Jurnal Peternakan Available online at:
http://ejournal.
uin-suska.
id/index.
php/peternakan DOI:http://dx.
org/10.
24014/jupet.
Vol 23.
: 26-35 February 2026 p-ISSN: 1829-8729 | e-ISSN: 2355-9470 Financial Efficiency of Closed House and Open House Systems in Small and Medium Scale Broiler Production in West Sumatra Henggi Apedro1* & Afiza Wulandari1 1 Animal Science Department.
Faculty of Agriculture.
Lambung Mangkurat University Jl.
Jenderal Achmad Yani Km.
35,5.
Banjarbaru.
Kalimantan Selatan.
Indonesia * Email Correspondence: henggi@ulm.
Oo Submitted: 29 December 2025 Oo Revised: 13 February 2026 Oo Accepted: 28 February 2026 ABSTRACT.
Broiler producers must decide whether production scale or housing type is the main driver of financial performance.
This study quantifies the relative effects of enterprise scale and housing system on broiler farm feasibility in West Sumatra using a structured comparative case study of four farms representing a 2y2 matrix of housing .
losed vs ope.
and scale .
bout 5,000 vs 15,000 bird.
Cyclelevel production and financial records were analyzed using standard farm-management indicators, including profit and loss per cycle .
nnualized to five cycle.
, the revenue-to-cost ratio (R/C), break-even price, cost composition, and a capital-expenditure profile, with outcomes standardized to rupiah per kilogram of liveweight.
The results show that scale is the dominant determinant of economic outcomes, as medium-scale units outperform small-scale units across profitability and efficiency indicators regardless of housing type.
Within the medium scale, closed housing further improves performance by lowering unit costs and producing the highest R/C ratio and the lowest break-even price, despite higher depreciation and electricity shares.
Feed and day-old chicks dominate total cost across systems, while CAPEX is concentrated in buildings and equipment for closed houses and in backup power for small open houses.
Sensitivity scenarios .
rice Oe10%, feed 10%, and a combined shoc.
indicate that small-scale operations are more exposed to downside risk, whereas medium-scale units provide greater buffering capacity.
These findings suggest that scale consolidation should be prioritized before adopting high-capital closed-house technology, and that closed housing acts as a performance amplifier when throughput is sufficiently large and stable.
Keywords: Broiler production, cost efficiency, housing systems.
scale economies INTRODUCTION Broiler chicken is the main source of affordable animal protein in Indonesia, so the financial health of broiler farms matters for household food budgets and rural livelihoods.
The industry has expanded and modernized while moving toward tighter coordination with integrators and contract farming (Nugroho.
Setiadi et al.
, 2022.
Prior research has examined broiler performance and farm feasibility under tropical conditions by discussing the managerial implications of housing systems and enterprise size.
Openhouse facilities remain common among smallholders because they require lower initial capital, yet their exposure to tropical heat, humidity, and pathogen loads can undermine survival, growth, and feed conversion efficiency.
Closed-house designs, in contrast, allow tighter control of temperature, humidity, and ventilation and are often associated with improved technical performance, but they demand higher capital investment and greater reliance on electricity and mechanical systems (Farida et al.
, 2022.
Honig et al.
, 2024.
Lara & Rostagno, 2013.
Susanti, 2.
Studies in tropical climates highlight how closed houses can reduce heat stress and stabilize production outcomes, and Indonesian evidence likewise reports better growth parameters and lower Copyright A 2026 by Author.
This work is licensed under a Creative Commons Attribution (CC-BY) License Jurnal Peternakan.
Vol 23.
: 26-35.
February 2026 mortality relative to open designs (Farida et al.
Susanti, 2.
At the same time, enterprise size shapes economic trade-offs: small flocks face fixed and operating costs more acutely, whereas mediumscale operations can benefit from economies of scale but require larger working capital and may depend more on external finance.
In Indonesia, vertical integration and partnerships can improve efficiency and incomes, although outcomes vary with scale, cost structure, feed price volatility, and financing constraints (Ismanto et al.
, 2024.
Setiadi et al.
, 2022.
Wantasen et al.
, 2.
Financial feasibility is commonly assessed through farm-management benchmarks such as profit and loss statements, revenue-to-cost (R/C) ratios, break-even points (BEP), payback periods, and cost composition, which together translate biological performance and input prices into decision-relevant indicators (Fikrianti dkkl.
, 2023.
Santoso et al.
Sari et al.
, 2021a.
Tafsin et al.
, 2.
