EVC-based Pricing Calculation for ODI Case

The costs associated with ODI vs. Debeaking

ODI Debeaking

Labor Labor

Price of lenses (X) Egg loss due to trauma

Mortality Mortality

Feed

ODI cost = labor + lens (set it as X) + mortality

Debeaking cost = labor + mortality + feeding loss + egg loss

Set two costs as the same and solve for X:

X = (labor_debeaking – labor_ODI) + (mortality_debeaking – mortality_ODI)

+ (feeding loss_debeaking) + (egg loss_debeaking)

Savings on labor

~0 (debeaking: 220 birds/hr, $7.5/hr with a crew of 3; ODI: 225 birds/hr, similar crew, cancelled out)

Savings on Mortality Mortality rate is reduced from 9% to 4.5%

Cost per surviving bird for Debeaking = 2.4 + 2.4*9% = $2.616 per bird (assume the replacement bird

won't die again)

Cost per surviving bird for ODI = 2.40 + 2.4*4.5% = 2.508 per bird (assume the replacement bird won't

die again)

Savings on mortality = 2.6160 -2.5080 = 10.80 cents /bird/year

Savings on Feed

Quantity of feed saved per bird per year: 156 lbs per inch per day /20,000birds * 3/8 inch (at least) =

0.0029 lbs per bird per day

Price of feed: $158 per ton / 2000 lbs per ton = 7.90 cents/lb

Savings per bird per year = 0.0029 lbs per bird per day * 7.90 cents/lb * 365 days

= 8.36 cents per bird per yr

Savings on egg loss due to trauma Number of egg loss prevented: 1 egg (no eggs in first week, recovered to one egg loss by month 5)

Price of egg: 53 cents per dozen / 12 = 4.42 cents per egg

Savings on egg loss: 4.42 x 1 = 4.42 cents/bird/yr

So solve for X X = (labor_Debeaking –labor_ODI) + (mortality_Debeaking-mortality_ODI) + (feeding

loss_Debeaking) + (egg loss_debeaking)

= 0 + 10.80 cents (mortality) + 8.36 cents (feed) + 4.42 cents (egg loss)

= 23.58 cents