CHAPTER 4

CONCLUSION
4.1 FINDINGS OF THE STUDY
To have a general picture of the current pathway of nutrient use from broiler
farms at a glance, flowcharts showing the destinations and use of manure and
dead animals by production arrangement . The proportions of farm household
using such pathway are indicated in parentheses.
The most common scenario of disposal of manure for the broiler farms surveyed
was to sell it. Seventy-nine percent of the smallholder broiler producers sold it,
eight percent gave it away, fourteen percent used it on their own farm, and less
than one percent dumped it. Ninety-five percent of the large broiler producers sold
it and five percent used it on their own farms. Most of the manure was piled in
either open sheds (72.4%) or closed sheds (25.2%). Only a small amount (2.4%)
was immediately used after being cleaned out. When used on farm it was used
primarily as an organic fertilizer. When it was used off farm it was used either as a
fertilizer, for brick building, fuel bricks, or mushroom substrate. There was
similar mortality in the growout phase for small-scale producers (3.7% mortality)
and large-scale producers (4.2% mortality). Most dead animals were buried or
sold to a secondary market as a source of food. Close to 70% of both small and
large scale broiler producers buried their dead animals. Selling frozen dead birds
to a secondary market was also practiced by small-scale producers (26%) and
large-scale producers (19%). Incineration was practiced more by large-scale
producers (9.4%) than small-scale producers (3%). This may be due to the capital
cost involved. Though feeding dead animals to fish is reported to be a practice in
India, none of the households surveyed disposed of their dead birds in this
manner.
The most common scenario for the disposal of manure in layer farms surveyed
was selling it. Ninety percent of the small-scale layer farms sold it and ninetythree percent of the large layer farms sold it. Probably due to its market value,
none of the small-scale producers surveyed gave the manure away and less than a
half a percent of large-scale farmers gave the manure away. Most of the manure
was stored in open sheds, though some stored it in closed sheds. The large-scale
producers surveyed report that 72% was stored in open sheds while only 26% was
stored in closed sheds. Only 2.3% of the large-scale producers used it
immediately. Similarly, small-scale layer producers stored most of the manure in
either open (81.3%) or closed (27.8 %) pits. Approximately 2% of the small-scale
layer producers used the manure immediately on their own farm. When manure
was used in the farm, small and large layer producers used it as an organic
fertilizer. Similarly as for broilers, when layer manure was used off farm, it was
used either as a fertilizer, fuel/brick, brick building, or mushroom substrate.

There was similar mortality in the grow-out phase for small-scale layer producers
(7.6% mortality) and large-scale layer producers (11.2% mortality). This was
slightly higher than for broilers, but it is not surprising given the longer life span
of the animals. Most dead animals were buried or sold to a secondary market as a
source of food. Close to 65% of both small and large scale broiler producers
buried their dead animals. Small-scale layer producers (27%) and large-scale
producers (18%) also practiced selling frozen dead birds to a secondary market.
Incineration was practiced more by the large-scale producers (15%) than the
small-scale producers (5%). Though feeding dead animals to fish is reported to be
a practice in India, none of the households surveyed disposed of their dead birds
in this manner.
Manure Use in the Households surveyed
Environmental problems from broiler production and layer do not seem to occur
in some households when a) they are able to sell the manure, and b) they are able
to spread manure on agricultural lands. Markets for both broiler and layer manure
do exist and most of the farms surveyed have access to such markets. In fact, 79%
of small-scale broiler households and 90% of the small-scale layer households
and almost all of the large-scale broiler and layer growers in the sample are able
to sell poultry manure At the point of disposal, there is more or less zero discharge
of waste into the environment for these raisers.
Rice and sugar cane are the main crops grown in the regions surveyed and where
manure is applied. In Andhra Pradesh, the application of nitrogen for rice is 120
kg/ha and the application of phosphorous is 60 kg/ha. The uptake of these
nutrients for these crops is 100 kg/ha of nitrogen and 31 kg/ha for phosphorous.
The application of nitrogen for sugarcane in this state is 250 kg/ha of nitrogen and
the application of phosphorous is 100 kg/ha. The uptake of these nutrients is 83 to
105 kg/ha of nitrogen and 32-40 kg/ha of phosphorous. In Haryana, the
application for rice is the same as Andhra Pradesh but the uptake is slightly
higher. The crop uptake for rice in this state is 100 kg/ha for nitrogen and 32-35
kg/ha for phosphorous. The application of the nutrients for sugarcane is 150 kg/ha
of nitrogen and 90 to 100 kg/ha of phosphorous. The crop uptake is 100 to 105
kg/ha of nitrogen and 32-35 kg/ha of phosphorous.
6.3 Dead Bird Disposal in the Households Surveyed
As for disposal of dead animals, the most common disposal method is burial.
Approximately 70% of both small and large-scale producers bury their dead
broilers. Similarly, over 60% of all layer producers bury their dead layers. Some
raisers also incinerate dead birds, but a higher percentage of these were largescale producers.
2

