INFLUENCE OF INCREASE IN PRICE ON POULTRY PRODUCTION IN NIGERIA
REVIEW OF RELATED LITERATURE
INTRODUCTION
Poultry are the smallest livestock investment a village household can make. Yet the poverty stricken farmer needs credit assistance even to manage this first investment step on the ladder out of poverty. Poultry keeping is traditionally the role of women in many developing countries. Female-headed households represent 20 to 30 percent of all rural households in Bangladesh (Saleque, 1999), and women are more disadvantaged in terms of options for income generation. In sub-Saharan Africa, 85 percent of all households keep poultry, with women owning 70 percent of the poultry. (Guéye, 1998 and Branckaert, 1999, citing World Poultry 14). Income generation is the primary goal of family poultry keeping. Eggs can provide a regular, albeit small, income while the sale of live birds provides a more flexible source of cash as required. For example, in the Dominican Republic, family poultry contributes 13 percent of the income from animal production (Rauen et al., 1990). The importance of poultry to rural households is illustrated by the example below from the United Republic of Tanzania. Assuming an indigenous hen lays 30 eggs per year, of which 50 percent are consumed and the remainder has a hatchability of 80 percent, then each hen will produce 12 chicks per year.
2.2 THEORETICAL FRAMEWORK
One of the key pillars on which the neoclassical theory of the firm stands is the assumption of profit maximization. It is a simple but controversial assumption that states that the objective of the firm is wholly and single-mindedly the maximization of profit. Many adherents of profit maximization have advanced a lot of arguments in support of their position. These include one based on the realism and predictive value of the assumption of profit maximization itself and the other based on a supposedly long-run survivalist instinct of the firm. But there are three types of factors, which may militate against a firm achieving maximum profit (Olayemi, 2004). They are:
(i) Uncertainty and lack of information needed for rational decision making;
(ii) The pursuit of multiple objectives by the firm of which profit earning may be only one of them;
(iii) Restraint imposed on the single-minded pursuit of profit maximization by such other considerations as the prevention of potential entry of new firms as competitors, the long-term survival of the firm and self-preservation of the top management of the firm, which short-run profit maximization alone, would not guarantee. The issue of profit maximization is, therefore, not about whether the simple types of firms envisaged in traditional theory do strive to earn the highest profit achievable, given real-life uncertainty, inadequate information and other constraints, or whether they behave as if they maximize profit, but rather about achieving a minimum satisfactory profit since firms can survive, even over the long period, without maximizing profit, if there are adequate barriers against actual entry or threat of new entry of firms in the forms of, say, limit-pricing, government legislation, product differentiation, absolute cost advantage, large initial capital requirement for entry, and large economies of scale.
