological parameters related to all stages of an integrated poultry farm: survival, hatchability, ratio of carcass weight to live weight, and number of eggs per layer. The variability of the output economic indices was indicated by coefficients of variation (CV) which were 100-108% of the CV of the biological parameter, for production cost, and 163-168% for project profitability. Such an estimation can be used to analyze a project’s economic risks, i.e., variability in production cost and profitability.
Number of Pages in PDF File: 18
Keywords: Bio-Economic Model, Integrated Poultry Farm, Stochastic Simulation, Variability, Risk
JEL Classification: C15, N50working papers series
Date posted: March 28, 2010
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