Distribution Chain Analysis of Fresh Broiler Chicken in Bulacan

Date

5-2016

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Arlene C. Gutierrez

Committee Member

Mar B. Cruz, Jeanette Angeline B. Madamba, Loida E. Mojica, Dinah Pura T. Depositario

Abstract

Demand for chicken meat has been increasing for the past years as a result of increasing disposable income and changing consumers’ preference towards a healthier protein alternative. In the Philippines, Bulacan is considered as one of the key players in the broiler chicken sector one of the major suppliers of chicken meat in Central Luzon and in Metro Manila. However, the growth of the industry in Bulacan has been hindered due to management practices at the production level and poor transport facilities especially road infrastructures that has led to higher losses due to mortality, spoilages, and rejects. Thus, it is important to assess the distribution chain of broiler chicken in the area to identify the inefficiencies as well as the current problems of the sector. This study was conducted to meet the following objectives: 1) present an overview of the key players in the distribution chain of broiler chicken; 2) to map out the transformation and value addition of chicken from the supply node up to the consumption node; 3) to determine the costs and compute for the profitability of the key actors; 4) to identify the issues, constraints, and problems affecting the efficiency of the current distribution chain; 5) recommend solutions that will help address the identified problems.

Snowball sampling was used in identifying the key players in the distribution chain due to the lack of an updated list from the government office. Primary data were obtained through personal interviews with the key respondents using a survey questionnaire. A total of four backyard growers, seven independent commercial growers, one contract-grower, one commercial scale dressing plant, one small scale dressing plant, three wholesalers-retailers, and one retailer were interviewed. Descriptive analysis was used to present the results of the interview with the aid of figures, charts, and tables. Financial and information flow analysis were also conducted to track the movement of the product and the significant changes that happened to the broiler chicken as it moved along the distribution chain. Value chain analysis was also used to trace the value-adding activities performed as well as the costs incurred by each key player.

Upon analyzing the data collected, four marketing chains were found to exist in the broiler chicken industry in Bulacan. The first chain is being practiced by the broiler integrators in the area. The chain starts with the contract growers who then pass the live broiler to the truckers to be delivered to the dressing plants for processing. The dressed chickens are then picked up by another trucker who delivers these to the supermarkets and wet markets.

Meanwhile, the other three marketing chains identified were the most common chains practiced in the wet market. The three chains included the grower, trader, wholesaler-retailer, and retailer. For the first chain, the grower sold the broiler chicken to a trader-wholesaler- retailer who then sold the dressed chicken to the end-consumers. In the second chain, the broiler chicken passed through the grower, trader, wholesaler-retailer before it reach the end- consumers. As for the last one, the chain consisted of the grower, trader, wholesaler-retailer, and retailer.

As for the financial flow, it was observed that the grower’s profit could range from Php 0 to 16.61 per kilo. Traders imposed a markup of Php 4 to 5 per kilo while the wholesaler- retailers were able to set the highest markup of Php 49.71 to 51.61 per kilo. In the case of the retailers, they were able to charge a markup of Php 5 to 10 per kilo. With regards to the information flow, the market supply and prevailing prices were disseminated across key players through broiler associations and cooperatives. Occasional price interventions were made by DA and DTI to protect the grower and consumer.

Based on the evaluation of the distribution chain, the efficiency was on the growers. The major causes of high mortality were changing temperatures and pest and diseases. Other problems which contributed to the lower profitability among the growers included: 1) unstable prices, 2) high cost and low quality input, and 3) poor management practices. Truckers on the other hand, aside from poor road quality and traffic congestion, experienced a higher mortality rate of broilers because of poor handling. As for the commercial dressing plants, the unnecessary costs due to delays on arrival. As for the wholesalers and retailers, the usual problems were miscommunication of orders and high cost of stall rent and labor.

Based on the problems that have been identified among the key players the study recommended the improvement of management practices and implement preventive measures to avoid unnecessary losses and mortality across the chain. The sharing of market information is also suggested to facilitate demand forecasting and price stabilization. Possible government interventions such as the improvement of farm-to-market roads, assistance to backyard growers, and establishment of law protecting local producers, and continuous research and development related to the gene pool of broilers. Lastly, possible investment opportunities were identified such as engaging in the logistics portion of the chain or investing in cold storage facilities and use of packaging materials in the wet market distribution.

Language

English

LC Subject

Broilers (Chickens), Chicken industry, Value distribution theory

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2016 M17 S54

Notes

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Document Type

Thesis

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