Course: Economics for Business in a Global Environment Course Code: INBA 6085 Lecturer: Mr. Henry Bailey Project: Describe the Industry Structure and Competitive Dynamics in the Poultry Industry of Trinidad and Tobago. Group Members: Karth Arthur Sonnia Alfred Keisha Deokiesingh Aaron Mohammed Nerrisa Mohammed Josanne Thomas
811006596 03757156 05744922 02733603 02734251 809006305
Contents ABSTRACT...................................................................................................................................................... 3 INTRODUCTION ............................................................................................................................................. 3 LITERATURE REVIEW ..................................................................................................................................... 8 ANALYSIS / DISCUSSION .............................................................................................................................. 12 CONCLUSION............................................................................................................................................... 19 BIBLIOGRAPHY ............................................................................................................................................ 21 APPENDICES ................................................................................................................................................ 24 Appendix 1 .......................................................................................................................................... 24 Appendix 2 .......................................................................................................................................... 24 Appendix 3 .......................................................................................................................................... 25 Appendix 4 .......................................................................................................................................... 26 Appendix 5 .......................................................................................................................................... 27 Appendix 6 .......................................................................................................................................... 28
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Figure 1 Number of broilers farms in Trinidad and Tobago.......................................................................... 5 Figure 2 Capacity of broilers farms in Trinidad and Tobago ......................................................................... 6 Figure 3 Difference in the number of broilers farms from 2010 to 2011 ..................................................... 6 Figure 4 Difference in the capacity of broilers farms from 2010 to 2011 .................................................... 7 Figure 5 Average weekly chicken prices ....................................................................................................... 7 Figure 6 Kinked demand curve (Economicshelp n.d.) ................................................................................. 20 Figure 7 Demand curve for a collusive Oligopoly (Cartel) (Economicshelp n.d.)........................................ 21
Table 1 Market structure and concentration Ratio (AmosWEB 2000-2012) ................................................ 9 Table 2 quick reference to basic market structures (WebFinance 2012) ................................................... 12 Figure 6 Number of broilers sold during 2006 to 2010............................................................................... 15 Figure 7 Live weight of broilers sold during 2006 to 2010 ......................................................................... 16 Table 3 Poultry Industry compared to Oligopoly. ....................................................................................... 17 Table 4 CR4 and HHI of Trinidad & Tobago Poultry Industry ...................................................................... 18 Table 5 Numbers of broilers farms in Trinidad and Tobago ....................................................................... 24 Table 6 Average weekly price of chicken .................................................................................................... 25 Table 7 Numbers of broilers sold during 2006 to 2010 .............................................................................. 26 Table 8 Live weights of broilers sold during 2006 to 2010 ......................................................................... 26
Table 9 components of the poultry industry .............................................................................................. 27 Table 10 Porter’s Five Forces Analysis of the Poultry Analysis of Trinidad & Tobago ................................ 29
ABSTRACT The purpose of this study is to understand the operation and identify the market structure of the Poultry Industry of Trinidad and Tobago. This report considers the competiveness, the threat of substitutes and new entrants, supplier and buyer power within the industry. This study also considers the concentration of the industry and the types of products available. The results of this analysis show the industry confirms to the factors of an Oligopoly.
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INTRODUCTION Thefreedictionary.com defines poultry as domesticated birds kept by humans for the purpose of producing eggs, meat, and/or feathers. Birds that are killed for their meats are also referred to as poultry. Poultry meat is rich in proteins and is a good source of phosphorus and other minerals, and of B-complex vitamins. It is a healthier alternative to beef and pork because of a lower fat content and has a higher proportion of unsaturated fatty acids than saturated fatty acids. Poultry meat comprises of: Chickens (87%) Turkeys (6.7%) Ducks (4%) Geese, pigeons, quails, pheasants, ostriches and emus (2.7%)
The top five poultry producers are: United States China Brasil Mexico India Poultry accounts for 30% of meat produced worldwide, second only to pork 38%. The 2011 global forecast for poultry estimates a grow rate of 2% and output of 100 million tones. The increasing popularity of poultry can be attributed to: value/price compared with other foods; good nutritional profile/low in fat; ?
