Broiler and egg farmers have called on the government to intervene to alleviate losses associated with the high cost of procuring day-old chicks and feeds as critical inputs in poultry production.
Ironically, poultry breeders and hatchery owners have expressed satisfaction over the rising prices of day-old chicks, saying the prices enable them to break even, recover losses of the past three years and strategically stimulate re-investments of capital resources that were pulled out of the sector in the last few years.
Poultry production is basically sub-divided into breeding, hatchery, and rearing, with stakeholders playing one or two roles or combining the three.
Egg and chicken producers depend on breeders and hatchery operators for their cardinal inputs of day-old chicks, while the hatchery owner equally depends on breeders for hatchery services in the value chain.
The breeders too depend on licensed grand-parent stock importers such as Obasanjo Farms, Chi Farms, Zartech and others for their parent stocks for breeding.
Breeding and hatchery services are capital and labor-intensive in Nigeria, requiring frequent capital injections and stable cash-flows. This accounts for the dominance of foreign investments such as Olam, Zartech and Chi Farms.
Finding by The Guardian at the day-old chick production hubs in Nigeria, Ibadan, Oyo State, on Thursday, revealed that a day-old broiler chick, which is raised into the chicken, was between N300 and N320, depending on the breed (Abor Acre, Marshall, Cobbs, or Ross). A day-old pullet chick was between N190 and N210, depending on breeds and colour (brown or black layer chick).
One Mrs Tola Popoola, a broiler farmer who spoke with The Guardian at the Oluyole Industrial Estate chick marketplace, bemoaned that at N320 per broiler chick, with high cost of feeds (N3500 per 25-kg bag), the chicken production business was no longer sustainable, and many small-scale producers would soon be forced out of business.
“There is a market for chickens because the borders have been closed against smuggled chickens, but consumers are not ready to buy beyond certain prices. And as producers, we cannot transfer the entire cost to the consumers because there are many sellers.
“So, we are forced to sell with extremely low-profit margins,” she lamented.
Another chicken producer who came for chicks, one Mrs Ayomikun Olaniyan, also described the upward price movements of chicks and other inputs in poultry production and unprofitable and unsustainable.
“Cost of veterinary drugs, vaccines and feeds, added to the high cost of day-old chicks makes the business very unattractive,” she complained.
A medium-scale farmer producing eggs in Ilorin, Kwara State, Mr Segun Oluwayinka, said the prices of chicks are nor reasonable in the face of high mortality rates associated with such chicks.
He called on the government to help breeders in securing low-cost grand-parent and parent stocks and hence lower prices of chicks, suggesting that electricity in certain industrial parks for hatcheries should be considered to reduce overhead cost.
Another commercial poultry producer, Mr Bidemi Aderemi, said the prices are not too high if the quality of the chicks is good and if the cost of feeds is low since high prices of feeds constitute the biggest of the challenges facing livestock farmers in Nigeria.
However, a poultry breeding investor, Mr Banji Akanji, at the same Oluyole Industrial Estate in Ibadan, said prices were once relatively favourable to breeders and hatchery owners since 2016 when economic recession and high inflation rate forced several poultry breeding investors out of the business.
They were out of the poultry breeding business because smuggling of eggs and chicken was at its peak, and purchasing power of many Nigerians, poultry farmers who were buyers of day-old chicks from breeders inclusive, was drastically weakened between 2016 and 2018. This, he explained further, forced down prices of day-old chicks, making breeders sell at a loss, which forced over 50 per cent of them out of the business.
Electricity, he argued, had been a major factor in hatchery business. Fertile eggs are set in poultry incubated for 21 days with 24-hour power supply, most of the time through diesel-burning power generators that increase the cost of production.
A former chairman of the Poultry Association of Nigeria (PAN), Oyo State chapter, Mr John Olateru, pitched his tent with Akanji, saying egg and chicken producers complaining of high prices of day-old chicks were being unreasonable and inconsiderate of the plights of breeders and hatchery owners.
Olateru said, “They are not being reasonable. For six to eight months, there was low demand for day-old chicks, which was caused by farmers’ fear of egg glut. The phobia of egg glut that happened in early 2019, before the border closure, sent lots of poultry farmers to close shops.”
The investor, who breeds, hatches and raises birds, explained that the past period of low demand for day-old chicks (2016 to 2019) shrank the poultry breeding sub-sector drastically, and the effect, triggered by border closure and other variables, was lower supply over demand of the products, forcing prices up and helping breeders to produce profitably for the first time in recent time.
Olateru added, “This has lots of effect on breeder farmers. They were forced to reduce their stocks. Now that the demand is picking up. Breeder farms will respond appropriately and price stability will set. There is no cause for alarm.”
Another broiler poultry breeder, Mr Oguyemi Awe, owner of Heritage Farm, said the current price is friendly to poultry breeders, helping them to gradually recover from losses incurred during the recession, saying, “At present, the price is okay.”
The prices of day-old chicks, he added, are determined weekly by forces of demand and supply, and bigger industry players such as Obasanjo Farms, Zartech and CHI Farms set the price while small and medium-scale breeders sell slightly below their prices.
“We are not the one fixing the price. We have all the big farms like CHI, Olam, and ZATECH that set the prices weekly. On Monday, ZATECH sold for N250, but we are believing that the price will still be the same for a while,” he told The Guardian on Thursday.
Awe said feeds take a larger percentage of the production cost, and if the government could provide a means for the farmers to buy maize (the major energy source in feeds formulation) directly from it at a subsidised rate, the cost of production would reduce and prices of day-old chicks could also reduce while giving room for profitability and sustainability.
He said, “I like the fact that the government has rejected importation of agricultural produce. Though Nigerians will suffer a bit, it will create more employment opportunities for us and everyone will realise the need to invest more in agriculture.”
Going forward, Ayo Ojimayo, Farm Manager, Olokun Farm in Kwara State, said the Central Bank of Nigeria’s (CBN’s) policy of giving farmers resources should be extended to medium and large-scale farmers to boost the poultry sector, reduce cost of capital and production, by extension.
The national president of the Poultry Association of Nigeria (PAN), Mr Ibrahim Mam, as part of the sustainable solution to the poultry sector challenges, urged hatchery owners and poultry breeders to consider long-term effects of moderate prices of chicks on the industry, saying if prices were lower, more farmers would come back to production.
“If the prices remain too high, farmers would abandon poultry and the government, as a result of too much internal pressure from consumers, might re-open the borders and the sector would go back to the old challenges of smuggling,” he explained.