Contract Broiler Farming in Indonesia: 6 Pros and Cons
Contract broiler farming can bring agreed prices, covered inputs and shared marketing, but also hidden costs and price cuts. See the pros and cons.
Broiler chickens have a large market because the product is accepted by every segment of society. Broiler meat also offers real health benefits, since it contains fat, protein and calories. Chicken eaten without the skin is lower in cholesterol than beef or goat meat. With such a large market share and so many opportunities, raising broilers is an attractive business.
Advantages of Contract Broiler Farming
Besides farming independently, broiler farmers can choose a partnership (contract) system. Farmers who use this system can enjoy several advantages. Here are the benefits of contract broiler farming:
Chicken Prices Can Be Higher Than the Market Price
One benefit for farmers is that the price paid for broilers can be higher than the market price. The reason is that before the market price of broiler meat is known, the partner company and the farmer have already reached a firm agreement on the selling price.
The Partner Company Covers Sapronak
Another attractive benefit is that the partner company covers the sapronak. Sapronak is short for Sarana Produksi Peternakan, or livestock production inputs: chicks, feed and medicine. Buying sapronak takes a lot of capital, so under this system the core company (the partner company) bears that cost.
Also read 4 Ways to Improve Broiler Carcass Quality
That said, some partnership systems state that the partner company only lends the farmer capital in the form of sapronak, so when harvest time comes the farmer must pay the debt back to the company. For that reason, to be clear about the partnership he or she is joining, the farmer should read the binding agreement between the farmer and the partner company.
Marketing Is Done Together
Another benefit of raising chickens under a partnership system is that marketing is done together. This helps farmers whose marketing reach is still limited. With help from the partner company, farmers do not have to worry about how to sell their harvest.
Disadvantages of Contract Broiler Farming
Besides the benefits, farmers can also bear some losses. The disadvantages deserve as much attention as the advantages. Here are the drawbacks that farmers using the partnership system can run into:
Dishonesty
One disadvantage for farmers is dishonesty on the part of the partner company about the exact costs the farmer must bear. This often happens in partnerships where the company only lends capital in the form of sapronak and the farmer must repay it after harvest. A dishonest partner company will mark up sapronak costs above the normal or proper price.
Uneven Profit Sharing
Farmers planning to join a partnership should also watch out for an uneven profit-sharing system. If profits are not shared fairly, the farmer loses out and the core (partner) company comes out ahead.
Price Deductions
The selling price of broilers is agreed from the start, but deductions apply if any chickens are sick. When the season and climate are unfriendly, many chickens get sick and die. That hurts the farmer, because the price paid for the chickens ends up very low.
Before joining a partnership, farmers need to weigh its advantages and disadvantages carefully. We hope the pros and cons of contract broiler farming explained above give farmers who intend to join this system a little more clarity.