convenience/ease of preparation; versatility; well suited for quick-service and casual dining menus. Source: Agribusiness Handbook, poultry, meat and eggs – FAO, 2010
The poultry industry in Trinidad and Tobago plays in important in the agriculture sector. The industry highlights are: 60 % Agriculture GDP Sales TT$ 1.3 billion (2010) Export TT$ 10 million Value added products TT$ 250 million Employment approximately 50,000 persons Linked to
•
agricultural sector via feed suppliers, garden shops
•
service sector via restaurants, supermarkets
•
the manufacturing sector via plastics, packaging, labelling
Over 500 farmers 4 hatcheries 5 feed plants 4 primary processing plants 2 further processing plants Over 3000 entrepreneurs. 2 % increase in the number of poultry farms (2010 – 2011) but with a decrease in capacity of 11 %. (table 5 – Appendix 1, figures 1 to 4)
NUMBER OF FARMS IN?TRINIDAD & TOBAGO 556
600
546
500 400 300
239 233
274 266
January 2011 Number January 2010 Number
200
43 47
100 0 Small - less than 10 000
Medium - 10 000 - 49 999
Large - 50 000 and over
TOTAL
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Figure 1 Number of broilers farms in Trinidad and Tobago
CAPACITY OF BROILER FARMS IN TRINIDAD & TOBAGO 11235,672 10049,366
12000,000 10000,000
5618,397
8000,000
5431,971
6000,000 2000,000
January 2011 Capacity
3241,446
1318,436 1375,949
4000,000
4298,839 January 2010 Capacity
0 Small - less Medium - 10 Large - 50 than 10 000 000 - 49 999 000 and over
TOTAL
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Figure 2 Capacity of broilers farms in Trinidad and Tobago
Difference in Number of farms from 2010 to ? 2011 12
10
10 8
8 6
6 4
Difference Number
2 0 (2) (4) (6)
Small - less than 10 Medium - 10 000 - Large - 50 000 and 000 49 999 over
TOTAL
(4)
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Figure 3 Difference in the number of broilers farms from 2010 to 2011
Difference in Capacity of farms from 2010 to 2011 200,000
57,513
0 (200,000) (400,000)
Small - less than Medium - 10 000 Large - 50 000 10 000 - 49 999 and over (186,426)
TOTAL
Difference Capacity
(600,000) (800,000) (1000,000)
(1057,393)
(1200,000)
(1186,306)
(1400,000)
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Figure 4 Difference in the capacity of broilers farms from 2010 to 2011
The price of chicken at groceries and supermarkets has seen many fluctuations from May 2010 to December 2011 and shows a 15.62 % increase over the period. However, the price of live ?
chicken has decreased by 7.75 % over the same period (figure 5, table 6 – Appendix 2).
AVERAGE WEEKLY CHICKEN PRICES TT$16.00
TT$13.40
TT$13.18
TT$14.00
PLUCK SHOP PRICES ($ / lb) LIVE WEIGHT
TT$12.00 TT$11.79
TT$
TT$10.00 TT$8.00
GROCERIES AND SUPERMARKETS PRICES ($ / lb)
TT$6.84 TT$5.24
TT$6.00
Linear (PLUCK SHOP PRICES ($ / lb) LIVE WEIGHT)
TT$4.00 TT$2.00 Apr-12
Dec-11
Sep-11
Jun-11
Feb-11
Nov-10
Aug-10
May-10
Jan-10
TT$0.00
Linear (GROCERIES AND SUPERMARKETS PRICES ($ / lb))
Month-Year Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Figure 5 Average weekly chicken prices
LITERATURE REVIEW Industry Analysis Businessdictionary.com defines a market analysis as a market assessment tool designed to provide a business with an idea of the complexity of a particular industry. It analyses the effects of an industry’s profitability, economic and market factors, the performance of competitors, and estimates the industry’s future prospects.
