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The broiler industry in Peninsular Malaysia has undertaken significant structural changes; mainly there has been a gradual move towards contract farming with an increasing number of broiler farmers working under contract arrangements for commercial firms and integrators. DVS indicated that the broiler contract farming system dominated around 75% of the domestic broiler production in Malaysia. Private Profitability plays a vital role in the sustainability of the broiler industry. To enhancement the agricultural performance in the country, the Malaysian government has been introduced several policies. Financial profitability is gauged using three agriculture incentives namely Pioneer Status (PS), Investment Tax Allowance (ITA) and Accelerated Capital Allowance (ACA). Though, the lack of effectiveness of the program is still of concern to the agricultural sector given the significance of poultry in Malaysia. The purpose of the study was to determine the extent to which those incentives affect the feasibility of the industry and financially assisting the viability of the project of contract farming in Peninsular Malaysia. Financial evaluation instruments were used to compute the assessment of firm’s financial projection mainly, Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period(PBP) and Profitability Index (PI). The questionnaire used as a tool for data collection and a face-to-face interview was organized for the 206 broiler contract farmers as respondents. The result reveals that the stock farmers who involve in contract farming are viable; highly profitable and rapidly recover its initial investment Moreover, with Government Incentives, the majority of stockbreeders gain positively. For instance, with a combination between ACA and PS or/and ACA and ITA, the tendency of high financial viability mostly occur in the broiler investment.

Financial Assessment and The Impact of Government Incentives on Contract Broiler Farming in Peninsular Malaysia