The construction of the Malayan domestic fowl industry is different from the 1 that existed in the 1890ss, due mostly to perpendicular coordination and integrating. Independent and self-operated activities that one time dominated the production system have been replaced by contracts and outright ownership and operation of the production by planimeters. By this many single domestic fowl treating companies own about all facets of production-breeding farms, generation farms, hatcheries, provender Millss, some broiler turning farms, and processing workss. The construction hence, involve an facet of incorporate production-marketing systems which involves a individual house owning and operating every facet of production from importing parent stock to marketing packaged chicken-meats in company owned mercantile establishments. For case the ex-farm degree has been dominated by the planimeters because there are merely four ( 4 ) companies commanding 100 % portion of the importing of the breeder birds. The four incorporate companies are Ayamas breeder Farm Sdn Bhd, CAB engendering Farm Sdn Bhd, Charoen Pokphand Farm sdn Bhd and Leong Hup Poultry Farm Sdn Bhd. There are 90 two ( 92 ) Parent stock ( generation ) farms owned by 20 five ( 25 ) separate companies. Harmonizing to DVS ( 2012 ) study 10s ( 10 ) of these generation companies are owned and operated by planimeters. There are 50 three ( 53 ) hatcheries in Peninsular Malaysia, thirty one or more than 58 % of the hatcheries owned and operated by planimeters. The entire day-old biddies ( DOC ) production in 2011 by the industry was estimated at 653,006,812 million biddies, and the planimeters contributed 70.75 % of the sum ( DVS, 2011 ) . The Department of Statistics ( DOS ) Malaysia study on the nose count of agricultural constitutions shows there are merely 292 domestic fowl farming constitutions registered in Malaysia as against more than 3,500 reported by DVS proposing that planimeters are likely to owned and operate multiple farms and that a figure of independent operated farms are non officially registered. Report from DVS, ( 2011 ) have shown that Malayan broiler-chicken industry control 62.56 % of the entire poulet meat supply in the Peninsular Malaysia and non-integrators control 21.4 % portion of the supply.

Problem statement

Although the incorporating production system allows the house to accomplish economic systems of graduated table, decrease minutess costs, every bit good as the ability to closely supervise merchandise quality at every phase of production by commanding all inputs and procedures at every degree. However, on the other manus the traditional structure-conduct-performance paradigm hypothesized that the degree of concentration in a peculiar market will act upon the grade of competition among houses in that market. Markets that are extremely concentrated ( few big houses ruling the market ) are less competitory than markets where concentration is low. As such, harmonizing to the hypothesis, houses in less competitory environment charge higher monetary values and harvest monopolistic net incomes. A higher monetary value above fringy cost implies inefficient allotment of resources and the resulting deduction is production inefficiency. A concentrated industry construction could therefore weaken the efficiency and effectivity of market public presentation. In position of this, the survey is aimed to measure the indexs of competition in the supply concatenation of the Malayan domestic fowl industry.

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Aim of the Study

In wide sense the aim of the survey is to measure the indexs of fight of the Malayan domestic fowl industry supply concatenation ; specifically

To measure the construction, behavior and market public presentation of the Malayan domestic fowl supply concatenation

To find the strategic behavior of the houses and relationship among supply concatenation participants of the industry.

To depict the farm-retail-wholesale monetary value spread along the supply concatenation to detect symmetricalness or otherwise in the monetary value transmittal procedure within the industry as an index of monetary value compositor and taker

Theoretical Framework and Methodology

The construct of S-C-P which emanated from industrial organisation surveies chiefly to analyse the competitory conditions in industries by analyzing how the industry construction relates to market behavior and its public presentation was explored in this survey. The S-C-P model posits that as market construction deviates from the ideal perfect competition, the extent of fight of the market will diminish and accordingly a diminution in market efficiency ( Scarborough and Kydd, 1992 ) .

The S-C-P Model

Concentration Ratio categorization

Market construction CR4 CR8

Highly concentrated 75-100

Reasonably concentrated 50-75 somewhat concentrated 25-50 Atomistic 0-25 & A ; lt ; 33


HHI & A ; lt ; 1000=concentrated market

1000 & A ; lt ; HHI & A ; lt ; 1800=moderately concentrated

HHI & A ; gt ; 1800=highly concentrated

( Joe Bain ‘s categorization ) Market Structure Indexs

Concentration Ratio

Herfindahl-Hirschman Index

Gini Coefficient

Lorenz Curve

Market behavior Indexs

Ad Intensity

Capital Intensity

Market Performance Indexs

Tax return on Assetss

Tax return on Shareholders ‘ Equity

Tax return on Gross saless

Price Asymmetry Model

The survey besides incorporated the construct of co-integration to analyze the relationship between monetary values i.e. farm-wholesale-retail in the monetary value transmittal mechanism. Von Cramon-Taubadel and Fahlbusch ( 1994 ) were among the first to integrate the construct of co-integration into theoretical accounts of asymmetric monetary value transmittal. They extended a standard mistake rectification theoretical account ( ECM ) by integrating of asymmetric accommodations footings. The process involves gauging a relationship between monetary values ( e.g retail and farm-level ) utilizing simple ordinary least square ( OLS ) . If the monetary values can be referred to as co-integrated, the estimated coefficient of the OLS is an estimation of the long-run equilibrium relationship between the two variables. The inclusion of the ECT allows the estimated monetary value to react to the alterations in the explanatory variables but besides correct any divergence from the long-term equilibrium that may be left over from the old periods. The ECT theoretical account takes the undermentioned signifier ;