Porter’s Five Forces Porter's Five Forces is a simple but powerful tool used to analyse industry attractiveness. It provides insights into current market position and provides opportunities to identify and maximise situations of strength, correct weaknesses and minimises mistakes as well as identify potentially profitable products and services. Porter’s five forces suggest five factors that should be analysed to determine competitive power = in an industry. These are: Supplier power Buyer power Competitive rivalry Threat of new entrants Threat of substitutes
Competitive Rivalry Competition is integral to the success of many market structures and is determined by analysing: Concentration ratio – Quickmba.com defines concentration ratio as the percentage of market share owned by the largest m firms in an industry, where m is a specified number of firms, often
four. It illustrates the market control of an industry’s four largest or eight largest firms. It’s calculated by adding their market share, CR4 or CR8.
CONCENTRATION
%
POSSIBLE MARKET STRUCTURE
No concentration
0.00 %
Perfect competition, Monopolistic competition
Total concentration
100.00 %
Monoploy
Low concentration
0 – 50 %
Perfect and Monopolistic competition, Oligopoly
Medium concentration
50 – 80 %
Oligopoly
High concentration
80 – 100 %
Oligopoly, Monopoly
Table 1 Market structure and concentration Ratio (AmosWEB 2000-2012)
Product differentiation –involves differentiating from competitors’' products as well as a firm's own product offerings (price, quality, service, benefits, etc.) for intended customers ?
Exit barriers –cost related obstacles that prevent a company from exiting a market. Growth rate - The amount of increase a particular variable has acquired within a specified period of time. Rivalry is higher in markets characterised by slow growth and weaker in markets with faster growth.
Threats to new entrants Potential Threat of New Entrants is influenced by: Entry barriers –circumstances particular to a given industry that create disadvantages for new competitors attempting to enter the market (government regulations, economic factors, marketing conditions, capital requirements, brand loyalty). Low entry barriers represent high attractive and high entry barriers low attractiveness
Pool of entry candidates –The number of persons or firms that possesses the resources necessary to enter the industry
Power of suppliers This considers the strength of supplier-seller relationships within the industry. Supplier bargaining power is determined by: Product Availability – product is readily available from many suppliers at the going market price. Switching costs - Degree of ease associated with switching from one supplier to another or to switch to attractive substitute inputs. High switching costs signal strong supplier bargaining power. Low switching costs signal weak bargaining power. Degree of pricing power - Addresses suppliers of items considered to be in short supply. Supplier bargaining power decreases with high availability and increases with low availability. 2
Backward integration - Focuses on whether it makes good economic sense for industry members to self-manufacture items they have been buying from suppliers.
Suppliers
specializing in the high volume production of a component at a lower cost, means industry members could achieve via self-manufacturing.
Threat of substitutes This affects the competitive environment of industry firms and influences their ability to achieve profitability. The availability of substitutes threatens the profitability of an industry. Lack of close substitutes makes an industry less competitive and increases profit potential for the firms. Relative price performance of substitute - Greater relative value of the substitutes, limits the industry profit potential
Buyer switching costs - High switching costs deter switching to substitutes, whilst low switching costs make substitutes more attractive. Typical switching costs include the time and convenience, costs of additional equipment, time and cost in testing, quality and reliability of the substitute, psychological costs of severing old supplier relationships and establishing new ones. Perceived level of product differentiation - Availability of a variety of differentiated products increases the attractiveness of buyers and reduces the threat of substitutes. The availability of substitutes - When greater substitute products are available, the demand is more elastic
Market structure The characteristics of a market, includes the number, relative strengths of buyers and sellers, degree of collusion, competition levels of firms, extent of product differentiation, and ease of 2
entry into and exit out of the market The market structure refers to the different characteristics such as size, number of providers, market share, purchasing behaviour, and growth forecast. Several market structures exist: Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly. Refer to the table below
Seller Market
Buyer Seller
Entry Structure
Product
HHI
Buyers Entry
Number Barriers
Number Barriers
Perfect
Homogeneous 0 – 50 % < 1000 No
Competition
CR4
Many
No
Many
Monopolistic
Differentiated 0 – 50 % < 1000 No
Many
No
Many
competition Homogeneous / 40 – 100 > 1000 Oligopoly
Yes
Few
No
Many Differentiated %
Oligopsony
No
Many
Yes
Few
Homogeneous Unique
Monopoly
Yes
One
No
80 – 100 ≈ 10000
Many %
Monopsony
No
Many
Yes
One
Differentiated
Table 2 quick reference to basic market structures (WebFinance 2012)
Herfindahl-Hirschman Index (HHI) – Economics.about.com defines HHI as a way of measuring the concentration of market share held by particular suppliers in a market. HHI is the 2
sum of the square of the market share of the firms competing in the industry. Its value can be as low as 0 and as high as 10000. The HHI value for competitive markets is below 1000; between 1000 – 1800 represents a moderately concentrated market and above 1800 represents a concentrated market.
