Impact of Government Incentives on Small-Scale Broiler Farms in Johor, Malaysia

Currently, in the Eleventh Malaysian Plan, three main elements had been stressed out in the agro-food subsector; food security, the income of farmers, and sustainability. Hence, several governments’ tax incentives had been introduced in assisting farms to enhance their profitability. The scheme of policy tax incentives is Pioneer Status (PS), Incentive Tax Allowance (ITA), and Accelerated Capital Allowance (ACA). However, the implementation and the acknowledgment regarding the incentives are still lacking effectiveness in the concern of the poultry industry. Hence, the aim of this study is to reveal the impact of government tax incentives on small-scale broiler farms in Johor, Malaysia. The study applies the indicators of financial appraisal namely Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Payback Period. The method is conducted by using questionnaires and face-to-face interviews with 22 small-scale broiler farms in Johor. The results reveal that the small farms with higher production capacity per cycle as the range between 20,001-30,000 are more financially viable by means of obtaining higher profitability and shorter payback period need to overcome the initial investment, rather than small farms with capacity production < 10,000 per cycle which is sensitive towards an increase in cost and a decrease in revenue.