Financial Risk Management Strategy for Poultry Farmers in Facing Fluctuations in Prices of Feed and Livestock Products

Abstract

This study aims to analyze the financial risk management strategies implemented by broiler chicken farmers in dealing with fluctuations in feed and livestock product prices, with a case study on a farming operation with a population of 46,000 animals. The study explores aspects of cage preparation, chick reception, handling of Day Old Chick (DOC), provision of feed and drinking water, environmental maintenance, livestock performance recording (feed consumption, weight gain, Feed Conversion Ratio, uniformity, depletion, performance index), waste management, as well as marketing processes and results. Primary data were collected through observation and in-depth interviews with farmers, including production cost data (including cage and feed preparation costs), livestock performance data as an efficiency indicator, management data, and potential income from waste, as well as data on marketing processes and results (selling price, trade chain, profit/loss). Quantitative descriptive analysis was used to identify cost patterns, production efficiency, and marketing results. Furthermore, sensitivity analysis and Monte Carlo simulation were used to evaluate the impact of price fluctuations on risk management. The analysis results show that a 10% change in feed prices can reduce profitability by up to 15%, and recommended risk management strategies include diversifying feed sources and improving feed efficiency. The results of this study are expected to provide an in-depth understanding of effective strategies that can be implemented by broiler chicken farmers in managing financial risks due to price volatility, as well as recommendations for enhancing the financial resilience of farming operations.