ANALYSIS / DISCUSSION The Poultry Association of Trinidad and Tobago valued the 2010 sales of broiler meat locally at TT$1,300m with exports totalling TT$10m. The Food and Agriculture Organization (FAO) reported in November 2005, that poultry represented 60% of agriculture’s contribution to gross domestic product (GDP). This suggests that this is a highly profitable industry with newcomers expecting to earn attractive profits.
Arawak and Company Ltd and Warner Grain Mills Limited indicated that potential entrants require a high start-up capital of approximately TT$2b which reduces the threat of potential entrants into the industry. Government regulation is a barrier to entry in the poultry industry as Environmental Management Authority, clearance is required before the construction of broiler pens and Public Health approval is required before actual operations begin. Production processes and operations are not protected by regulations or patents, therefore no licences or permits are required to do business. The poultry industry is an open market and information on the production process is readily available, making it quite attractive for a new entrant. Inputs for the poultry industry are easily accessible. Two of larger firms have backward integrated in feed production. Corn and soya bean used in the production of feed are obtained on a commodity market at a fixed price set by the Chicago Board of Trade, while hatching eggs, 2
medication, vitamins etc. are obtained from several suppliers. This makes it easy for new competitors to enter the industry. Whilst the Muslim community prefers halaal chicken, it would seem that the majority of customers in the industry do not portray a significant level of brand loyalty as products are not unique, resulting in little or no costs of switch to another brand. Therefore a potential competitor has to spend very little to overcome customer loyalties and build its own clientele, making it a favourable industry to enter. Whether the industry’s entry barriers are considered high or low depends on the resources and competencies possessed by the potential entrant. That is, if the company has sizable financial resources and proven competitive capabilities they may be able to combat the industry’s entry
barriers rather easily thus making their threat greater. However, if the company does not have access to sizable financial resources, their threat is greatly reduced to existing firms.
The market has various firms and so the retailer is able to choose from many producers. All producers provide basically identical products and so the bargaining power of Buyers would be substantial given the presence of competitors. Four firms have the majority of the market share and the price is set by the demand and supply in the market. Arawak sells 40% of their product in Supermarkets and 30% in the Food Services sector. They consider their partnerships with their Prestige Buyers to be a competitive advantage. Similarly, WGM sells 30% of their produce to restaurants and supermarkets. Some large retailers have bargaining power based on being “Prestige Buyers”. WGM has buyers 2
such as PriceSmart, Tru Valu, Movietowne and Foodbasket. Arawak has buyers such as Hi Lo, Mc. Donalds and Prestige Holdings. The substantial value of these buyers’ purchases contribute to a large share of income for these producers which increases their power and has negotiated product specifications, such as pre-ready chicken, special cuts, seasoned chicken, specified size and weight, as well as best by date. The companies in the local poultry industry spend less than 5% of their revenue on advertising and are less focused on innovation. The local industry consists of four major firms of different sizes. These firms are not aggressive in their pursuit of market share. The level of differentiation in the poultry industry is fairly low. The top four firms can easily interchange most of their products with very little consequences.
