Financial risk management strategy for broiler farmers in facing fluctuations in prices of feed and products

¹ Livestock Technology and Management Study Program of Vocational Studies, IPB University, Bogor, Indonesia
² Agribusiness Management Study Program of Vocational Studies, IPB University, Bogor, Indonesia
³ Accounting Study Program of Vocational Studies, IPB University, Bogor, Indonesia

^* Corresponding author: ir.da@apps.ipb.ac.id

Abstract

This study investigates financial risk management strategies for broiler chicken farmers, focusing on price fluctuations of feed and livestock products. We examined a 46,000-animal farming operation, analyzing aspects from cage preparation and chick reception to feed provision, environmental maintenance, and waste management. Marketing processes and results were also scrutinized. Primary data, including production costs (cage and feed preparation), livestock performance (efficiency indicators), management data, and potential waste income, were collected through observation and in-depth interviews. Marketing data, such as selling prices, trade chains, and profit/loss, were also gathered. We used quantitative descriptive analysis to identify cost patterns, production efficiency, and marketing outcomes. Using sensitivity analysis, the study reveals that fluctuations in feed costs and selling prices have a substantial impact on farm profitability, with feed price increases being the most critical determinant of financial outcomes. This underscores the importance of adaptive risk management strategies within broiler partnership models. Recommended risk management strategies include diversifying feed sources and improving feed efficiency. This study offers insights into effective strategies for broiler farmers to manage financial risks from price volatility, ultimately enhancing farm resilience.