?= + + + + Z*EC1t-1 + ___________________________ ( 1 )

= + + + ?3?Pwt-I + Z*EC2t-I + _____________________ ( 2 )

Where, ?i and ?i are short-term coefficients and EC1 and EC2 are error rectification footings, and are remainders in the equation ( 1 ) and ( 2 ) severally.

Consequences and Discussion

S-C-P Consequences

The analysis of the consequences shows that there are 561, 567, and 447 houses runing in the full industry in 2009, 2010, and 2011 severally. The houses were categorized into six industries based on five digit codification of the MSIC, 2008. The six industries were further grouped based on type of concern of the house into ex-farm, sweeping and retail market supply concatenation. The consequences revealed there has been increase in the entire gross in the full industry from RM12.2b in 2009 to RM13.6b in 2011. The mean CR4 and CR8 of the ex-farm market degree have somewhat increase from 2009 to 2011 but remain within the quartile of reasonably concentrated. The sweeping section witnessed the same tendency with CR4 31.9 and 40.6 % in 2009 and 2001 severally. The retail market degree has moved from low concentration in 2009 to extremely reasonably concentrated quartile. The HHI index of the ex-farm market was above 1800 quartile for the three old ages of mention, while the sweeping remain in the low concentration throughout the survey old ages the retail industry has roused from HHI 205, 980 and 1395 in 2009, 2010 and 2011 severally. The public presentation indictors revealed there has been positive but low return on assets for both market degrees in the twelvemonth of mention, the ROE and ROS are besides positive but somewhat better with the values increasing over the last three old ages of mention.

Asymmerty Results

The survey examines the perpendicular monetary value relationship to measure grade of market power and competition along the market supply concatenation. Monthly norm for the whole Malaysia monetary value informations 2004M01 to 2010M12 of standard broiler poulet for farm gate, sweeping and retail were analyze utilizing co-integration technique. The consequences of the unit root trial for both ADF and PP rejected the void hypothesis of unit root at 5 % significance after first difference of the series indicating that the variables are integrated of same order I ( 1 ) . All the slowdown choice standards LR, FPE, AIC, SC and HQ suggest optimal slowdown of 1. The Johansen-Juselius co-integration trial consequences show both Trace trial and Max-Eigen trial are statically important to reject the void hypothesis of no co-integration among the variables ( r=0 ) at 5 % significance degree. The VECM consequence indicates the causality of variables in the system, and the way of causality within the sample period. The coefficient of the slowdown dependent variable and the mistake rectification term in equation ( 2 ) are both important bespeaking a bi-directional between retail monetary value and farm monetary value. There is unidirectional causality from farm to wholesale but at 10 % significance degree. The consequence is consistent with earlier surveies, but decision could non be made at this point because the causality does non supply us with the dynamic interactions. The dynamic interaction analysis among variables was conducted through discrepancy decomposition ( VDC ) and impulse response maps ( IRF ) .

Table 1: Unit of measurement Root Testing Results

Augmented Dickey Fuller

( ADF )


( PP )



Changeless Without Tendency

Changeless With Tendency

Changeless Without Tendency

Changeless With Tendency
















First difference
















** and * denotes important at 5 % and 10 % significance degree.

Table 2: Consequences of Optimum Lag Order Selection Criteria











































*indicates lowest slowdown order of the standards. FPE= Final forecaster mistake, AIC=Akaike information standards SC=Schwarz information standards, HQ=Hannan-Quinin information standards

Table 3: Co-integration trials consequences


No. of CE ‘ ( s )



Critical Values ( 5 % )

























Note: ** donates Significant at 5 % degrees.

Table 4: Causality and monetary value transmittal consequences

Dependent Variables

Independent Variables

Long-run causality

Short-run Causality






[ 0.002 ]


[ 0.176 ]


( 3.353 )



[ 0.844 ]


[ 0.623 ]


( 5.522 )



[ 0.784 ]


[ 0.090 ]


( 3.060 )

* and ** denotes significance at 10 % and 5 % significance degree, severally. The figures in the parenthesis denote as t-statistics and figures in the squared brackets represents as p-value. RP=log retail monetary value, FP= log farm degree monetary value, WP=log sweeping monetary value and ? denotes change.