Economic viability of closed house and open house systems among medium-scale broiler farms in Malaysia
DOI:
https://doi.org/10.12928/optimum.v16i2.16153Keywords:
Economic Viability, Cash Flow Analysis, Partial Budgeting, Medium-Scale FarmsAbstract
Broiler production is a major contributor to Malaysia’s livestock industry, accounting for approximately 52% of total national livestock production. However, rising feed prices and increasing production costs have intensified the need for more efficient and financially sustainable production systems. This study evaluates the economic viability and operational efficiency of the Closed House System (CHS) and the Open House System (OHS) using projected cash flow analysis and partial budgeting. Primary data were collected through face-to-face interviews with three medium-scale commercial broiler farms, each managing 25,000–30,000 birds per production cycle. Financial feasibility was evaluated over a 35-year project horizon using a 10% discount rate. The findings indicate that CHS requires substantially higher initial capital investment than OHS but provides greater production capacity due to lower floor space requirements (0.7–0.9 ft² per bird) compared with OHS (1.0–2.0 ft² per bird), enabling annual production of approximately 185,714 birds compared with 100,000 birds under OHS. Operationally, CHS demonstrated superior performance, recording lower mortality (<5%), reduced labour costs (RM0.25 per bird compared with RM0.47 under OHS), and improved production efficiency. Financial analysis confirmed that both systems were economically viable, with positive Net Present Values (NPV) and Internal Rates of Return (IRR) exceeding 25%. Nevertheless, CHS exhibited stronger financial performance, achieving an NPV of RM2,392,982 and a payback period of 3.5 years. Despite its higher initial investment, CHS offers superior long-term profitability, greater resource utilization, and improved production efficiency, making it a more sustainable and competitive housing system for medium-scale broiler production in Malaysia while providing empirical evidence to support investment and policy decisions on broiler housing modernization.
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