Farmafric: PROSPECT, PRICE AND PERIL OF POULTRY INDUSTRY IN NIGERIA
PROSPECT.
Nigeria has the highest number of poultry farm in Africa. Poultry meat and eggs are the most consumed animal protein; unrestricted by any religion or culture in Nigeria. It is recorded that the poultry industry contributes about 25% of the country’s Agricultural GDP.
Nigeria presently produces about 300,000 tons of poultry meat per annum officially and 650,000 tons of eggs according to FAO. A parallel record from Poultry Association of Nigeria (PAN), indicates that Nigeria produces presently above 1.25million tons of egg per year. Despite, this volume, Nigeria is far from meeting her domestic demand for poultry products. In comparison, countries like Brazil produces over 13million tons of poultry meat per year while China produces about 13.5 million tons. Top on the least of poultry meat production is USA which stand above 25million tons per year.
USA, in 2011, exported poultry products worth $3.2billion(N576 billion)on broiler alone. A single corporation, Tyson Food Inc, produced about 100,000tons of poultry meat per week, in order words, the company produced in three weeks what we produce in a year. Brazil with a population of 192 million is not so much larger than we are, with predominately black population, second only to Nigeria. If Brazil can harness such great wealth from poultry, Nigeria can.
South Africa is the second producer of eggs in Africa. They stood first in broiler production in Africa with 1.5 million ton per year being about 28.8kg per capita per year in comparison to our 300,000tons which is about 1.7kg per capita per year. Ghana, produces about 2.07kg per capita per year with about 51,700 tons for a population of 25 million.
With our gross under production, most of our poultry demands are met by smuggling. Ton and tons of poultry meat are smuggled into Nigeria daily despite the fact that the product is high on the Import prohibition List (IPL). Most farms in Nigeria have demand for eggs which is beyond their capacity to supply making the enterprise one with very high potential in Nigeria.
In 2007, the a statement credited to one of our greatest farmer, indicated that Obasonjo earns about N34,million net per months, this was refuted by industrial experts who said that going by the capacity of the Ota farm, he makes far more than that. But yet in comparison to farms such as Tyson farm USA, JBS Brazil or Farqeeh Poultry Farms in Saudi Arabia among many, we have really not gotten a big farm in Nigeria. Tyson farms as at that time produced 20million eggs per day, in 2011 generated a revenue of over $32 billion and made a net profit of about $750 million(N120 billion). We can create such a company in Nigeria, because we have such potential and the competition is less. JBS Brazil is the largest multinational food company in the world with annual revenue of $40 billion in 2012. It presently employs over 125,000 persons. Their major product is poultry and beef. Similarly, Faqeeh Poultry Farm, Saudi Arabia is reputed to be the world largest individually owned poultry farm. Expanding to a capacity, of 1 million broiler birds per day and 3 million table eggs per day. All these are indication that Nigeria’s potential for wealth generation from poultry industry is far from being tapped.
According to the Global poultry trend, it seems poultry expands in Africa by 3.2% against global figure of 2.2%. Egg production in Africa is targeted to reach 3 million ton per year in 2015 and Nigeria is leading on the expansion with South Africa, both expanding at 4% annual increase (FAO).
Nigeria poultry potential is expanded beyond her borders. The Nigerian farms already supply beyond our domestic market. Countries like Tchad, Niger, Cameroon, Equatorial Guinea, Central African Republic, Gabon, Togo, Benin Republic as well as Sao Tome and Principle are our market to fill. Some of them presently depend on our meager supply.
The poultry industry has a large capacity in Nigeria to create employment and even much more as value s are added to the products. The potential in Nigeria is enormous and only the elite farmer can actually fill the gap and harness these opportunities.
PRICE.
The industry is capital intensive to set up ranging from the cost of feed, birds, housing, land and labour. Briefly, the following data will give one an insight of cost of set up of a poultry farm in places like Kaduna state.
A standard poultry building to house between ten to fifteen thousand layers could cost about N8.million.
Cost of Day old chicks, feeding, etc of 10,000 birds from day 1 to week 22 when they start laying could be between N9 million to N10 million.
Thirdly, about N7.9million would be needed to install semi automatic cages to house such birds or about N11million to install full automated battery cages for a 10,000 birds. This implies that such a small farm as this will on the average need about N30 million to operate under an accepted standard.
Profit expectation of such farm grossly is about N18million per annum and would take about two and half year to break even.
PERILS OF THE POULTRY INDUSTRY IN NIGERIA.
I will utilize this section to outline common cause of the setback in this industry because; handling them will make us prepared for the successes that this industry portends.
Modern poultry trend are taught by very few institutes in Nigeria. The few experts, in Nigeria are scarcely patronized except by the very big farms, hence dependence on quacks and outdated method one of the great peril that befall this great industry.
Technically, our environment could be harsh on birds, hence the need for structures that minimize stress. Poultry house should be constructed to provide to suit the environment, promote comfort of the birds and permit ease of waste management.
