Abstract: Indonesian Poultry Farm business in the last recent ten years experienced up and down growth so that it is worth to assess. Various government regulations have been implemented to enhance this sector by emphasizing on the increasing income of breeders. Though, the attempt is regarded insufficient and gives impression that deregulation is not focused to empower the breeders in respective sectors.Breeders are frequently faced with doubtfulness as business in this sector presents the high level of uncertainty. Furthermore, they are sometimes put aside for the economic interests which are difficult to justify. The conflicting policies time to time are reflected in the great lost suffered by breeders of non-ruminating animal those who breed chicken for meat and egg – in the recent year as they are faced to the high price of animal feed and production facility but ironically the profit margin is not in balance with what they put into a risk.With particular reference to aforementioned condition, an assessment toward Poultry Farm Business is necessary so that this sector remains competitive for breeders. The assessment includes how the government regulation should be conducted to protect the interest of breeders whose businesses are small up to medium scales. The assessment is limited to poultry farm as they are the most dominant among other non ruminating animal breeders so that they are considered representatively as samples representing problems faced by other breeders.The significant objective of this assessment is to trace the direction of development policy toward the sector which is able to become impetus to the economic while protecting the interest of breeders. A model consisting of two sub models is developed for the need of assessment. The two sub models are breeding system and breeding external factors. The first sub model describes working mechanism in a poultry farm business unit (SBU). This sub model is relatively stable and fixed. The second sub model describes external factors outside the poultry farm business affecting significantly the first mentioned system. These external factors are price of raw materials and production output which are beyond the control of poultry farm system which frequently create uncertain condition. However, the government has capability to take action influencing those external factors. Model development and simulation output reveal an indication that the present condition of poultry farm sector is no longer profitable where Return on Investment is very low and tends to decrease year by year. If this condition is not improved by changing the external factors, it is assumed that by the year of 2009, the return on investment figure will be negative. It means that there will be many breeders are facing bankruptcy. The result of assessment reveals that strategic recommendation in anticipating the trends is that besides attempts to enhance efficiency of internal factors of business, the government regulation must lead its policy toward the empowerment of breeders so that they become a capable businessman in the respective sub sector by implementing the policy that will create significant profit.

Keywords: System Dynamics, Poultry, Development Policy

Budisantoso Wirjodirdjo adalah dosen di Industrial Engineering Departement, Surabaya Institute of Technology.

Wirjodirdjo@yahoo.com

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