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Advances in Social Sciences Research Journal – Vol. 8, No. 11

Publication Date: November 25, 2021

DOI:10.14738/assrj.811.11187. Bassyouni, G. A., El-Kawy, A. E. E. A., Zahran, H. A., & Kamal, E. M. (2021). Effect of Broiler Prices on Logistics and Supply Chains in

Developing the Poultry Industry in Egypt. Advances in Social Sciences Research Journal, 8(11). 246-264.

Services for Science and Education – United Kingdom

Effect of Broiler Prices on Logistics and Supply Chains in

Developing the Poultry Industry in Egypt

Gaber A. Bassyouni

Dept. of Agric. Econ., Fac. of Agri. (Saba Basha), Alex. Uni., Egypt

Abd El-Kareem E. Abd El-Kawy

Dept. of Agric. Econ., Fac. of Agri. (Saba Basha), Alex. Uni., Egypt

Hanan A. Zahran

Dept. of Agric. Econ., Fac. of Agri. (Saba Basha), Alex. Uni., Egypt

Ehab M Kamal

Dept. of Agric. Econ., Fac. of Agri. (Saba Basha), Alex. Uni., Egypt

ABSTRACT

This study aimed to study the effect of changes of broiler prices on the profitability

of broiler logistics under Egyptian conditions. This study was undertaken during

the period 2016 – 2020 on random cycles of both broiler and layer farms in three

different provinces which were Menofia, Kaliobia and Giza. The data were collected

from a cross-sectional survey on the broiler and during the data collection the

researcher was contact with the poultry holders and managers. The data were

collected from the accurate records which available in the poultry farms of the

study areas and from the structured questionnaires methods which established by

the researcher and admitted to the farmers during the time of interview, also, the

data collected from the Agricultural Directorates of governorates, Livestock

development sector and Economic Affairs Sector. The data includes data about

logistics costs, returns and net prpfits of broiler production, the data were analyized

statistically and economically. The price of broilers considered as the main variable

affecting the profitability of broiler production farms. The price of poultry affected

by the costs of production costs that includes variable and fixed costs. The results,

concluded that, the higher prices of broiler prices observed during the years 2018,

2019 and 2020 than that of years 2016 and 2017 and in winter seasons than the

summer seasons. The increasing of broiler prices causes increasing returns level

for broiler sales, the summer seasons achieved a higher net profit than the winter

seasons due to increasing the level of production costs in winter seasons than the

summer seasons.

Key words: Broiler prices - logistics - supply chains - poultry industry - Egypt

INTRODUCTION

Globally, chicken meat consumption has raised faster rate than any other animal protein

source. Modern broiler chickens have become reaching for the marketing weight (2 kg) as early

as 5 to 6 weeks. The result of advancement in genetics, feed utilization and management

practices during the last couple of decades [Devatkal et al., 2019 and Wu et al., 2019]. The most

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Bassyouni, G. A., El-Kawy, A. E. E. A., Zahran, H. A., & Kamal, E. M. (2021). Effect of Broiler Prices on Logistics and Supply Chains in Developing the

Poultry Industry in Egypt. Advances in Social Sciences Research Journal, 8(11). 246-264.

URL: http://dx.doi.org/10.14738/assrj.811.11187

commercialized variety and profitable livestock of the avian species are chickens in the world.

Chickens turn many forms of feed into protein food more efficiently than other animal species,

also broiler chicken production more preferable in comparison to other types of meat like pork,

beef and fish. So consumer demand trends reveal a raise in white meat consumption and a

decrease in red meat [González-García et al., 2014 and Nkukwana, 2018].

The popularity of chicken by consumers occurred because of low prices. Chicken meat is

considered healthier than beef and pork; and processors provide an array of products such as

whole chickens, chicken parts, and a plethora of value-added products [Davis et al., 2018].

Within broiler meat, consumers prefer white meat (chicken breast and wings) to dark meat

(thighs and legs) by a 2-to-1 margin primarily for health reasons, as white meat includes more

protein and less fat than dark meat [Arumugam, 2011]. Consumers benefit from the rapid

advances in productivity because broiler production has outpaced beef and pork production

and broiler demand, resulting in relatively low broiler prices.

Logistics refers to the overall process of managing how resources are acquired, stored, and

transported to their final destination. Logistics management involves identifying prospective

distributors and suppliers and determining their effectiveness and accessibility. Logistics

managers are referred to as logisticians [Xiang, 2014].

