Francis Toromade, is the former group head-policy and strategy of Amo Group of Companies. In this interview with JOSEPHINE OKOJIE, he talks about major challenges confronting Nigeria’s poultry industry
You have over 30 years’ experience in the Nigerian poultry industry. What would you say are the critical issues in the poultry subsector?
The critical issues in the Nigeria’s poultry industry cuts across the entire value chain from the feed milling, hatchery, animal medicament manufacturing companies, processing and even the packaging of eggs.
The issues are in all the stages but the most critical of them all that affects other subsectors across the value chain is raw materials needed by the feed mills. The macro ingredients are the major issue and this is majorly maize and soybeans which constitute 75 percent of the ratio of raw materials needed by feed millers. Maize and soybeans are grown locally but it is still a major challenge to the poultry industry. The yield per hectare of maize and soybean in Nigeria is still low compared to other African peers, high quality seeds are lacking and the finance to increase production areas by farmers are not there. All these factors have made our cost of maize and soybean production higher and unable to compete favourably with the imported ones.
For the micro ingredients such as the amino acid, vitamins and minerals, enzymes are affected by the volatility of the exchange rates and are not easily available because they are all imported. This has put producers of feeds at a disadvantage because they cannot compete in the international market. The cost of feeds has a multiplier effects across the entire poultry value chain because it is what determines the cost of day of chicks, frozen chicken and the cost of eggs.
Another major challenge facing the poultry industry is the high rate of smuggling of frozen chicken into the country. A lot of farms have shut down operations because of smuggling. The government and the Nigerian Customs have tried but there is still room for improvement. Over 1million tons of chicken is smuggled into the country yearly, if these smuggled chickens were produced in the country, it will create jobs. But now these jobs are exported to the countries these chickens are imported from.
Poultry farmers have been suffering from yearly egg gluts. What is cause of egg gluts in Nigeria?
I will approach it in two ways, that is industrial and consumer challenges. Egg is a unique product because it is consumed by all. In Nigeria there is low usage of eggs because the food and beverage industries in the country use egg powder and this is not being produced in the country but imported. Egg powder is not manufactured in Nigeria because of the inputs.
If maize imported into Nigeria including tariffs is costing N80, 000 per ton and the one produced in Nigeria is costing N140, 000 per ton and the chickens that would lay these eggs are consuming this maize, there is no way egg powder produced in Nigeria will not be more expensive than the imported ones.
This is why industries have continued to import egg powder into the country, because they are profit making businesses. We need to consider the environment where we operate in business which could be exogenous and endogenous.
The exogenous are factors we do not have control over. We don’t have over economic, ecological, technological, political, legislation, socio-cultural and regulation situation as well as new entrance into the industry amongst others. The inability to use eggs industrially is one of the reasons why we are experiencing egg glut yearly.
On the consumer aspect there is a challenge also. Per capital income of Nigerians is low and people are not consuming eggs as expected. Nigeria per capital egg consumption is 65 eggs per person a year. In Spain its 340 eggs person in a year and US is 305 eggs per year.
This shows that Nigerians are not consuming enough eggs. The northerners eat more eggs than the south west, south-south and eastern regions of the country. The channel of eggs distribution in the country is also faulty. Many of the channels to sell these eggs are not certain and there are close substitute to eggs in terms of eating it with yam and not nutrients.
Also there is no serious advertisement on the importance of egg consumption in the country by farmers. Farmers must find a central way of prompting egg consumption.
The Ondo state government has just inaugurated an egg powder factory in the state. Is it the right way to address the issue of egg glut?
It is a right step in the right direction. But so many things have to be put in place to ensure sustainability. The government must find out what the price is at the international market. Also, there is need to ensure the quality of eggs needed for processing because the quality of raw materials determine the quality of the finished product.
In Nigeria, farm A quality of eggs is different from farm B because of the quality of the feeds the birds are fed with. Eggs that you use soybean to produce are not the same as the one you use groundnut cake. The Ondo state government must ensure quality of the egg powder they intend producing to meet international standards. There must be a model to ensure sustainability. The factory must also be rightly located to ensure nearest to raw materials.
Can you give us the statistics of farms that have already shut down operations across the country?
I do not have the data but the best way to confirm this fact is the reduction in the patronage of day old chickens. Every farmer either those producing eggs or those producing meats must buy day-old chicks, either broiler or pullet. The sales of day-old chicks have been on the decline. This shows that a lot of poultry operators are shutting down. Nearly every hatchery suffered last year, many stopped setting eggs, turned the eggs that was meant to be fertilised to table eggs for consumption, all these are the signals that many poultries are shutting down.
The prices of broiler declined to as low as N70 from N180. I do not have the statistics but taking a cursory look, I can tell you that most farms have closed down and when there is reduction in the volume of feed sales, and then you will know farms have closed down, those are the indices.
Recently, Heineken Lokpobiri, Minister of state for Agriculture said investors are scared of coming into the sector because of paucity of data, how true is this?
What the minister for state said is very correct. You will discover that about three to four years ago, the rate at which the eateries, Quick Service Restaurants (QSRs) sprang up was very sporadic, go and check them today; many have closed down their outlets because reliable data and statistics are not available.
Everybody comes into the country, which has 180 million as the total market, but is 180 million the available market? Is the service market? How many people eat chickens? So it is not enough, then again, if proper data is available what is supposed to be available is the geographical analysis, talking of the country size, the city size, the density, the climate for geographical information. Then, talk of demographic, how many people are between 0 and six years, how many are between seven and 10 years, how many people are dependent, the family size, occupation, family life cycle, all these information are key. It will interest you that life expectancy in Nigeria is 54 years, whereas in South Korea it is 90 years, in US it is about 89. We then talk of the occupation, how many are in class A, B, C, talk of the psychographics-their social class, their lifestyle, their personality, then the last one-behavioural, all these would guide any investor, reason why those who suppose to expand their businesses are now shrinking it or closing it. How many poultry farms do we have, nobody can successfully say this is the statistics. The challenge is the attitude of some government officials, is the contributing factors. They would come to you to ask for your number of chickens and then use it against the farmers to collect high taxes. So those poultry farmers would now tell lies for example if they have 5,000birds, they would declare 1,000birds because our government is not sincere. From the local government, states to the federal level, the officials are not helping matters.
What are you planning to do after retirement?
I will be going into consultancy. I started as a sales representative in the poultry industry 30 years ago before moving to, to sales manager, to quality control, procurement, supply chain even accounts farm manager before becoming the group head. These positions gave me the opportunity to under the entire industry. I am a student of Rome agribusiness school and I am learning a lot of things which I can bring into the country’s agric sector. I am also into training and I facilitate the Lagos Business School, agribusiness. So with all this knowledge I will be going into full time consultancy in any aspects of agribusiness to contribute my quota to our nation building.