Equipments used in poultry farming are improving on daily. Dependence on old and obsolete methods wills maximization of the available potentials. Electricity is needed to power some of these modern machines; hence lack of power is as well perilous.
Smuggling: The custom, the paramilitary, the police and other security operative aid and abate smuggling of poultry products into Nigeria on a daily basis. With the price of these products being less than half the cost of production in Nigeria, smuggling remains a major setback to the poultry industry in Nigeria.
Maize: The major cost of poultry production is feed, 70% of this is the energy cost. The price of maize in country like Brazil is just 30% of the cost in Nigeria.
Extension: Knowledge of advancement in the poultry industry such as on building, diseases management, biosecurity, management and marketing technique are hardly disseminated to farmers, hence farmers continue in their trial and error and the result is often failure.
Vaccine break: Coverage for Newcastle disease and Infectious Bursa Disease are not yet adequate. We encourage farmers to utilize the local vaccines from National Veterinary Research institute, Vom to minimize lost due to vaccine failure.
Research showed that technical and allocative inefficiency of farmers is among major cause of failure in the industry. Allocative inefficiency includes putting more money in asset than on running cost. Only quality consulting can save entrepreneurs from this error.
Glut: occasional glut in egg market is a great challenge to farmers. Farmers should be educated on egg storage techniques. Governments and enterprises should also bring in advanced technology on conversion of eggs to liquid or powder as obtainable in other clime. Industrial utilization of eggs should be promoted.
Feed formulation: In addition to high cost of energy cost, poor formulation of feed by farmers often leads to compromise and eventually malnutrition. Experience showed that only few feed mills have quality control. It is often difficult to beat the big players in feed milling. My advice have always been, to leave feed milling to the big companies such as UAC, Top feed, Hybrid etc and focus on one aspect of poultry which could be egg production or meat production. Vertical or horizontal integration should only come in after the stabilization of the enterprise.
Poor quality chicks: There are many breeder farms and many hatcheries, Control is near zero. Consult older farmers for advice on stocking of day old chicks or point of lay birds.
Further Reasons for Poultry Failure in Nigeria.
Non patronage of professionals. Farmers should patronize professionals and not quacks. Employ veterinarians with experience in poultry practice and pay well to retain them either on full time or part time options. Allow tutelage under experience professionals only. Quackery, indiscriminate administration of drugs, vaccine and other mismanagement is tantamount to failure. One characteristic of successful farms such as Animal Care, Obasonjo Farms, Ajanla Farms and Zartech is that they all patronize professionals.
Absenteeism: Small and medium scale farms cannot be run by an absentee farmer. Farms can be handed over to trusted professionals or managers but after the enterprise has taken a footing. Every business will pass through a ‘teething problem’ time. Entrepreneurs at those times should offer at least 65% quality time to their business to be able to survive.
Poor planning: There is no room for procrastination or poor execution in poultry farming. Every input must be available as when needed. Imagine a poultry that would have to run out of feed or water for hours or even days! Or a poultry that could not afford to administer drugs or vaccine because the chairman traveled. One day mismanagement could result in chains of consequences and several of such could result in total failure. Plan according to your capacity and have the picture of the whole cost right from the very beginning.
Structure: This is very important but often ignored by some consultants and farmers. Ab initio, the poultry house design should be prioritized. The poultry house must be suitable to enable optimal production because production or reproduction is leisure. Different zone of the country has different peculiarities that must be put into consideration when constructing the poultry houses. In all, building should be constructed to minimize floor wetness, prevent excessive wind or cold weather, and maximize sun light while minimizing heat. Positioning and designs should be done by experts. Waste tanks, water well, space for further expansion should all be inclusive in site plan to achieve success
Permit me to mention some other cause of Small and Medium Enterprise failure which are not particular to poultry per se
Only 50% of SMEs, survive five years! Record showed that 15% don’t even survive one year and most succumb to the same mistake. Causes include but not limited to:
Inexperience : Over estimation of ability to generate revenue or an underestimation of cost (Stewart Thornhill , executive director at Morissette Institute for entrepreneurship )
Lack of proper management and accounting procedure. Even when this is in place, refusal to follow the norm, spending outside budget, fraud, arbitrary withdrawal of money or products, shrinkages from thieving workers etc. Mismanagement could also include poor remuneration or welfare package for staff. Imagine when worker are registered under NHIS and are having N5,000 being paid into insurance scheme for them and are being paid minimum wages; such would be scared of loosing such jobs.
Mum and Pop Syndrome. I learnt this from Poju Oyemade; it is a great syndrome that affects small business growth all over the world. A business run solely under family management can only grow beyond a particular level except some principles are put in place. Accountability, record keeping, seriousness of purpose, expertise should not be jeopardize all in the name of family or friendly ties. As a principle, employ no one into the poultry if you cannot fire him or her! Children, nephews, nieces, cousins, friends, siblings, friend’s children etc should only be employed when they can be subordinate to the management and accept to see business as it should be.
