Original Research Article Financial Risk Threshold Determination in Broiler Enterprise in Delta State, Nigeria

Increasing concern about the problem of risk associated with poultry business has highlighted the need for its comprehensive understanding. A clear knowledge of financial risk in broiler enterprise will pave the way to efficient mitigation strategies among broiler producers. This study investigates financial risk programming, and threshold analysis in broiler enterprises in Delta State, Nigeria. Probabilistic (multi-stage) sampling procedure was adopted in selecting 200 broiler farmers for the study. Structured questionnaire was used to collect 6 years time series data (2004-2009) from the respondents. Collected data were analyzed using descriptive statistics, QSB version of linear programming model, and threshold model. The results of the study showed that broiler enterprise is profitable with optimum net profit of N47,925 and N357,558 per small scale and large scale producers, respectively. An optimum profit of N389.9 per bird was earned by broiler producers. The output of QSB version of linear programming showed that at the stocking rate of 20, 692 birds, financial risk is optimized at 15%. The threshold regression model revealed that the broiler enterprise in the study area generally operated below the risk threshold. Simple regression indicated that expected return is positively and significantly (P < 0.05) related with financial risk. Incorporating financial risk as a constraint in the broiler farm plan is a useful contribution that will enhance efficient farm planning. The optimal return and financial risk threshold provided in this study will improve the confidence level of stakeholders in poultry industry such as current and potential investors, insurance institution and institutional lenders. This will translate to growth in the broiler subsector of the poultry industry in Delta State