A Model for Estimating How Variability of Biological Parameters Affects Economic Factors in an Integrated Turkey Farm

Abstract:     
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, N50

working papers series