EFFICIENCY GAINS IN BROILER PRODUCTION THROUGH CONTRACT-PARAMETER FINE-TUNING

This paper reports on an analysis of existing broiler production contr acts, with an attempt to establish the degree of efficiency gains poss ible from contract alteration. With the use of settlement cost and far m level data, an assessment is made of optimal grower input decisions given contract specifications. Using this analytical framework, altern ative contract designs are simulated by searching over possible contra ct parameter values. The foci of the analysis are three contract param eters: base payment, bonus factor, and the utilities cost allocation f actor. In the first two cases, the simulation generated ambiguous resu lts. In the third case, results seem to indicate that switching part o f the electricity cost from the grower's cost into the settlement cost may result in a mutual welfare gain.