Budget constraints and its impact on broiler production in Masjed Soleyman city

Document Type : Research Paper

Authors

• adalat salim odlou ¹
• Reza Shakeri Bostanabad ¹
• azar shahbazi ²
• Mohsen Salehi Komroudi ²

¹ Department of Agricultural Economics and Development, College of Agriculture and Natural Resources , University of Tehran, Karaj, Iran

² Department of Agricultural Economics, Faculty of Agriculture, Tabriz University, Tabriz, Iran

10.30495/jae.2023.24649.2159

Abstract

Introduction: Access to credits to cover the costs needed to buy production inputs at the optimal level is necessary, and budget restrictions can be an effective factor in not using the optimal economic level of production inputs. Due to the importance of the poultry industry in providing a major part of the food and protein needs of the country, the aim of this study is to investigate the effect of budget restrictions on the production of meat poultry farms in Masjid Soleyman city.
Materials and Methods: In this study, the indirect production function approach was used and the required information was collected by completing 43 questionnaires at the city level in 2018.
Findings: The results of the study showed that 62% of poultry units had budget restrictions of 26.62%, which caused a decrease in chicken meat production by 32.12% in this city. The return to scale was equal to 1.30, which indicates an increasing return to scale for the studied units.
Conclusion: Removing the budget limit of poultry farming units can be considered an effective step towards increasing production and productivity. In this regard, it is recommended that the price policies of inputs and products, as well as the import of inputs, should be given special attention in order to reduce the problems related to the budget limitations of broiler chicken production units. For example, by determining the appropriate import tariff and subsidizing the import of these inputs, the inputs can be provided to poultry farmers cheaper.

Keywords

• Indirect production function
• production structure
• budget constraint
• broiler

---

References

1. Bokusheva R, and Kumghakar S. Modeling Farms Production Decisions Under Expenditure Constraints. 107th EAAE Seminar Modeling of Agricultural and Rural Development Policies. Sevilla, Spain. 2008.[http://dx.doi.org/10.22004/ag.econ.6641 ]    

2. Coyle B.T, Expenditure Constraints and Profit Maximization in U.S. Agriculture. 1990; 72: 734-737. [https://doi.org/10.2307/1242132]

3. Dashti G, SHorafa S. Analysis of Economic Benefits Due to Optimal Scale and Size in Laying Chicken Breeding Units in Tehran . Province. Agricultral Economics and Development. 2010; 17(68), 17-36. [http://aead.agri-peri.ac.ir/article_58818.htm]

4. Fare R, Sawyer M. Expenditure Constraints and Profit Maximization in U.S.Agriculture: Comment. American Journal of Agricultural Economics. 1988; 70: 953-54.

5. Fattahi S, Mansouri M, Khodavaisi H. A Case Study about the Role of Insurance in Khoy Poultry Production Industry. Iranian Journal .of Agricultural Economics and Development Research. 2013; 44(4), 657-664. [doi: 10.22059/ijaedr.2013.5097010.22059/ijaedr.2013.50970 ]

6. Griffin RC, Montgomery JM,  Rister ME. Selecting functional form in production function analysis. Western Journal of Agricultural Economics. 1987; 12(1836-2016-150929), 216-227. https://www.jstor.org/stable/40987872

7. Haji rahimi M, Fahimzadeh M, Mashkoh R. Cost structure analysis of broilers industry scale (Case study Kurdistan province). Agricultural Economics and Development Research. 2013; 26(3), 159. [doi: 10.22067/jead2.v1391i3.17771]

8. Hilmer E, Holt MT. Estimating Indirect Production Functions with a More General Specification: An Application of the Lewbel Model, Journal of Agricultural and Applied Economics. 2005; 37:102-121.[ DOI: https://doi.org/10.1017/S1074070800027127]

9. Hosseini S, Kouchakzade Malari M, Sydabadi H. Determination of the share of cost-effective price per kilogram of broilers by using a multi-criteria decision analysis in Tehran province. Animal Production. 2015; 17(1), 51-58. [doi: 10.22059/jap.2015.54019]

10. Kim HY, Analyzing the indirect production function for US manufacturing. Southern Economic Journal. 1988;  494-504. [https://doi.org/10.2307/1059121]

11. Lee H, Chambers RG. Expenditure constraints and profit maximization in U.S. agriculture: Reply. American Journal of Agricultural Economics. 1988; 70: 955-956. [https://doi.org/10.2307/1242132]

12. Lee H,  Chambers R.G. Expenditure Constraints and profit maximization in U.S. Agriculture. American Journal of Agricultural Economics. 1986;  68: 857-865. [https://doi.org/10.2307/1242132]

13. Najizavareh A, Javaheri barforosh H, Mansoob basiri M. Investigation of cost structure and economies of scale in the broiler industry (Tehran Province). Journal of Applied Research in Animal Sciences. 2017;  20, 43-55. [DOI: 10.22092/aasrj.2017.110126.1061]

14. Ollinger M, MacDonald JM,  Madison M. Technological change and economies of scale in US poultry processing. American Journal of Agricultural Economics. 2005; 87(1), 116-129. https://doi.org/10.1111/j.0002-9092.2005.00706.x

15. Ollinger M, MacDonald JM,  Madison ME. Structural change in US chicken and turkey slaughter. 2000; (No. 1473-2016-120706). https://doi.org/10.1111/j.0002-9092.2005.00706.x

16. Pishbahar E, Abedi S, Sarbaz A, Moazen V. Investigating Budget Constraints in Wheat Production in East Azerbaijan Province: Applying a Generalized Functional Form of Indirect Production Function. Agricultural Economics. 201

17. 4; 8(3), 83-102. [doi: magiran.com/p1352149]

18. Pishbahar E, Kohnepooshi S, Hosseinzad  J. Estimation of Indirect Production Functions and Investigationof Budget Restrictions Existence in The production of Irrigated and Dry-land Wheat in Kurdistan Province. Agricultural Economics Research. 2016; 8(31), 37-56. [doi: 20.1001.1.20086407.1395.8.31.3.7]

19. Pishbahar S, Kohnehpooshi S, Hosseinzad J, Abedi S. Survey Existence Financial Restrictions and Its Effects on Potato Production of Kurdistan Province Using Lewbel\'s Indirect Production Function. Agricultural Economics and Development. 2018; 25(97), 219-240. [doi: 10.30490/aead.2017.59072]

20. Rahmani Z, GHader zadeh H. Estimation of the Cost Function of Meat Poultry in Sanandaj City Journal of Agricultural Economics Research. 2016; 6(21), 80-67.  https://www.virascience.com/article/29326/

21. Rashidghalam M, Dashti GH, Aminian F. Study of Pistachio Production Structure in Damghan. Agricultural Economics and Development Research. 2012; 26(3), 197-203. [doi: 10.22067/jead2.v1391i3.17776]

22. Salami H, & Rafiee H. Investigating Credit Constraint and Its Impact on Decrease in Rice Production in the Northern Provinces of Iran: Application of Indirect Production Function. Agricultural Economics & Development. 2010; 24(1). [doi: 20.1001.1.20084722.1389.24.1.13.6]

23.  Yazdani S, Shahbazi H, Kavoosi Kelashami M. Assessment of Indirect Production Function and Budget Constraint in Khorasan Provinces' Cotton Production. Iranian Journal of Agricultural Economics and Development Research. 2011; 41-2(4), 425-433 https://journals.ut.ac.ir/article_22913.html