# Begin By Computing The Weighted-Average Contribution Margin Per Uni Practical Poultry Farm Business Performance Calculations

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## Practical Poultry Farm Business Performance Calculations

Introduction

In this article, I share VERY practical, real world relevant tips about performance measures you can compute daily, weekly, monthly and at the end of year to accurately determine at every stage whether your poultry farm business is operating optimally.

These performance indices are NOT aggregate measures. In other words, they are NOT measured in monetary terms. Instead they have NO units, being ratios, usage rates and percentages that help to (a) establish a normal trend of your farms’ behaviour (b) quickly identify/detect departures from that trend, so that you can take timely/corrective action.

Note that these measures are tried and tested, and are actually built into a custom spreadsheet software application I built for a client who runs a Twelve thousand (12,000) layer poultry farm business.

You Can Quickly & Easily Compute Performance Indicators To Check Your Farm’s Health

It would interest you to know that this client actually currently does ALL data entry into the software application on his laptop, using filled copies of a custom record keeping form I designed (following a farm visit that involved a review of existing/needed records) for use by the farm staff DAILY.

He once shared with me how he detected some anomalies in data recorded by the supervisor, by using the automatically computed performance indices in the software.

The point being made here is that KNOWING the performance measures you can calculate to CHECK how well your farm is doing in terms of OPERATIONS and FINANCES, is crucial.

You can do it yourself, as the calculations are actually simple and easy to use. However, when you manage a large (or growing) farm enterprise, you may get to a point where it would be more value adding, if you saved yourself the hassle of having to do such computations manually.

Instead, you can automate their computation(using custom software like mine), and spend your time doing more intelligent managing of your farm business by studying the trends in your performance indices over time, so as to take timely/effect decisions that lead to overall profitability.

Here are three (3) VERY useful Poultry Farm Business performance measures you should know and use regularly:

1. Mortality Rate (%)

In the course of the laying cycle for a batch of birds on a poultry farm, there will be deaths or losses that occur for a variety of reasons. Could be disease outbreak, fire, predators etc. What is important is that measures be put in place to prevent a re-occurrence.

Then accurate documentation of such losses needs to be done, with needed stock records adjustments being made.

There is NO farm that will not have mortalities. However, the farm management needs to keep it to a minimum. You will be able to monitor the mortality rate easily by computing it daily. That way, you can detect any changes, taking timely action, so that there are no surprises at the month end!

Incidentally, when you keep track of this index, you will find it easier to reconcile otherwise unexpected drops in eggs production.

To calculate Mortality Rate (%):

Number of birds dead x 100

———————–

(Opening Stock + Closing Stock of layers) x 0.5

2. Hen Day Production (%)

Properly documented records of mortalities will aid accurate estimation of Hen Day production – which is the number of eggs produced divided by the total number of laying birds on the farm during the period considered, assuming each bird lays an egg per day.

It is well known that a bird actually takes about 26 hours to lay another egg after a preceding one. This is why we do not expect to set a target of 100% Hen Day production for our flock. It would be reasonable instead to expect that 80 to 90% of the birds will lay eggs each day, so that if our calculations yield results within that range, it would suggest reasonably satisfactory performance.

To calculate Hen Day production (%):

Number of eggs produced x 100

———————–

(Opening Stock + Closing Stock of layers) x 0.5

Your Hen Day production will drop in a manner reflective of mortalities recorded, unless you calculate as shown above. Understanding this will help you compare your results with other farms that may not be conscious of this subtle difference.

Note that this calculation method helps you really verify whether or not your birds are getting less productive, as it prevents the losses that occur from making those birds still alive appear to be laying less frequently – something that can make you start worrying or taking otherwise unneeded corrective actions.

3. Feeding Rate (grammes per bird)

Available records from farms and literate all indicate that each laying bird should eat about 100 to 105 grammes daily.

To calculate Feeding rate (grammes per bird):

Total Kilogrammes feed x 1000 x 100

——————————

(Opening Stock + Closing Stock of layers) x 0.5

Using the total Kilogrammes converted to grammes) fed to your laying birds to divide the total number of birds managed daily will tell you how well they are feeding; if they are underfeeding or being over fed.

Each condition has its own implications. Underfeeding could lead to poor laying; over feeding translates to waste – and of course higher cost of production, which you definitely want to avoid lest you eat into your profit margins!

By calculating your feeding rate for each battery cage or pen daily, you can quickly check and confirm if the birds are getting the right amount of food needed. It would also help you track your balance stocks of feed, and therefore aid planning for new purchases.

IMPORTANT NOTES:

1). To achieve a “weighted” – and therefore more realistic – result, the formulas outlined above use a derived average of the sum of the opening and closing stocks of laying birds, as denominator.

2). If you do NOT have a reliable paper based farm data recording system diligently kept by your competent staff on the farm, you will NOT be able to depend on whatever results you get from computing these performance indices. It would be like it is often said for the computer: Garbage In, Garbage Out (GIGO)!

SUMMARY

A lot of people run poultry farm businesses out here. Many plan to start. A number are hoping to borrow money from banks, or friends/relatives to launch theirs. Unfortunately, very FEW – just like their catfish farming counterparts – have ANY knowledge of what it takes to intelligently mange the business data analysis aspects of their ventures.

A sound knowledge of how to measure the operational performance of your farm business is essential for ensuring long term success. The three indices I have discussed above can help you in this regard. Learn to use them.

But that is just ONE side to it. You also need to know how to measure the financial performance of your farm business – and possibly compare it to other farms or even a generic standard.

There are at least three financial performance ratios that can be computed to tell you if your farm business is growing or NOT.

They will tell you if you have done better at the end of this year as against last year or two (2) years before. They will also tell those who invest in your business, (or who want/plan to) how financially strong your farm business is – compared to last year etc.

If you are looking to BUY a farm business, you will want to know how to compute these three (3) ratios, to be sure your investment is worthwhile!

Note that the financial ratios I mention are NOT aggregate measures like the Income Statement (also known as the Profit and Loss report) or the Net worth Statement (aka Balance Sheet). They are measures that are NOT unit based, which make them (like those farm operations measurement indices discussed above) easy to use for comparison.

You can get a special report detailing how to compute these very powerful farm business financial performance ratios from me.

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