The second most common method of disposal is to sell them in the secondary
market, which is largely for human consumption.
6.4 Environmental Cost Borne by Broiler and Layer Farms
There are differences between large and small growers in the cost control of flies,
for removal of manure and dead animals. Small-scale layer producers spend more
Rs. per batch for the removal of dead birds than larger producers. There was a
considerable difference in expenditures between small and large-scale layer
producers in controlling flies and cleaning out the sheds. Large-scale layer
producers spent nearly double per batch than small-scale producers. Though the
difference for controlling flies, removal of dead birds, and shed cleaning per batch
for broiler is less pounced than for layers, small scale broiler producers
consistently spent less per batch than large broiler producers.
The environmental differences in environmental mitigation costs per output. The
average expenditure for environmental abatement in India was 1.88 RS per kg of
broiler meat. When broken down into size categories small-scale broiler producers
spent more on environmental abatement than large-scale producers. Small-scale
broiler producers spent on average 2.5 Rs. per kg of broiler meat on
environmental abatement effort compared to an expenditure of 0.4 Rs. per kg of
broiler meat by the large-scale broiler producers. Small-scale layer producers on
the other hand spent slightly less per egg (0.0004 Rs. per egg) than large-scale
layer producers spent (0.0002 Rs. per egg).
It also illustrates the mean farm cost by output size for layers. Farms producing on
average 25,622 eggs had slightly higher environmental costs per 100 eggs than
larger or smaller scale operators.
4.2 CONCLUSION
Profitability defined as profits (excluding family labour wages) per unit of output
does not differ significantly between small-size and large-size farms, whether
layer or broiler. In other words, profitability per unit is not significantly affected
by scale of operations.
The main factors that determine profitability are the price of chicks (DOCs), price
of labour (wage rate), price of feed, price of eggs/broilers, and Feed Conversion
Ratio (FCR). Profitability is inversely related to the price of chicks, wage rate,
price of feed, and FCR, and is positively related to the price of eggs/broilers. (The
FCR and wage rate are significant only for broilers).