The industry has experienced slow steady growth from 2006 to 2010. The number of broilers sold has increased by an average of 2.93 % per year (shown in figure 6 and table 7 – Appendix 3) with a corresponding increase in price of 4.08 % per year (shown in table 8 – Appendix 4 and figure 7) over the same period. This low growth rate can serve to increase competition within the industry.
NUMBER OF BROILERS SOLD DURING 2006 TO 2010 Number / 000 Birds
39000
y = 1033.9x - 2E+06 R² = 0.9173
38000 37000 36000
38000
35499
35000
35664
SALES
34000 33000 32000 31000 2005
32652
Linear (SALES)
33140
31918 2
2006
2007
2008
2009
2010
2011
2012
2013
Year Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Figure 6 Number of broilers sold during 2006 to 2010
LIVEWEIGHT OF BROILERS SOLD DURING 2006 2010 Weight / 000 Kg
75000
72000
70000
69174
65000
63261 63642
65256 SALES
60000 55000 50000 2005
Linear (SALES)
56106 y = 2421.3x - 5E+06 R² = 0.6512 2006
2007
2008
2009
2010
2011
2012
2013
Year Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Figure 7 Live weight of broilers sold during 2006 to 2010
In the Poultry Industry two of the top four firms are fully integrated and are not directly influenced by suppliers. Inputs to the poultry production process demonstrate low levels of product differentiation allowing firms to easily switch amongst suppliers. Also, inputs are not in short supply which weakens suppliers pricing ability and bargaining leverage. It can be concluded that bargaining power of suppliers is weak because inputs are readily available, switching costs are low; industry members are a threat to integrate backwards into the business of suppliers and self-manufacture their own inputs.
Locally produced poultry is the least expensive option in the animal protein market with the prices of pork, goat, lamb, beef, imported meats and seafood ranging from 1.5 to 4.5 times the price of chicken.
2
Substitute products are readily available at supermarkets or pluck shops; therefore, consumers spend very little time and incur minimal inconvenience to switch to a substitute product. Restaurants and groceries include a range of meat options and dishes on their menus and shelves which provide consumers with a wide range of choice. The consumer’s tastes, habits, demographics and income determine which product is consumed. The diverse and multicultural background of Trinidad and Tobago, results in a seasonal demand for poultry. During seasons and religious festivals, such as Lent, Divali and Christmas, poultry in some instances is abstained from, with consumers preferences redirected to other meats or seafood. The overall threat of substitute products was assessed as low based on mainly the relative priceperformance of poultry when compared to other substitute products, and the increasing level of
product differentiation
since price was considered to be the main determinant of industry
sustainability. The completed Porter’s Five Forces Analysis is shown in Apendix 5 and 6.
Market Structure Seller Market
Buyer Seller
Entry Structure
Buyers Entry
Number Barriers
Product
HHI
Barriers
Homogeneous OLIGOPOLY YES
CR4
Number
FEW
NO
/ 40 – 100 % > 1000
MANY Differentiated Homogeneous
POULTRY
YES
FEW
NO
/ 85.00 %
2766.00
MANY Differentiated
Table 3 Poultry Industry compared to Oligopoly.
Seller Entry Barrier, seller numbers, buyer entry2 barriers and buyer numbers are features of the Oligopolistic structure that will be analysed. In an oligopoly market structure barriers to entry exist where EMA (Environmental Management Authority) must grant a Certificate of Environmental Clearance (CEC) for establishment of all Poultry and Animal Husbandry Production. Start-up capital can be considered yet another barrier where the requirement is approximately TT$2 billion if one wants to compete with the four larger firms.
The poultry industry has several sellers including pluck shops and small scale farmers; however Arawak, Warner Grains Mills (WGM), Nutrina and Mastermix account for approximately 85% of the overall market share. There are no barriers for entry into this industry by buyers as they are free to purchase from whom they deem more economical or by taste preference. The industry
has many buyers, some of which are; Pricesmart, True Value, Marios, Movietown, foodbasket, KFC, Mc Donalds, Japs, Pollo Tropical just to name a few.
