Animal Production Science Animal Production Science Society
Food, fibre and pharmaceuticals from animals

Contract bonus systems to encourage biosecurity adoption on small-scale broiler farms in Indonesia

Anak Agung Sagung Putri Komaladara A , Ian Patrick B D and Nam Hoang C
+ Author Affiliations
- Author Affiliations

A Centre on Food Availability for Sustainable Improvement, Udayana University, Jl. P.B. Sudirman, Denpasar, Bali, 80232, Indonesia.

B Institute for Rural Futures, University of New England, Armidale, NSW 2351, Australia.

C UNE Business School, University of New England, Armidale, NSW 2351, Australia.

D Corresponding author. Email:

Animal Production Science 58(3) 595-600
Submitted: 4 December 2015  Accepted: 9 September 2016   Published: 29 November 2016


Ongoing economic losses in the poultry industry, due to endemic diseases such as highly pathogenic avian influenza and Newcastle disease, ensure that biosecurity adoption on small-scale broiler farms remains a priority for Indonesia. However, given their economic constraints and the nature of the market for their products, these smallholders need to be convinced that there is an economic benefit to them from investing in biosecurity. As the majority of smallholders manage their birds under a contract, these contract companies not only need to be involved in the discussion but, if they are not prepared to assist directly in assisting with improved biosecurity, need to ensure that the conditions of the contract do encourage this smallholder investment. Every contract includes price and performance bonuses and, although the nature of these vary between contract companies, they are designed to encourage productivity improvement. This study evaluates existing contract bonus systems in six major contract companies in Indonesia and their capacity to encourage investment in biosecurity. Results indicated that the price bonus plays a significant role in providing additional smallholder income. If higher than expected sale prices are obtained, contracts with companies 3, 5 and 6 ensure that a greater proportion of this price is passed on to smallholders. Contracts 2, 4, and 6 provide farmers with higher performance bonuses, indicating that these companies encourage farmers to improve production efficiency. Overall estimates after the initial year of biosecurity investment show improvements in returns, where farmers can receive up to USD 2.73 for every dollar invested in biosecurity.

Additional keywords: agribusiness, economics, HPAI, poultry, smallholder.


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