Profits, cash flows and risk in a hybrid broiler production system for small-scale farmers in Rwanda

Purpose This study conducted an economic evaluation of a hybrid poultry production system implemented in Rwanda through a public-private partnership from 2017 to 2020. The program, funded by the United States Agency for International Development and other agencies, subsidized farmers with a zero-interest loan to acquire and equip a coop to grow 100 chickens per flock. The main objective of this study was to evaluate the financial performance of 489 farmers who participated in the program. A secondary objective was to determine whether small-scale farmers in this program could be competitive relative to Rwanda’s commercial broiler production standards or those in other developing countries. Design/methodology/approach The study estimated and analyzed deterministic and stochastic financial statements and metrics. Relevant financial statement items were simulated stochastically according to observed variability within the data by selecting the best-fitted distributions according to the Akaike Information Criterion. The database contained over 2,200 farmer/flock observations from 489 farmers participating in the Rwanda hybrid broiler program from 2017 to 2020. Analyzed outputs per flock or production cycle included net income, cash flow before labor, the return on sales, the return on assets and selected production parameters. Findings The evaluated hybrid system had production standards comparable to commercial production. However, identified opportunities for improvement included increasing the number of flocks harvested per year and reducing the feed conversion ratio (FCR). The financial analysis revealed a 70.5% probability (64.3% probability without a subsidy) that farmers would break even or generate a positive net income. Regarding cash flow before labor, farmers were 78.3% likely (72.8% without a subsidy) to take cash home. The analysis also found that farmers’ profitability and the FCR improved over time as they gained experience producing chickens. Originality/value This analysis showed that a hybrid broiler production system has the potential to succeed in Rwanda and help the most economically vulnerable farmers in this country. Such a model would contribute to Rwanda’s 2017 long-term national livestock master plan, which aims to reduce poverty and increase national security.