Jezreel Jasmin Sam A.

Talaver ANSCI Lecture

BSDC 1-2 Slaughtering 5

1. What are the risks of contract growing?

Since contract growing is a partnership between two parties (mother company &
individual farmer grower) with a lot of process and third parties involve, there can
be a lot of risks that may come up for both of them such as:
• the possibility of yielding or having an output level that is lower than what
is projected;
• numerous numbers of deaths and health issues on animals;
• lack of access to financial resources for smallholder development;
• low growing scale of animals;
• there can also be difficulty in technological updates that are needed and
lastly:
• the risk of low profit for both parties due to uncontrollable circumstances.

2. What are the prospects and advantages of contract growing?

Here are the advantages of contract growing:

• Small growers may access technology, financing, marketing channels,
and information while cutting transaction costs, making them more
competitive.
• Their product will have a guaranteed market just outside their door,
lowering marketing and transaction expenses.
• It lowers manufacturing risk, pricing, and marketing expenditures.
• Contract farming can provide access to new markets that would otherwise
be closed to small producers.
• It also assures higher-quality output, financial assistance in cash and/or
kind, and technical assistance to individual producers.
• In the case of livestock processing, it assures a regular supply of high-
quality food delivered on time and at a lower cost.

3. In broiler contract growing, kindly interview or do research on what is the profit per bird as
well as commercial broiler farming.
 After researching for the cost/profit of each broiler involved in CGS, I have found an
example from Magnolia Chicken Enterprises. Based on their contract birds will be sold to
individual growers for P15.00 and they will invest P382.00 on every bird (out of 36,000).
There will be a gross earning of P15-P19 based on the performance. Almost all of the
profit related worth are based on the performance of the bird that has been grown that is
ready for production.

Sources:
https://magnoliachicken.com/contract-growing
https://vikaspedia.in/agriculture/market-information/contract-farming-a-mechanism-of-
alternative-marketing