In recent years, the Egyptian poultry production has become an industry, rather than an

agricultural activity. Growing consumer demand for affordable animal protein has prompted

an increase of broiler chicken meat production in Egypt. At the same time, lack of Government’s

involvement in outlining the rules for the industry development, or better to say absence of

National strategy for poultry industry development, has resulted in numerous issues due to

HPAI outbreak, massive live bird market, inefficient production practices, etc [Ahlam El Nagar

and Ibrahim, 2021].

Despite its improved self-sufficiency in the broiler meat sector, the country will remain

dependent on imports of feed ingredients, as well as primary genetic material (GPS), vet

medications, vaccines. The threat of feed grain price increases or decreased import tariffs

protection put pressure on local poultry producers to become more competitive. To do so, they

will need to invest in the efficiency of primary production and higher food quality and safety

standards.

Egyptian poultry industry has evolved into a very significant sector of Egyptian agricultural

production. The times when growing poultry in the backyard farms was only a traditional

activity that supported the well being of particular household are gone. That does not

necessarily mean that backyard poultry production disappeared rather then the role of

backyard poultry production for household consumption in the overall national poultry

production became minimal. Since middle of the 20th century there have been various vectors

and conditions for poultry sector development in Egypt. The socialist era is known for its

generous subsidies and support. Today the poultry industry in Egypt is predominantly market

driven and has to find its way in the turbulent waters of global market [Ahlam El Nagar and

Ibrahim, 2021].

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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 11, November-2021

Services for Science and Education – United Kingdom

The prices of the kilogram poultry sale considered as one of the most important factor affecting

broiler production and prpfitability, as it affected positively on the returns, costs of production

and net profit. As of July 2020, the monthly average price for farm chickens in Egypt was 28.86

Egyptian pounds (1.84 U.S. dollars) per kilogram), which illustrated a slight decline of 1.27

percent from the preceding month. From January 2019 onwards, the average price per

kilogram ranged between 25.42 Egyptian pounds (1.62 U.S. dollars) and 34.44 Egyptian pounds

(2.20 U.S dollars). In April and May 2020, the price increased to 30.72 Egyptian pounds (1.96

U.S. dollars) per kilogram and 31.19 Egyptian pounds (1.99 U.S. dollars) per kilogram,

respectively, which can be related to an increase in demand due to coronavirus (COVID-19)

curfew. Furthermore, throughout the period under review, the mean price of farm chicken

more or less followed the same trend as for local chicken prices, with slight differences, as both

items are bound by the same market forces [Hafez and Attia, 2020].

The broiler prices affected by the logiostics of broiler production that includes variable and

fixed costs. Cost of production is the major factor affecting prices of kilogram poultry sale , and

so profitability of commercial broiler operation if management would not be a limiting factor,

as poor management will call on for increased production costs, as cost of production was

reduced in optimally utilized sheds, on concrete type floor and for broilers kept under good

hygienic conditions [Asghar et al., 2000]. The cost of production grouped into (i) fixed costs, (ii)

variable costs and the sum of (i) and (ii) called total costs of production [Muhammad, 2002].

-Variable costs (VC), It is the costs which changes with change of production and characterized

by wide variability from time to time, place to place and management to management and it

include the following costs: (i) feed cost (ii) day old chick cost (iii) medication and vaccination

cost (iv) labor cost (v) fuel or electricity cost (vi) bedding cost (vii) miscellaneous and

transportation cost [Asghar et al., 2000 and Muhammad, 2002].

The second type of the logistics costs includes Fixed cost, wich is the costs which not changed

with change of production and includes the capital invested on building construction and

equipments so; its proper utilization will ensure better returns. It contributes a small percent

of the total cost of production in terms of depreciated cost for building and equipments

according to number of years in which consumed as 25 years for building houses and 5 years

for equipments [Muhammad, 2002].

The Total costs (over all costs) of broiler production defined as the summation of total fixed

and total variable costs and its curves take the same shape of variable costs curves but found

above it, the total costs differed according to type of the farm sector. The feed cost is one of the

major variables that affecting total costs as it constitute about 65-70% of the total cost of

production [Bhuiyan, 1998].

The main effects of broiler prices and its effects on profitability of broiler farms attributed to

its effects on the total returns and net profit (TR), the total returns from broiler production

mainly come from (i) live weight of broiler sales (ii) litter sales as good fertilizers in agriculture

fields. The total returns influenced by several factors as kg market price, mortality percent, live

body weight at sale, market age, feed wastage and cost of production. The returns and

profitability of broilers decreased with increasing of mortality percent from 2.5 to 10 % and

increased of market age from 53 to 62 days [Zahir-ud-Din et al., 2001].