Simulation of chicken market and the probability of bankruptcy of poultry industry in Iran

The broiler industry is of paramount importance in supplying protein requirement. So, it seems imperative to recognize the structure of its production costs and profitability and its potentials in order to take advantage of these potentials and make better plans. The present study simulates the broiler market and the probability of bankruptcy by probit function in the broiler industry of Iran. To this end, data on the prices of live chickens, one-day-old chicks, soybean meal, and maize meal were collected from the ITPNews website on a daily basis. Data on average input consumption of a 30,000-chick farm and the production rate were collected by a questionnaire from a panel of poultry farm experts for a single growing season in 2015-2016. Then, the relationship between live chicken price and the probability of bankruptcy was simulated for three groups of farmers differing in their financial structure. The results showed that at an average chicken price of 42,756 IRR over the studied period, the highest probability of bankruptcy was 70% related to the farms having working capital and bank debt and the lowest was almost zero related to farms having adequate financial resources and no bank debt.

Keywords:

Iran , Simulation , poultry industry , bankruptcy