The poultry industry in Nigeria is currently facing a critical challenge due to the soaring cost of feed. The surge in feed prices has precipitated grave concerns among poultry farmers, industry stakeholders, and consumers. Nigeria's poultry industry, the largest egg producer and second-largest poultry meat producer in Africa, is struggling to stay afloat due to soaring production costs, especially that of feed. In 2022, Nigeria produced some 335 million tons of poultry meat and 663 million tons of eggs. Maintaining and improving on this level of production would require urgent actions.
How did we get here?
Food inflation, which measures y-o-y change in consumer food prices, has risen to over 40%. Major food items have seen their prices increase by more than 100% y-o-y between May 2023 and May 2024. Feed cost accounts for 70% of production cost in the poultry industry, which implies that production, profit margins, and sustainability depend on feed cost and availability. The major constituents of Poultry feed are maize and soybean. As of June 2024, maize prices per tonne have surged by almost 60% from January to May. The average price per tonne of soybeans in 2023 also saw a significant uptick, rising by an estimated 51% over the same period. With the increase, the price of poultry products is expected to keep increasing as farmers need to sell their products at least profitably to be able to repay loans and keep the business growing.
Impacts on Poultry Farmers
The poultry industry in Nigeria is facing a crisis, as feed costs continue to soar, local poultry farmers are being forced to shut down their operations. This alarming trend has been attributed to the significant increase in production costs, which has made it unsustainable for many farmers to continue their operations.
The cost of feed continues to escalate daily, leading to a corresponding increase in the price of eggs. Unfortunately, the disposable income of consumers is not increasing proportionally, resulting in many opting out of egg consumption and other poultry products. Consequently, the business is transforming into a high-risk venture where only those with the capacity to absorb these risks can survive.
Stay up-to-date!
Contrary to the norm, where cost is transferred to consumers while producers maintain their profit margins, the dynamic is shifting. Consumers are now turning away from poultry product consumption, forcing farmers to either downsize or close operations as business viability remains elusive. The persistent rise in feed cost has far-reaching consequences, leading to supply and demand imbalances, product substitution or diversification into other agricultural productions, and even business downsizing. A lack of protein in the right quantity, especially in children, can lead to malnutrition and poor cognitive development.
Advice to Poultry Farmers?
Poultry farmers are advised to consider adopting horizontal and vertical integration strategies to minimize their expenditure on feed purchases. Through horizontal strategies, farmers can engage in collaborative purchasing, such as cooperatives, source alternative feed sources, and engage in contract farming. These strategies help leverage economies of scale and spread risk, thereby reducing expenditures on feed purchases.
With vertical integration, farmers can grow their own feed crops, such as corn or soybeans, to reduce dependence on purchased feed or invest in milling equipment to improve feed efficiency. Additionally, research into alternative feed sources should be intensified to identify options that provide similar nutritional value at a lower cost. Optimizing the supply chain is crucial to ensure consistent feed availability for farmers. Processing and freezing of poultry meats, along with proper storage, can also give farmers reasonable time to sell their products.
Government support is also essential, and provisions such as training and resources should be made available to sustain poultry operations. Furthermore, efforts should be made to enhance local industries to reduce dependence on imported feed constituents.
About Vestance
At Vestance, our mission is to be the foremost catalyst of sustainable agricultural transformation in Africa by empowering agri-businesses and governments with high-quality and data-driven insights, knowledge, innovation, and resources.
References
Food and Agriculture Organization (FAO). (2022).: Crops and Livestock Products. Accessed July 2024.
National Bureau of Statistics (NBS, 2024): Consumer Price Index. Accessed July, 2024.