However, an important analytical gap Although multiple studies suggest financial advantages of closed poultry houses, many empirical comparisons either do not segment results by enterprise size or focus only on closed-house superstructures, leaving guidance coarse and insufficiently tailored to the scale-specific contexts faced by producers (Farida et al.
, 2022.
Honig et al.
, 2024.
Susanti.
This limitation matters because the financial justification for adopting a highercapital closed house is inherently scaledependent: the same technology can produce different cost structures, risk exposure, and cashflow recovery profiles between small and medium farms.
To address this gap, this study evaluates open and closed housing at two enterprise sizes .
bout 5,000 and 15,000 bird.
in West Sumatra.
Indonesia.
Using farm-management indicators .
rofit and loss, revenue-to-cost (R/C) ratio, break-even price and volume, and payback perio.
, we quantify the financial effects of each housing system by scale.
The study contributes by clarifying when the higher capital requirements of closed houses are financially justified, by reporting decision-relevant metrics aligned with farm budgeting and lender appraisal, and by providing region-specific evidence to guide modernization choices for small and medium producers (Nugroho, 2020.
Setiadi et al.
, 2.
MATERIALS AND METHODS
Study Area and Case Selection This study was conducted in West Sumatra.
Indonesia, a broiler-producing region where production has increasingly shifted toward tighter coordination with integrators and contract farming (Nugroho, 2020.
Setiadi et al.
The research applied a comparative case study design structured around a 2y2 analytical matrix defined by housing system .
losed versus ope.
and enterprise scale .
pproximately 5,000 versus 15,000 bird.
Four farms were purposely selected to represent each housing-by-scale combination to support a most-comparable and contrast logic that clarifies whether observed financial differences are more strongly associated with housing technology or enterprise scale.
Case selection was justified on the basis that each farm had clear system classification, maintained cycle-level production and financial records that could be verified for calculation, operated under comparable market and partnership conditions so that the analysis is not dominated by differences in procurement or marketing channels, and represented scale levels that reflect realistic decision thresholds faced by producers when considering modernization.
This design aims to produce decision-oriented evidence about capitalAeperformance trade-offs under realistic farm conditions, rather than statistically generalizable estimates.
Data Collection Data were collected at the productioncycle level for each farm and then annualized to Financial Efficiency of Closed House and Open House Systems in Small- and Medium-Scale Broiler Production in West Sumatra (Apredo, et al.
facilitate comparison.
Primary data included farm production logs documenting starting population, harvested population, mortality, harvested liveweight, and supporting notes on cycle performance, together with cost records covering feed, day-old chicks, utilities, hired labor, and routine operating inputs.
Revenue data were obtained from recorded total liveweight sold and realized selling price in rupiah per kilogram.
Information on capital assets and investment outlays was also compiled to calculate depreciation and total capital expenditure for each housing system.
Key informant interviews with farm operators and technicians were used to confirm operational practices and validate the consistency of recorded cost components.
Where possible, figures were cross-checked against supporting documents such as invoices, receipts, and internal records, and internal consistency checks were applied to ensure coherence across output, price, and cost variables.
Figure 1.
Research design and analytical The study was conducted in West Sumatra and applied a 2y2 housing-by-scale matrix to purposely select four representative Cycle-level production and financial records, supported by interviews and documentary checks, were compiled and standardized to common units and annualized using five cycles per year.
Financial indicators were then calculated, including profit and loss.
R/C ratio, break-even price and output, payback period, and cost composition, followed by crosscase comparison to interpret technologyAescale trade-offs and to state analytical limitations.
Figure 1.
Flowchart of Data Collection and Analysis Financial Indicators and Formulas This study used a structured comparative case study design with quantitative financial calculations to characterize performance across the 2y2 housing-by-scale matrix.
All values are in Indonesian rupiah (R.
Financial feasibility was assessed using standard farm-management indicators calculated per cycle and then For sensitivity analysis, we simulated liveweight price (P) Oe10%, feed cost 10%, and a combined shock, then recalculated profit.
R/C, and BEP price using the baseline Total revenue ycNycI = ycE y ycE Profit and loss per cycle ycNya = ycNycOya ycNyaya yayaycE yuU = ycNycI Oe ycNya Annual net profit:
yuU_ycaycuycu = yuU y ycA_yca Jurnal Peternakan.
Vol 23.
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February 2026 Revenue-to-cost ratio (R/C) ycI/ya = ycNycI ycNya Break-even point yaAyaycE ycyycycnycayce = yaAyaycE ycycuycoycycoyce = ycNya ycE ya .
cE Oe y.
