Cost efficiency and economies of scale in broiler production in Ghana. A case study of the Ashanti Region.

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The steep decline in broiler production in Ghana is largely attributed to high cost of production. However, empirical evidence from other African countries suggests that low cost efficiency levels among the broiler farms/farmers could be a contributory factor to this soaring production cost. This study, therefore, measured the economies of scale and cost efficiency levels of the broiler farms in the Ashanti region of Ghana. Through multi-stage sampling technique, 114 broiler farms/farmers were selected as respondents for this study. Stochastic cost frontier model was then used in estimating the cost efficiency levels. The empirical result of this study showed that the cost efficiency levels of the broiler farms in the study area ranged from 1.03 to 1.43 with the mean of 1.14. This implies that an average broiler farm in the study area spent about 14% above the frontier cost (minimum cost). Farm size, Farmers’ level of education and technical advice from veterinary services were identified as factors that significantly improved cost efficiency in the study area. On the other hand, economies of scale was computed to be 1.513. Since the value of the economies of scale is greater than one, it implies that there is presence of positive scale economies among the farms. This is an indication that most of the broiler farms in the study area could reduce their production cost by further increasing their scale of production. It is, therefore, recommended that the Government should support the broiler farmers with funds to increase their scale of production in order to benefit from the cost advantage associated with scale. The farm owners should recruit farm managers who have at least acquired formal education up to the Senior High School (S.H.S) standard or at best use them on part-time basis. In addition, more veterinarians should be trained by the government and assigned to the various poultry/broiler farming communities to enable the broiler farmers receive technical advice from a professional source instead of relying hugely on their fellow farmers.
A thesis submitted to the Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the Degree of Master of Philosophy in Agricultural Economics Faculty of Agriculture College of Agriculture and Natural Resources,