A model for estimating how variability of biological parameters affects economic factors in an integrated turkey farm

Turkeys, as well as other poultry meat, are marketed as a healthier alternative to red meat. At the same time, the necessary investment in integrated turkey projects is 65% higher than for similar broiler projects. This explains the importance of rigorous evaluation of new turkey farms, including their sensitivity to biological parameters. We present a method of evaluating poultry projects that takes simultaneous variability of several biological parameters into account, using a bio-economic model, stochastic simulation, and an integrated turkey farm in Russia as a real-life example. The algorithm based on the Cholesky decomposition of the covariance matrix was used to generate a multivariate normal random vector of biological parameters. The bio-economic model takes into account simultaneous variability of major input biological parameters related to all stages of an integrated poultry farm: survival, hatchability, ratio of carcass weight to live weight, and number of eggs per layer. The highest variability of the output economic indices was estimated for internal rate of return: the coefficient of variation (CV) of this major economic index was approximately 240% of the CV of the input biological parameters. Such estimation can be used to analyze a project's economic risks, i.e., variability in production cost and profitability.

Research highlights▶ A method of evaluating poultry projects with variable biological parameters. ▶ Cholesky decomposition to generate a vector of biological parameters. ▶ The highest variability of the economic indices was for internal rate of return. ▶ A method can be used to analyze a project's economic risks.