Economic and Marketing Information                                                                                                                                                                                          FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana      
September   30,   1961
Stabilizing the Broiler Industry
by Richard  D.  Darley   and   Paul  L.   Farris,  Agricultural Economics
Increasing concern is being expressed about over-
expansion of the broiler industry. Broiler prices, U. S.
mid-month average at the local market I or farm) level,
dropped from 17.6 cents per pound in February, 1961,
to around 12-13 cents in midsummer. Questions have
been raised whether such low prices cover production
costs.
If the industry should desire to stabilize production
at prices which cover production costs, or alter broiler
marketings and prices in some manner, Seasonal (within
the year) and Year to year measures of demand and
cost of production would be needed.
Alternatives
Demand and cost of production information can be
used by individuals and groups to increase the industry's
stability.
Individual action—Estimates of future market prices
and information on how to figure production costs could
be disseminated to individual members of the industry.
The individual could then adjust his own production
as he saw best.
Group action—Available supply and demand information could be used to determine the quantity of broilers
needed to maintain a certain price level and a given
price pattern within a year. Quantities that various individuals within the industry would produce would need
to be determined. A device for stabilizing the industry
through group action might be a marketing order.
Members of the broiler industry and other agencies,
both public and private, may wish to consider alternative methods of stabilizing extreme fluctuations in broiler
production and broiler prices. This article presents some
demand estimates of the kind required in whatever method may be employed.
Seasonal Variations  in  Demand
Demand in this article is defined as the quantity of
broilers that buyers will take at a given price in a
given market (the U. S.) at a given time (a certain
month). Demand increases if buyers will take more
at a given price than in a previous month, or if they
w"l pay more for a given quantity than in a previous
month. Demand decreases if buyers will take less at a
g'ven price, or if they will not pay as much for a given
quantity.
A recent Purdue study1 shows that the low point in
the demand for broilers has come in December l sec
Figure 1). From the first of the vear through  March.
JDarley, Richard D., "Monthly Price Herniating Model? for
Broilers,"' unpublished Ph.D. thesis, Purdue University, August,
1961. The analysis is based on the 1948-60 period. The stud)
was conducted under Purdue A.E.S. project  876.
•constant marketings
at December level
INCREASING BROILER DEMAND
Percent difference in marketings from December
Figure 1. Estimated monthly broiler demand, December-July, 1948-60. This chart shows that in
July, for example, an estimated 69.1 percent more
broilers could be marketed than in December at
the December price. Or, if quantity marketed in
July would remain constant at the December level,
the price in July would be an estimated 36.2 percent higher.
DECREASING BROILER DEMAND
%M
21.0 47.0 63.0   69.1
Percent difference in marketings from December
Figure 2. Estimated monthly broiler demand, July-
December, 1948-60. This chart shows that in
August, for example, an estimated 63 percent more
broilers could be marketed than in December at
the December price. Or, if quantity marketed in
August would remain constant at the December
level, the price in August would be an estimated
33.6 percent higher.