Payback period (PP) ycEycaycycaycaycayco .
= yayaycEyaycU yaya ycaycuycu yaya ycaycuycu OO .
uU yayaycE) y ycA_yca Cost composition ycIEaycaycyce_ycn (%) = yaycuycyc_ycn y 100 ycNya Notation:
P = live weight price (Rp/k.
Q = total liveweight sold .
TVC = total variable cost (R.
TFC = total fixed cost (R.
DEP = depreciation (R.
TR = total revenue (R.
TC = total cost (R.
A = net profit per cycle (R.
v=TVC/ Q = variable cost per kg (Rp/k.
F=TFC DEP = fixed cost per cycle (R.
Nc = 5 = cycles per year.
CFann = annual net cash flow (Rp/yea.
Depreciation Note:
Depreciation was calculated using the straight-line method based on recorded service lives and residual values.
For per-cycle reporting, house depreciation may be expressed as a fixed share per cycle .
or example, 2 percen.
if consistent with farm records.
RESULT AND DISCUSSION
Capital Allocation and Financing Structure Across all cases, fixed assets constitute the largest share of total capital, and the fixed-asset share rises with both technology level and operational scale (Table .
This pattern reflects the fact that housing upgrades and scale expansion are primarily realized through higher mechanically increased capital intensity per bird.
The capital-per-bird ratio in closed, mediumscale farms is 324,807 rupiah compared with 150,575 rupiah in open, medium-scale farms.
The difference of 174,232 rupiah per bird represents 7 percent increase, confirming that closedhouse adoption is fundamentally a capitaldeepening decision.
Consistently, the fixed-asset share reaches 89.
75 percent in closed, mediumscale farms and 83.
51 percent in open, mediumscale farms, while it remains lower in small-scale operations at 64.
99 percent in closed, small-scale farms and 57.
16 percent in open, small-scale These capital allocation differences align with technical studies emphasizing that closedhouse production depends on insulated buildings, tunnel ventilation, evaporative cooling, and automated controllers to stabilize microclimate conditions and performance in tropical environments (Teles et al.
, 2020.
Yani et , 2.
In the context of Indonesian partnership and contract frameworks, the financial advantage of closed-house systems is typically realized through performance stability and improved income per unit output, but this advantage requires higher initial investment and is recovered only through repeated cycles.
The observed dominance of fixed capital in closed, medium-scale units is consistent with evidence that technology-based modernization can raise profitability while shifting the enterprise toward a more capital-intensive cost structure (Santoso et al.
, 2018.
Setiadi et al.
, 2.
Because closedhouse assets are long-lived and recovery occurs over multiple cycles, financing structure becomes part of feasibility rather than a background assumption.
Matching loan tenure to the economic life of facilities and machinery and adopting a financing mix such as 60 percent equity and 40 percent debt helps align repayment schedules with asset productivity, which is consistent with broader finance-based feasibility logic in agricultural investment contexts (Kamruzzaman et al.
, 2021.
Mendes et , 2.
Financial Efficiency of Closed House and Open House Systems in Small- and Medium-Scale Broiler Production in West Sumatra (Apredo, et al.
Table 1.
Capital Allocation and Financing Structure Close House Small Medium Allocation of Business Capital Fixed Capital (R.
Non-Fixed Capital (R.
Total Capital (Rp/far.
Total Capital (Rp/bir.
Fixed Capital (%) 64,99% 89,75% Non-Fixed Capital (%) 35,01% 10,25% Capital Structure by Source .
% Equity / 40% Deb.
Equity (Ow.
Debt (Externa.
Total Capital Description Income Statement and Cost Composition The income statement results show that closed, medium-scale operations achieve the highest gross profit and the lowest total cost per kilogram among the four groups (Table .
, which directly answers the modernization question
Small
Open House Medium
57,16%
42,84%
83,51%
16,49%
posed in the research gap: closed-house advantages become financially meaningful when they operate at a scale that can convert capital investment into lower unit costs.
For closed, medium-scale farms, the unit cost is 17,985 rupiah per kilogram, compared with 19,237 rupiah per kilogram in open, medium- Table 2.
Income Statement and Cost Composition Description Close House Medium Open House Medium Small Small Income Statement Ae Per Cycle Live weight .
g/cycl.
Price (Rp/k.
Revenue (Rp/cycl.
Variable Cost (R.
Depreciation (R.
Total Cost (Rp/cycl.
Gross Profit (Rp/cycl.
Income Statement Ae Annual Cycles/year Live weight .
g/yea.
Revenue (Rp/yea.
Total Cost (Rp/yea.
