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ODI Case Study

Farmers had been using the de-beaking method for the past 50 years. Because farmers are known to be "stuck in their ways- ODI needs to have salesmen personally present the farmers with an annual cost (benefit) savings to the farmer for the lenses vs. the de-beaking method. The cost (benefits) are as follows:.
             1) Cannibalization decreased from 9% to 4.5%.
             Per exhibit 4, the cost to purchase a chicken is $2.40 and the allocation cost for replacing the dead birds is $.21. The cannibalism percentage for de-beaking is 9% vs. the cannibalism when using ODI lenses which is 4.5%. Therefore, the savings per chicken due to the reduced cannibalism is 11.74 cents ($2.61 purchase/replacement cost (.09-.045). .
             2) Less food to purchase.
             The reduction in the depth of the feed is .5- (actual is between 3/8 to 1-).
             The reduction by 1- saved 156 lbs of feed per day for 20,000 birds. Therefore, .
             5- reduction in feed would save about 78lbs of feed per day. Farmers would save 1.4235 lbs (78*365/20,000 chicken) per chicken per year. Since 1 ton (2,000 lbs.) of feed costs $158.00, then .079 cents per lb is saved. Therefore, the yearly cost of food saved for 1 bird is 11.24 cents and for 20,000 birds $2,248 (1.4235 lbs*.079 cost per lb*20,000 birds).
             3) Additional savings for food due to the reduction in spillage.
             4) An increase in egg production for lower pecking birds.
             5) Reduction in egg lost due to trauma when they are de-beaked.
             De-beaked chickens lay one egg less for 1week compared to a chicken with lenses. Per exhibit 4, the cost for 1dozen eggs is $ 0.53. The cost of loosing 1 egg would be 4.42 cents ($0.53/12).
             Total savings to farmer per bird if they choose to use the contact lenses is 27.4 cents. Depending on the size of the farm, this can amount considerable savings. When presented with the value of using these lenses, I believe that the farmers would be interesting in testing them on some of their chickens. .
             Also, there are risks that the farmer will have to take if they deciede to use the lenses so ODI needs to identify and minimize these risks in order to establish a trusting relationship with the farmers.


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