Business

Poultry farmers battle high cost, low margins

Nigerian poultry farmers are battling high cost of production and low margins, our correspondent has gathered. Our correspondent gathered that this had resulted in an increase in the price of eggs and other poultry products.

The National Bureau of Statistics in its Selected Food Price Watch data for January reported that the average price for one dozen medium-sized eggs increased year-on-year by 7.49 per cent and month on month by 0.62 per cent. The product increased from N466.97/dozen in December 2018 to N469.85/dozen in January.

The NBS stated further that one piece of medium-sized egg increased from N42.58 in December 2018 to N42.25 in January 2019. A poultry business consultant, Mr Francis Toromade, attributed the increase in the price of eggs to the cost of input and the cost of production.

He told our correspondent that the challenges facing operators in the poultry sector had persisted into the New Year. He said operators’ plight had been compounded due to lack of access to funds at a reasonable interest rate, adding that commercial bank loans attracted 27 per cent interest which was too high and would only amount to the business operating at a loss.

He said, “The price of maize and soya has gone up and the cost of funds is too high while the  margin is getting slimmer and slimmer. “If somebody borrows funds at 27 per cent, it means the person will be paying two per cent interest every month. Maybe the operator only makes 10 per cent as profit, after paying the interest on the loan and taking care of salaries and other expenses in the business, there will be nothing left in terms of profit.

“The situation has driven many operators out of the business, leading to many hatcheries folding up as their owners could no longer cope.” According to him, the price of the product in the international market is always lower than the price sold in Nigeria, because practitioners in other climes do not incur the kind of cost that Nigerian operators incur.

Toromade said although the Federal Government had extended the Central Bank of Nigeria’s Anchor Borrowers Programme to the sector, the fund was not accessible to small operators due to the stringent conditions attached. He said, “The commercial banks are supposed to deposit a certain percentage of the fund with the CBN and most of them cannot do that,” he said.

He added, “Another thing is that even when the fund is released, it is not released on time. Input is usually available from October to November and at that time, it will sell for N100.

“But the banks could end up releasing the money by March or April and by that time the input may have gone up to N130.  The farmer will then have to start paying bank loan and trying to pay the high input price in addition to all the other costs. “The secret to the business is buying the right thing at the right time and at the right price, otherwise one will operate at a loss.”

An official with the Amo Farms Natnuprenuer broiler scheme, Gbolade Adewole, said the cost of input had gone up by December because maize farmers were selling at high price. He said it would be difficult for small business owners to cope with the huge cost. He said, “If the operator is not producing in large volumes, it will be difficult for him or her to make profit.”

The Director-General, Lagos Chamber of Commerce and Industry, Mr Muda Yusuf, remarked that funding was still an issue for operators in the agricultural sector. He said, “Finance is not getting to those creating wealth but they rather go to Treasury Bills and other less risky form of lending.

Pix: a poultry farm in Nigeria