In analysing the four firm concentration (CR4) ratio (Table 4 ) it was clear that Trinidad and Tobago’s Poultry Industry has an oligopoly market structure as the four largest poultry firms combined holds more than 50% of the market share, together they hold approximately 85% market share. Market
Market Share
TOP 4 FIRMS
Share / %
^2
Arawak & Company LTD
45.00
2025.00
WGM
25.00
625.00
Nutrina Farms
10.00
100.00
NOTE: The market share of Nutrina and Mastermix farms has been estimated based on their customer base.
2
Mastermix Farms
4.00
Concentration Ratio, CR4
85.00
HHI
2766.00
16.00
Table 4 CR4 and HHI of Trinidad & Tobago Poultry Industry
Based on the analysis, Trinidad and Tobago’s poultry industry can be classified as an Oligopoly market structure, as the market is dominated by four (4) companies that holds majority of the market share, being Arawak, WGM, Nutrina and Mastermix with Arawak holding majority share out of the four.
Prices in an oligopoly are usually lower than in a monopoly, but higher than it would be in a competitive market and also tends to remain stable because if one company lowers the price too much, then the others will do the same. The result lowers the profit margin for all the companies, but is great for the consumer. On the downside however output in this type of industry would be less than in a competitive market and more than in a monopoly. Research and development (or innovation), location, packaging, marketing can be considered competing forces among companies in an oligopoly. Major barriers such as economies of scale, access to technology, patents, and actions of the businesses keep companies from joining oligopolies. Barriers can also be imposed by the government, such as limiting the number of licenses that are issued.
CONCLUSION The poultry industry in Trinidad and Tobago plays an important role in the agriculture sector. 0 The number of birds produced has grown at a rate of 2.93 % from 2006 to 2010 with a corresponding 4.08 % increase in the live weight of broilers resulting in over 65 million Kg of chicken sold in 2010. Firms trying to enter the industry have to overcome some entry barriers resulting in few sellers. Correspondingly, it is very easy for buyers to enter the market leading to a large number of buyers. The products in the industry are considered to be differentiated products. The concentration ratio of the top four firms is approximately 85 % with a Herfindahl-Hirschman Index of approximately 2500. These factors support our conclusion that the market structure is an Oligopoly. Firms in an Oligopoly can influence the price and quantity of a product in many ways. Two such ways are collusion (Cartel) or follow a kinked demand curve.
Figure 6 Kinked demand curve (Economicshelp n.d.)
The Kinked Demand Curve (Figure 6) maximises profits at Q1, P1 where MR=MC. Thus a change in MC, may not change the market price. Assumptions: 0
Firms are profit maximisers. Demand is price elastic for price increases. Demand is inelastic for price decreases
Figure 7 Demand curve for a collusive Oligopoly (Cartel) 嶀Ϙ (Economicshelp n.d.)
Collusion in an Oligopoly leads to the formation of a Cartel. Once formed, firms will try to fix prices and determine quotas at the level that maximizes profits. The industry will set a quantity of QM (shown in figure 7) and a corresponding price of PM. The Quantity QM distributed between the firms in the industry.
