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Optimal Selling Prices for Small Sized Poultry Farmers

Picture of chicks

Wednesday 13 September 2017, 12.00PM to 1.00pm

Speaker(s): Professor Hidefumi Kawakatsu, Onomichi City University, Japan

Abstract

There are many small and middle sized poultry farmers in Japan. Each small sized poultry farmer would normally sign a certain exclusive contract with a dominant buyer such as large wholesalers or meat processors, which signifies that their financial conditions are completely dependent upon the order quantities of the dominant buyer. There is a possibility that poultry farmers could stabilise and secure profit by producing their own branded chicken. This study considers the situation where a small sized poultry farmer not only produces Broilers (Product 1) to meet the demand of the dominant buyer, but also introduces their own Branded chicken (Product 2) for other customers. The breeding area is limited and divided into two regions; one is for Product 1 and the other for Product 2. Each product has a different breeding period. The product with longer breeding period has higher selling prices. The poultry farmer’s total profit per unit of time is formulated as a function of selling prices and it has been proven that there exists a unique optimal selling price for each product, which maximises the total profit. Some numerical examples are also presented.

Location: LMB/102b