Gross Profit (Rp/yea.
Cost Composition per Cycle Feed (%) 71,67% 68,30% 69,37% 65,69% DOC (%) 19,00% 16,47% 24,19% 22,12% Electricity (%) 4,88% 4,83% 2,26% 2,36% Labor (%) 2,26% 1,83% 2,88% 1,59% Depreciation (%) 2,19% 8,56% 1,29% 8,25% Notes: Panel B annualizes Panel A at 5 cycles per year.
Gross margin = gross profit / revenue.
Cost per kg excludes finance costs.
DOC = day-old chick.
Jurnal Peternakan.
Vol 23.
: 26-35.
February 2026 scale farms, representing a reduction of 1,252 rupiah or 6.
5 percent.
At the same time, gross profit per cycle is 66,173,982 rupiah in closed, medium-scale farms versus 30,988,265 rupiah in open, medium-scale farms, an improvement of 35,185,717 rupiah or 113.
5 percent.
These patterns are consistent with Indonesian evidence that closed houses can improve feed conversion, survivability, and resulting income performance compared with open houses, especially under tropical stress conditions (Laili et al.
, 2022.
Sari et , 2021b.
Susanto & Nursita, 2.
Why Scale Dominates Housing in Financial Feasibility? The results indicate that scale exerts a stronger influence than housing because scale reshapes the unit-economics architecture of the enterprise, whereas housing primarily affects biological performance and operational stability.
First, scale dilutes fixed and quasi-fixed costs over a larger output base.
Depreciation, maintenance, supervisory labor, and some utilities are not perfectly proportional to bird numbers, so medium-scale operations can spread these costs across more kilograms of output, lowering cost per kilogram and reducing the break-even threshold even when the housing system is unchanged.
Second, scale increases throughput and improves capacity utilization.
Closed-house systems are designed to operate efficiently when stocking levels and production cycles are stable, so the benefits of microclimate control translate more reliably into financial outcomes at medium scale than at small scale.
Third, because feed and DOC dominate total cost, small improvements in technical efficiency must be applied to sufficiently large output volumes to become large enough in rupiah terms to offset the higher electricity and depreciation burden associated with closed houses (Teles et , 2020.
Yani et al.
, 2.
This explains why closed-house benefits are most visible in the medium-scale case: scale enables both the amortization of capital and the conversion of biological stability into consistently lower unit costs and higher margins, which is consistent with Indonesian closed-house performance findings (Laili et al.
, 2022.
Susanto & Nursita.
R/C Ratio and Break-Even Analysis All groups are profitable based on benefitto-cost ratios above one, but the ranking reinforces the central answer to the research gap:
scale creates the primary separation in feasibility, while housing refines performance within scale.
The closed, medium-scale operation has the highest R/C ratio at 1.
followed by open, medium-scale at 1.
07, closed, small-scale at 1.
05, and open, small-scale at 1.
Break-even price per kilogram mirrors observed unit cost and is lowest for closed, medium-scale farms at 17,985 rupiah, followed by open, medium-scale at 19,237, open, small-scale at 19,261, and closed, small-scale at 19,553.
Closed houses have been shown to improve break-even performance because better feed conversion and lower mortality reduce the cost required to produce each kilogram, while a more stable microclimate reduces performance variance across cycles (Mendes et al.
, 2014.
Setiadi et al.
, with supportive evidence from heat-stress comparisons (Hamed et al.
, 2.
However, the small open-house group remains the most vulnerable because its margins are thin and thus highly sensitive to feed and output price fluctuations, which is consistent with broader evidence that financial strain and price volatility disproportionately threaten smaller operations (Kamruzzaman et al.
, 2.
Sensitivity Analysis and Robustness to Price and Feed Shocks Table 4 assesses whether the baseline feasibility conclusions remain consistent under plausible downside shocks.
The scenarios show that profitability deteriorates quickly when selling prices fall and feed costs rise, which is consistent with prior evidence that feed dominates broiler cost structure and strongly drives margins in both closed-house and openhouse systems (Pakage dkk.
, 2018.
Sari et al.
Financial Efficiency of Closed House and Open House Systems in Small- and Medium-Scale Broiler Production in West Sumatra (Apredo, et al.
The results also indicate that small-scale cases turn negative more rapidly, while medium-scale operations provide greater buffering capacity, aligning with Indonesian findings that profitability and performance tend to improve with scale and better cost control under commercial conditions (Santoso et al.
This pattern is also consistent with contract-farming evidence showing that operational efficiency and cost inefficiency factors shape farmer performance and vulnerability, particularly among smaller producers (Aji et al.
