Economic viability of broiler production under different governance structures

ABSTRACT The objective was to verify the economic feasibility in the production of broilers under hybrid and hierarchical governance mechanisms. Case studies were used to evaluate the activity of the integrating company and the integrated rural producers. The primary data about costs, income, and zootechnical indicators were collected in 36 poultry production units belonging to an integrated company and five rural producers, in state of Minas Gerais. Data from 216 batches of broilers produced between August 2015 and August 2016 were used in the economic analysis. Costs calculation was based on the methodology proposed by EMBRAPA - CNPSA and IEA - SP. The economic analyzes were carried out as proposed by DAE UFLA and CONAB. It was verified that the cost of labor caused the greatest impact on the economic performance of cores with different governance structures. In all breeding sites via hierarchical governance, even considering secondary revenues, there was a financial loss in the activity. It was concluded that the hybrid governance represented a better economic alternative than the internalization of the broiler production by integrating companies. Thus, it is suggested that integrating companies deplete the production possibilities through an integration contract before investing resources in their own breeding facilities.