SUCCESS TIPS
Join Poultry Association of Nigeria (PAN), share notes, with willing farmers.
Seek for grants and other government incentives such as loans and subsidies
Re –invest profit for expansion but always know the status of your investment always.
Avoid quick diversification. Focus on an aspect and don’t combine it quickly with non poultry farming until you are set to take a curve out or in, or to undergo vertical integration or horizontal integration.
Explore new market; generate more customers within and outside the state and even into the surrounding neighboring countries such as Niger republic, Chad, Central African Republic etc.
Scale down cost. Reduce labour cost by utilizing cages, get a van to reduce dependence on transporters, obtain distributorship or sub distributorship from feed companies to buy feed at a discount prices
Employ qualified personnel and pay commensurate salary
Have a good knowledge of the business via training, seminars and reading
Have a working knowledge of your enterprise through a workable business plan that present a projected cash flow, profit and loss account, break even analysis, organogram and other tools even before you start. This should be prepared by an experienced practitioner.
Give your business minimum quality time before you give any space.
Apply the 80:20 principles on your products, workers, customers and resources. It states that a 20% of any of those often give you 80% of your result. Discover that small fraction and devote 80% of your resources on them to get optimal result. Try reducing some of the unproductive 80%.
Remember always that customer is the king, Strive to create them and satisfy them
Work out a team out of the administration, workers, customers and partners. Ensure that each understand the benefit of the progress of the business.
Envisage competition and hence plan ahead of them even before they emerge. Be innovative even in your poultry farming and marketing of your product; make your product unique
Project definition.
At the beginning of the project have a target on a scale you wish to operate. For instance one can say, “at full capacity, I will have 5000 laying birds or 50,000 or 500,000 laying birds”. With such in mind, you create a plan for land, capital, manpower, market etc and start off gradually possibly with a 10% trial phase and with the set land marks, graduate gradually to full maturation. Stop at full capacity and only start again under a new plan! Not to know when to stop, is an error and could be a source of failure. With set land marks, move only to the next level when you are at rest on the present level. This will also aid one when taking loans or bringing in investor to avoid biting more than can be chewed.
Management of Disaster.
Disasters could present itself as natural disasters e.g., avian flu, flooding, etc and manmade disasters such as national or regional crises, economic crises, etc. without an insurance cover, most farmers do not survive such disasters. National Agriculture Insurance Corporation, NAIC provides such cover and must be taken as a priority.
Provide biosecurity measures in your farm to prevent outbreak of diseases.
RECOMMENDATION FOR AN INTENDING LARGE POULTRY FARM
We have seen that:
The market for egg and poultry meat is large and waiting
There is a fallow in expansion of the egg industry to storage and processing egg to liquid and powdered form
Nigeria has a larger potential to export poultry products to other part of Africa.
And Price is high
* Poultry is capital intensive
* Much expertise is needed to succeed
* Cost of machinery is high
*Modern machines necessary to follow world trend
We also reorganized the Peril include
Inexperience, lack of information and less utilization a setback for the industry
Maize cost, smuggling of poultry products, high cost of loan, are perils that the government can tackle
Vaccine break, glut, feeding error and poor accounting policy are administrative errors affecting growth
Hence, we now know that potential farmers especially planning to go on big scale have to avoid:
Poor planning
Absenteeism
Patronage of quacks
Poor allocation of fund
THIS THEREFORE IS OUR RECCOMMENDATION…
Before you start CONSULT!
Properly ALLOCATE your fund, Land, and time
Perform a market STUDY, and continue with peers to improve
Utilize RESARCH result from institutions, online and consultants such as Farmergiant etc
Get TRAINING from institute such as Funtuna, company like Farmergiant.
Bring in consulting PARTNERS.
Employ PROFFESSIONALS and pay well
Take an INSURANCE policy
FOCUS on one aspect of the industry at a time
Expect curved balls, hence start GRADUALLY but steadily
Thanks and know it that FARMERGIANT NIGERIA LIMITED is there for you all the way.
Dr Paul Oche Adoyi
CEO
Farmergiant Nigeria Limited
www.farmergiantltd.com
email: paul.adoyi@farmergiantltd.com
+2348099515923
+2348136241647
Good write-up. However, I need some clarification on what you wrote. You painted this egg production business as one that once you produce these thousands of eggs daily on a medium or large scale, you'll always sell it. You reiterated that demand far outweighs supply right now, yet you still suggested that we can still supply to neighboring countries. Does that not mean that the market in Nigeria is saturated?. Are you saying that all these thousands of eggs that can be produced are sold daily in the market?. Also, you mentioned the egg glut period. It's great that you recognised that because I was wondering if there's no 'slow' time in the business like all others. When does this glut time occurs?. How do you overcome it when it arises?. Because I know you can't stop birds from producing at this time. Please explain further for an interested individual like me. Thanks. 1 Like |
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