, 2023.
Setiadi et al.
, 2.
Overall, the sensitivity results reinforce the paperAos decision message that scale is a key source of financial resilience under volatility, and housing upgrades are most viable when stable throughput and partnership conditions can be maintained (Sari et al.
, 2021.
Setiadi et al.
Table 3.
R/C Ratio & Break-Even Point (BEP) Description R/C Ratio BEP Price (Rp/k.
BEP kg/year .
BEP birds/year .
BEP kg/cycle BEP birds/cycle Close House Small
Medium
1,05
1,10
Open House Small
Medium
1,04
1,07
Table 4.
Sensitivity scenarios .
er cycle, baseline omitte.
Case ClosedAeSmall ClosedAeSmall ClosedAeSmall Scenario Price Oe10% Feed 10% Price Oe10% & Feed 10% Profit (Rp/cycl.
Oe6.
Oe2.
Oe14.
R/C
0,943
0,978
0,880
BEP price (Rp/k.
ClosedAeMedium ClosedAeMedium ClosedAeMedium Price Oe10% Feed 10% Price Oe10% & Feed 10% Oe6.
Oe50.
0,990
103,146
0,927
OpenAeSmall OpenAeSmall OpenAeSmall Price Oe10% Feed 10% Price Oe10% & Feed 10% Oe5.
Oe2.
Oe11.
0,935
0,970
0,873
OpenAeMedium Price Oe10% Oe19.
0,959
OpenAeMedium Feed 10% Oe14.
0,999
OpenAeMedium Price Oe10% & Feed 10% Oe50.
0,899
Note: Profit and R/C are recalculated under the stated shocks using the same cost definitions as the baseline BEP price is computed as ycNya/ycE.
Investment in Capital Expenditure (CAPEX) CAPEX rises sharply when farms shift from open to closed housing and when they scale from small to medium operations, with investment concentrated in construction and equipment (Table .
In closed, medium-scale farms, the CAPEX shares are 57.
5 percent for buildings, 35.
4 percent for equipment, 6.
percent for generators, and 0.
3 percent for By contrast, the generator share in open, small-scale farms reaches 48.
9 percent, indicating a heavier dependence on backup power and a different risk posture in which reliability is managed through generator Jurnal Peternakan.
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February 2026 investment rather than through fully integrated microclimate infrastructure.
This investment structure reflects the equipment and facility requirements needed to keep broilers within the thermally neutral zone in wet tropical In Indonesia, such investment partnerships can raise incomes but may imply a longer simple payback period at medium scale because the absolute capital base is larger, even when unit costs improve (Santoso et al.
, 2018.
Wantasen et al.
, 2.
Studies focused on climate-specific control investments likewise show that investments targeting heat-stress mitigation can reduce mortality, lower unit costs, and strengthen returns, which is consistent with the superior cost-performance profile observed in closed, medium-scale units (Benalywa et al.
Sari et al.
, 2.
Tabel 5.
Investment of Capital Expenditure (CAPEX) Close House Open House Small Medium Small Medium Building Equipment Generator Licensing Total CAPEX Note: Data processed .
CAPEX = Capital Expenditure.
Rp = Indonesian Rupiah.
Description (R.
CONCLUSION This study provides a decision-oriented message for broiler modernization in West Sumatra based on a structured comparative case analysis of four farms operating under similar partnership conditions.
The evidence suggests that technology upgrades translate into more reliable cash flow when implemented through a scale-aware pathway rather than as a standalone housing switch, and the sensitivity scenarios indicate that small-scale operations are less able to absorb adverse feed and price shocks.
For smaller producers, priority actions with low capital burden include collective purchasing for feed and DOC, standardized recordkeeping and budgeting, and extension support focused on consistent cycle management to reduce preventable losses.
Closed-house adoption is more viable when supported through partnerships or farmer-group aggregation that stabilizes utilization, combined with financing aligned to production cycles and asset life, and maintenance planning that prevents downtime from eroding returns.
For government and integrators, enabling conditions such as power reliability, access to service and spare parts, and transparent contract arrangements can reduce input and output uncertainty so modernization performs as intended.
CONFLICT OF INTEREST
We certify that there is no conflict of interest with any financial, personal, or other relationships with other people or organizations related to the material discussed in the Conflicts of Interest should be stated in the manuscript.
ACKNOWLEDGEMENT
The authors thank the participating broiler farmers for their generous cooperation, access to facilities, and provision of production records that made data collection possible.
REFERENCES