Proceedings of the International Conference on Science and Technology (ICOSAT 2017)

Financial Assessment and The Impact of Government Incentives on Contract Broiler Farming in Peninsular Malaysia

Authors
Zineb Abdulaker Benalywa, Mohamed Mansor Ismail, Mad Nasir Shamsudin, Zulkornain Yusop
Corresponding Author
Zineb Abdulaker Benalywa
Available Online August 2017.
DOI
https://doi.org/10.2991/icosat-17.2018.8How to use a DOI?
Keywords
Broiler contract farming, Government incentives, Financial viability, Malaysia
Abstract
The broiler industry in Peninsular Malaysia has undertaken significant structural changes; mainly there has been a gradual move towards contract farming with an increasing number of broiler farmers working under contract arrangements for commercial firms and integrators. DVS indicated that the broiler contract farming system dominated around 75% of the domestic broiler production in Malaysia. Private Profitability plays a vital role in the sustainability of the broiler industry. To enhancement the agricultural performance in the country, the Malaysian government has been introduced several policies. Financial profitability is gauged using three agriculture incentives namely Pioneer Status (PS), Investment Tax Allowance (ITA) and Accelerated Capital Allowance (ACA). Though, the lack of effectiveness of the program is still of concern to the agricultural sector given the significance of poultry in Malaysia. The purpose of the study was to determine the extent to which those incentives affect the feasibility of the industry and financially assisting the viability of the project of contract farming in Peninsular Malaysia. Financial evaluation instruments were used to compute the assessment of firm’s financial projection mainly, Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP) and Profitability Index (PI). The questionnaire used as a tool for data collection and a face-to-face interview was organized for the 206 broiler contract farmers as respondents. The result reveals that the stock farmers who involve in contract farming are viable; highly profitable and rapidly recover its initial investment Moreover, with Government Incentives, the majority of stockbreeders gain positively. For instance, with a combination between ACA and PS or/and ACA and ITA, the tendency of high financial viability mostly occur in the broiler investment.
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This is an open access article distributed under the CC BY-NC license.

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Cite this article

TY  - CONF
AU  - Zineb Abdulaker Benalywa
AU  - Mohamed Mansor Ismail
AU  - Mad Nasir Shamsudin
AU  - Zulkornain Yusop
PY  - 2017/08
DA  - 2017/08
TI  - Financial Assessment and The Impact of Government Incentives on Contract Broiler Farming in Peninsular Malaysia
BT  - International Conference on Science and Technology (ICOSAT 2017) - Promoting Sustainable Agriculture, Food Security, Energy, and Environment Through Science and Technology for Development
PB  - Atlantis Press
UR  - https://doi.org/10.2991/icosat-17.2018.8
DO  - https://doi.org/10.2991/icosat-17.2018.8
ID  - Benalywa2017/08
ER  -