Financial Efficiency of Closed House and Open House Systems in Small and Medium Scale Broiler Production in West Sumatra

Abstract

Broiler producers must decide whether production scale or housing type is the main driver of financial performance. This study quantifies the relative effects of enterprise scale and housing system on broiler farm feasibility in West Sumatra using a structured comparative case study of four farms representing a 2×2 matrix of housing (closed vs open) and scale (about 5,000 vs 15,000 birds). Cycle-level production and financial records were analyzed using standard farm-management indicators, including profit and loss per cycle (annualized to five cycles), the revenue-to-cost ratio (R/C), break-even price, cost composition, and a capital-expenditure profile, with outcomes standardized to rupiah per kilogram of liveweight. The results show that scale is the dominant determinant of economic outcomes, as medium-scale units outperform small-scale units across profitability and efficiency indicators regardless of housing type. Within the medium scale, closed housing further improves performance by lowering unit costs and producing the highest R/C ratio and the lowest break-even price, despite higher depreciation and electricity shares. Feed and day-old chicks dominate total cost across systems, while CAPEX is concentrated in buildings and equipment for closed houses and in backup power for small open houses. Sensitivity scenarios (price −10%, feed +10%, and a combined shock) indicate that small-scale operations are more exposed to downside risk, whereas medium-scale units provide greater buffering capacity. These findings suggest that scale consolidation should be prioritized before adopting high-capital closed-house technology, and that closed housing acts as a performance amplifier when throughput is sufficiently large and stable.