PROFITABILITY AND COST EFFICIENCY ANALYSIS OF OPEN SHED BROILER FARMERS

Every business is grossly dependent on how best productive resources are tie together to achieve profit maximization. This study of profitability and cost efficiency was conducted of open shed broiler farmers in Punjab, Pakistan. Data was collected from 60 broiler respondents using proportional allocation sampling technique during February, 2014. Stochastic cost frontier function was used for analysis of data. Profitability analysis revealed that net profit in study area was PKR. 30,830.49 (1 USD = 99.7 PKR). Net profit margin was 3.99 percent and Rate of return on investment 4.16 percent while Shepherd Futeral coefficient was 24.06, Revenue per rupee of input cost 1.01 and Cost benefit ratio was 1.04. Maximum likelihood estimation revealed that cost efficiency range from 0.425 to 0.972 with mean efficiency of 0.741 implies that on average farmer was 74 percent efficient in cost saving. In other words that if the most inefficient broiler farmer in the sample was to achieve the technical efficiency level of its most frontier counterpart could realize 54.7 % per cent cost savings. Results further showed that day old chicks, feed and labor, vaccination/medication cost and rent of building was positively and significantly affected broiler production cost. Results of technical inefficiency effect mode