3 Advantages of Starting a Chicken Slaughterhouse Business

The chicken business is not only about selling live birds; farmers can also go into the business of slaughtering chickens and selling the carcasses (dressed chicken). Chicken production keeps rising year after year, which brings businesses both gains and losses. On the plus side, the chicken produced can meet consumer demand; on the downside, farmers can end up with an oversupply. Once there is an oversupply, farmers cannot simply give away live chickens for nothing, so a glut of chicken is very likely. When that happens, chicken prices fall, and the selling price drops below the cost of production.

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The Chicken Carcass Processing Opportunity

When chickens pile up on the farm, farmers need to expand their business into other sectors. There are two kinds of businesses that can extend a chicken farming operation. The first is a chicken slaughterhouse (known in Indonesia as Rumah Pemotongan Ayam, or RPA), which produces chicken carcasses; the second is chicken meat processing. Business owners who have been raising chickens are advised to start with a slaughterhouse or carcass business first, and only move into chicken meat processing once that is running well and meeting their expectations.

Advantages of a Chicken Carcass Slaughterhouse Business

With so many businesses raising chickens today, another oversupply is entirely possible. Oversupply causes farmers to lose money, because chicken prices fall below production costs. That is why farmers are advised to run a chicken slaughtering or carcass business as well. Here are some of the advantages farmers gain from going into the chicken carcass slaughterhouse business:

Narrowing the GAP

Farmers make only a small profit if they sell their birds directly to a slaughterhouse. Yet when the slaughterhouse sells that meat directly to consumers, it can fetch a high price. This creates a gap, a fairly wide price difference between what the farmer gets and what consumers pay. When farmers run their own carcass slaughtering business, that difference shrinks, because they handle the slaughtering themselves. Current data shows that only a small number of farmers still sell live chickens to slaughterhouses, which means most farmers have already moved into the slaughterhouse or carcass business.

Shortening the Supply Chain

A long supply chain is one reason for wide price differences. Those wide differences dampen the enthusiasm of the farmers raising these chickens. Farmers who do not have their own slaughterhouse sell live chickens to wholesalers or middlemen. That arrangement is what makes the chain so long. Owning a slaughterhouse is expected to solve the problem of a long supply chain. By cutting out the extra links, the price gap narrows, and farmers can make a profit.

Higher Profit Margins

The real benefit of a chicken carcass slaughtering business is a higher profit margin. With higher profits, farmers can save for unexpected business needs and for a better future.

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If farmers face an oversupply, setting up a chicken slaughterhouse is one alternative for avoiding low prices for live birds. Opening a chicken carcass slaughtering business brings many more advantages than simply raising and selling live chickens.