Contract bonus systems to encourage biosecurity adoption on small-scale broiler farms in Indonesia
Anak Agung Sagung Putri Komaladara A , Ian Patrick B D and Nam Hoang CA Centre on Food Availability for Sustainable Improvement, Udayana University, Jl. P.B. Sudirman, Denpasar, Bali, 80232, Indonesia.
B Institute for Rural Futures, University of New England, Armidale, NSW 2351, Australia.
C UNE Business School, University of New England, Armidale, NSW 2351, Australia.
D Corresponding author. Email: ipatrick@une.edu.au
Animal Production Science 58(3) 595-600 https://doi.org/10.1071/AN15845
Submitted: 4 December 2015 Accepted: 9 September 2016 Published: 29 November 2016
Abstract
Ongoing economic losses in the poultry industry, due to endemic diseases such as highly pathogenic avian influenza and Newcastle disease, ensure that biosecurity adoption on small-scale broiler farms remains a priority for Indonesia. However, given their economic constraints and the nature of the market for their products, these smallholders need to be convinced that there is an economic benefit to them from investing in biosecurity. As the majority of smallholders manage their birds under a contract, these contract companies not only need to be involved in the discussion but, if they are not prepared to assist directly in assisting with improved biosecurity, need to ensure that the conditions of the contract do encourage this smallholder investment. Every contract includes price and performance bonuses and, although the nature of these vary between contract companies, they are designed to encourage productivity improvement. This study evaluates existing contract bonus systems in six major contract companies in Indonesia and their capacity to encourage investment in biosecurity. Results indicated that the price bonus plays a significant role in providing additional smallholder income. If higher than expected sale prices are obtained, contracts with companies 3, 5 and 6 ensure that a greater proportion of this price is passed on to smallholders. Contracts 2, 4, and 6 provide farmers with higher performance bonuses, indicating that these companies encourage farmers to improve production efficiency. Overall estimates after the initial year of biosecurity investment show improvements in returns, where farmers can receive up to USD 2.73 for every dollar invested in biosecurity.
Additional keywords: agribusiness, economics, HPAI, poultry, smallholder.
References
Australian Biosecurity Cooperative Research Centre for Emerging Infectious Diseases (ABCRC) (2007) The epidemiology, pathogenesis and control of highly pathogenic avian influenza in ducks in Indonesia and Vietnam. ABCRC. Available at http://aciar.gov.au/publication/fr2011-30 [Verified 15 March 2014]Glover D, Kusterer K (1990) ‘Small farmers, big business.’ (The Macmillan Press: London)
Indonesian Centre for Agricultural Socio Economic and Policy Studies (ICASEPS) (2004) ‘Socio-economic impact assessment of the AI crisis on poultry production systems in Indonesia with particular focus on independent smallholders.’ (Indonesian Centre for Agricultural Socio Economic and Policy Studies: Jakarta)
Kay R, Edwards W (1994) ‘Farm management.’ 3rd edn. (McGraw Hill Inc.: New York)
Knoeber C, Thurman W (1995) Don’t count your chickens..: risk and risk shifting in the broiler industry. American Journal of Agricultural Economics 77, 486–496.
| Don’t count your chickens..: risk and risk shifting in the broiler industry.Crossref | GoogleScholarGoogle Scholar |
Malcolm B, Makeham J, Wright V (2005) ‘The farming game. Agricultural management and marketing.’ 2nd edn. (Cambridge University Press: Melbourne)
Patrick I, Smith G, Hasnah, Sarini NP, Karim H, Kurnianto B, Dharma D, Komaladara AASP, Jubb T (2014) Developing a clean market chain for poultry products in Indonesia. ACIAR Impact Technical Reports No. 82. (Australian Centre for International Agricultural Research: Canberra)
Pattison M, McMullin P, Bradbury J, Alexander D (2008) ‘Poultry diseases.’ 6th edn. (Elsevier Limited: Toronto)
Statistics Indonesia (2015) Poultry Population by Province and Kind of Poultry, 2000–2014. Available at http://www.bps.go.id/linkTabelStatis/view/id/1512 [Verified 15 May 2015]
Taha F (2007) How highly pathogenic avian influenza (H5N1) has affected world poultry-meat trade. Available at http://www.ers.usda.gov/publications/ldpm-livestock,-dairy,-and-poultry-outlook/ldpm-15902.aspx [Verified 18 October 2016]
World Bank (2015). World Development Indicators. Available at http://data.worldbank.org/indicator/PA.NUS.FCRF [Verified 18 October 2015]
World Health Organization (WHO) (2014) Cumulative number of confirmed human cases for avian influenza reported to WHO, 2003–2014. Available at http://www.who.int/influenza/human_animal_interface/EN_GIP_20141223CumulativeNumberH5N1cases.pdf [Verified 7 June 2014]