Though profitability per unit does not differ significantly between small farms
and large farms, the efficiency of these two types of farms does differ
significantly. Small farms are relatively inefficient, and the principal reasons for
their inefficiency are high transaction costs and pollution abatement costs
associated with policy induced distortion. This is specially true for layer farms. To
be more precise, small producers enjoy fewer advantages compared with large
producers in terms of obtaining information, marketing, and transportation and
storage facilities (transaction costs). At the same time, small producers are
observed to spend more effort per unit of poultry output than large producers on
collecting, drying and transporting poultry manure (pollution abatement costs).
Speculatively, this could be due to the lower opportunity cost of their own labor,
or perhaps to the greater incentive to keep the surrounding household and
neighborhood environment clean in a close-settled smallholder setting.
In addition to transaction costs and pollution abatement costs, differences in the
amount of implicit policy subsidies received by farms across regions/states are
also found to affect the relative profit efficiency of small and large producers.
Large farms in Andhra Pradesh, for example, are more profit inefficient than their
smaller counterparts in the state of Haryana, because Andhra Pradesh levies a four
percent processing tax on poultry products in addition to the usual sales tax on
poultry feed, while Haryana levies no such taxes.
A significant difference exists in the profitability of contract farms vis--vis
independent farms. The profitability of contract farms in this study, whether large
or small, is generally lower than that of independent farms.
These study results do provide valuable inputs to policymaking. Approximately
15 million people in India are currently making a livelihood from poultry farming,
and many of them are small producers. These small farmers are severely
constrained by the cost of inputs/outputs, a lack of adequate infrastructure, poor
transport facilities, an inefficient marketing system, and no proper means of
disseminating information. In order to strengthen these 15 million farmers and
make them more competitive, the following policies may be recommended.
First, it must be noted that the poultry industry is highly dependent on the feed
industry feed alone constitutes 65 percent of the cost of broiler and egg
production. Therefore, any price movement in the feed sector will have a direct
positive effect on the prices of eggs and broilers. The main feed ingredients used
are maize, soya, rice bran, and other cereals. Of these, maize is the most critical
one in India. Domestic production of maize has remained almost static at around

10 million tonnes per annum for the last decade or so. The poultry industry alone
requires about five million tonnes per annum.
Other users of maize in India include the starch industry, the cattle feed industry,
the seed sector, and the general population. Severe shortages of maize have
frequently existed, causing the price to shoot up and leading to crisis and turmoil
in the poultry industry. Imports of maize were at one time restricted, but, since
April 2000, imports have been approved under Open General License (OGL).
There is, however, a 15 percent duty levied on imports of up to 450,000 tonnes,
and it has been proposed that that duty increase by 50 percent (Tariff Rate Quota
or TRQ) on quantities greater than 450,000 tonnes.
According to estimates prepared by the Poultry Federation of India, the proposed
hike in the import duty on maize could increase poultry feed costs by as much as
one rupee per kg. It seems likely that such a hike will hurt independent farmers
more than contactors and small farmers more than large ones, other things equal.
Larger and more vertically-integrated enterprises have greater flexibility and more
resources than small independents to adjust to price rises in a single key input.
Providing all producers, but especially smaller ones, with feed at a competitive
price might require that (a) the present TRQ be raised or abolished, and (b)
domestic production of maize be increased by increasing the yield per hectare,
which is currently the lowest in the world at 1.4 tonnes (as compared with a world
average of 4.2 tonnes). In order to increase domestic production of maize, though,
India may have to diversify its agricultural production through contract farming
and/or cultivation of GMO seed varieties.
Second, serious efforts are warranted from the government of India to improve
basic infrastructure facilities (stoppage and transportation, including cold chain),
access to credit, dissemination of information, and the marketing system, all of
which have severely constrained small farmers and much more so than large
farmers. For example, in the case of the marketing system, poultry products
currently pass through various intermediaries before they reach the final
consumer. The presence of so many intermediaries between the producers and the
consumer harms the interests of both the producer does not get a remunerative
price for his product and the consumer pays a high price because of the cascading
profit margins from so many intermediaries. In order to address this, the
marketing system should also grow along professional lines that may include the
use of the traditional channels of traders to some extent in the intervening period
before the marketing system is substantially improved.

Third, the government should endeavour to create a favourable economic

environment for increasing capital formation and investment in poultry by
rationalising the tax structure and removing distortions in incentives. Several
Indian states levy taxes on poultry processing and feed manufacturing, which
tends to increase production costs and retard industry growth.
Finally, the Indian poultry sector, classified neither as an agricultural sector nor an
industrial sector, receives far less support than its potential contribution might
indicate. While the poultry growers continue to pay the same rate of income tax as
any other industry, they receive neither subsidised power nor water, unlike the
agricultural sector. Poultry producers also do not receive other fiscal and
regulatory benefits and concessions available to the industrial sector. This
ambiguity in the status of poultry producers is currently hindering the potential of
this important sector. Improved governmental policy would treat all small poultry
producers as agriculturists, extending the same benefits and concessions to them
as to other agriculturists.