Fiji Poultry Industry Strives for Self-Sufficiency

According to the news on The Poultry Site dated on 30^th April 2012, Fiji has reported an increase in poultry production. Economy and social plays a big part in the development of Fiji, the poultry industry is regarded as one of the most important industries. Chicken is also considered a primal food as well as an affordable source of protein for the people. Due to the ever-growing population in Fiji, the poultry industry has been facing a shortage since the past 6 years. In response to the market demands, Fiji has started investing money to expand the poultry industry to in order to increase the supply. As a result, a total of 1300m² of new poultry farms were built. Recently, Mr Joils has revealed that the industry had successfully moved towards becoming self-sufficient because around 80 to 85 per cent of poultry meats are being produced locally.

I personally think that this strategy is very crucial and has helped Fiji maintain the price everybody agrees on which is also known as the equilibrium price while being able to supply enough poultry for the people. This is because importing poultry would definitely cost more and thus, increasing the price of poultry. This would either lead to a price ceiling being implemented on poultry which will definitely upset the manufacturers or causing the government to subsidize in order to maintain price. Either way, it is not a win-win solution for the parties involved. According to Mr Cokanasigac, the government has encouraged small holder farming as a concept to strengthen and move the agriculture sector forward through the Department of Agriculture, since then, many people are starting to get involved in the industry. The project has been proven successful and being able to supply independently has helped Fiji in many ways.

If such strategy was not implemented, a substitution effect might have occurred to the industry. This is because when there is not enough supply for the people, the price of poultry will increase. Based on the law of demand, when the price increases, the quantity demanded will decrease. When the price of poultry increases, people will try to find an alternative source of food or protein. This occurrence would definitely be bad for the poultry industry in Fiji, a substitution of product would have a direct effect on the demand of poultry. This will then lead the income effect, when an industry is not doing well, many people in the industry will be affected by having reduced income. In relation to that, having a lower income would mean having to consume less, poultry as a primitive source of food in Fiji would have a decreased demand.

Based on the graph of price against quantity demanded, a decreased demand would shift the slope to the right which indicates a reduction in price and quantity demanded. This leads to the elasticity of the product, when it comes to elasticity of poultry, it is only affected by the closeness of substitutes and the proportion of income spent on the good. In Fiji although poultry is the primal and one of the most affordable source of food, when the price increases, consumers would consider it to be equivalent to alternative products such as milk or cheese which are also good sources of protein. Furthermore, when the price or poultry rises, it would indirectly cause a larger proportion of income spent on the good, this will in time discourage consumers from buying as much poultry as they used to buy. This proves that poultry in Fiji is considered as an elastic good. In other words, the percentage change in the quantity demanded exceeds the percentage change in price of poultry.

Mr Joils also stated that the industry had recently reported that they have recently resumed the sale of day old chickens to rural communities and reviewed its feed pricing to ensure affordability. When some of the prices have been changed the supply of chickens are known to depend on the short run supply, this means that the quantity supplied of chickens will respond in a short time. For example, when the quantity supplied is more than the quantity demanded, the price of chickens will decrease giving consumers a surplus. In order for chicken farmers to bring the price back to the equilibrium actions have to be taken. For the case of chickens, some of the supplies are already in the market so the price cannot be affected overnight. There are cases where actions like slaughtering or drowning chickens are taken in order to reduce the supply and bring the price of chickens back to the equilibrium. Some may think that it is inappropriate but this is what was done in order to achieve the balance in the industry. On the other hand, when there is a shortage of chickens the industry can also consider steps such as injecting growth hormones to the chickens to speed up the process and achieve better production efficiency. The act of reviewing feed pricing is to ensure that the chickens will not cost too much to breed. This may also lead to overpricing of chickens in the market.

In the near future, the poultry industry might face problems such as having unprofitable prices of products. When this occurs people in the industry might choose to move to an alternative industry causing the supply of poultry to decrease. To prevent this from happening, the government can impose a price floor for chickens. This makes it illegal for the prices of poultry to go below a specified level. Having a price floor for the products offered will provide a stable profit from the products in the industry. In short, Fiji has reacted appropriately to the shortage of poultry. The industry regained stability without affecting the quality or the price of the products.   

-Wayne Choo