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APPENDICES Appendix 1 January 2011
January 2010
SIZE OF FARM (square Difference Difference feet) Number
Capacity
Number
Capacity
Number
Capacity
Small - less than 10 000
239
1375,949
233
1318,436
6
57,513
Medium - 10 000 - 49 999
274
5431,971
266
5618,397
8
(186,426)
Large - 50 000 and over
43
3241,446
47
4298,839
(4)
(1057,393)
TOTAL
556
10049,366 546
Change in the number of farms
2%
11235,672 10
Change in capacity
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Table 5 Numbers of broilers farms in Trinidad and Tobago 㘰ϙ
Appendix 2 PLUCK SHOP GROCERIES AND PRICES ($ / lb) SUPERMARKETS MONTH
LIVE WEIGHT
PRICES ($ / lb)
May-10
TT$5.68
TT$11.59
Jun-10
TT$6.84
TT$11.98
Jul-10
TT$5.49
TT$12.61
Aug-10
TT$5.82
TT$13.18
-11%
(1186,306)
Sep-10
TT$5.86
TT$12.72
Oct-10
TT$5.92
TT$11.79
Nov-10
TT$5.91
TT$12.70
Dec-10
TT$6.00
TT$13.17
May-11
TT$5.42
TT$11.81
Jun-11
TT$5.49
TT$13.34
Jul-11
TT$5.56
TT$11.79
Aug-11
TT$5.46
TT$11.79
Sep-11
TT$5.56
TT$13.15
Oct-11
TT$5.56
TT$13.00
Nov-11
TT$5.12
TT$12.68
Dec-11
TT$5.24
TT$13.40
Jan-11 Feb-11 Mar-11 Apr-11
㘰ϙ
CHANGE -7.75%
15.62%
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Table 6 Average weekly price of chicken Appendix 3 000 Birds WHOLESALE PERIOD
SALES
RETAIL
CONTRACTORS TOTAL
KILLED NONCONTRACTOR TOTAL
/ PROCESSORS
LIVE AND
DRESSED 2006
31918
31888
29267
2621
30
16
14
2007
32652
32566
29478
3090
86
45
41
2008
33140
33061
27643
5418
79
25
54
2009
35499
35462
28589
6873
37
7
30
2010
35664
35647
26758
8890
17
4
13
Growth Rate
2.93%
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Table 7 Numbers of broilers sold during 2006 to 2010
Appendix 4 000 Kg WHOLESALE
RETAIL KILLED
PERIOD
SALES
CONTRACTORS TOTAL
嶀Ϙ
NONCONTRACTOR TOTAL
LIVE
AND
/ PROCESSORS DRESSED 2006
56106
56016
51629
4387
90
54
36
2007
63261
63134
56888
6246
127
55
72
2008
63642
63449
61797
11652
193
40
153
2009
69174
69104
54516
14588
70
8
62
2010
65256
65214
47668
17547
42
7
35
Growth Rate
4.08%
Source: Central Statistical Office, Poultry Bulletin, Vol.13, No.354, January, 2011.
Table 8 Live weights of broilers sold during 2006 to 2010
Appendix 5
Inputs
Processing of Poultry
Outputs
Feed (wheat or corn)
Equipment/Machinery
Live poultry
Baby Chicks (Hatcheries)
Skill
Packaged meats
Vitamins
Expertise
Distribution
to
retailers/consumers Hormones
Packaging
Labour
Live Storage/Pens
Vaccines
Cold Storage
Processed meats
Quality Assurance Inspection and Testing Table 9 components of the poultry industry ?
Appendix 6
Exit costs are relatively low High capital investment Industry concentration is high Medium government regulations Fixed costs are relatively high EMA and Health certificates Industry growth is low Relatively easy access to inputs. Insignificant
product
THREAT OF NEW ENTRY
Low level of brand loyalty
differences There is no significant protection via Switching costs are low patents. Low brand loyalty MEDIUM
㘰ϙ
BUYER POWER SUPPLIER POWER LOW
MODERATE LOW COMPETITIVE
MODERATE LOW
RIVALRY
Buyer switching cost is low
Small number of suppliers
Many buyers of various sizes
Differentiation of inputs is LOW insignificant
THREAT OF SUBSTITUTION
Inputs are readily available
Switching costs are low
Switching costs are low
Substitutes
Possibility
available
of
backward
integration is moderate
are
poultry for their own use. readily
Many substitutes are available but are more costly
Customers could grow their own
Product differentiation has medium significance Many substitutes are available but are more costly
Table 10 Porter’s Five Forces Analysis of the Poultry Analysis of Trinidad & Tobago
?