Nigeria’s poultry industry has in the last two years been struggling to survive, with many poultry farmers shutting down mostly on account of cost of feeds. At times when feeds where available, the quality was in doubt, invariably rubbing off on the quality (and mortality) of birds produced. However, as poultry farms shut down, the country’s 60 million birds deficit only gets wider.
The Agriculture Promotion Policy document by the Federal Ministry of Agriculture showed that Nigeria’s annual chicken consumption is 200 million birds, while supply is 140 million birds. The deficit of 60 million birds is filled by illegal imports that enter market at lower price point than domestic producers, and this gap is also a moving target based on fast food/QSR demand.
The 720,000 metric tonne feed mills by Olam, as well as its 1.65million chicks per week hatchery facility could however lower this gap, by offering local farmers these inputs in order for them to either start new poultry businesses, or expand existing ones.
The notion that Olam’s foray into poultry would threaten local (and smaller) businesses was addressed during a facility tour of the mill and hatchery in Kaduna, where it was made clear that the objective is to concentrate on poultry feed, breeding farm and hatchery.
“Let me clear the doubts of Nigerian farmers, whether as broiler or layer farmer, we are here to support you, not to kill your business,” said Vinod Mishra, Business Head, Animal protein, Olam hatcheries ltd.
“Don’t think that Olam is here to grab your business, kill it and destroy it. We are not getting involved in any direct (consumer end) poultry business such as egg production, we would only be supporting you with provision of day old chicks and feed. The layer farmers can then get required stock to come and compete in the market, same for broilers and cockerels. You can buy the day old chicks make them bigger, feed, then sell in the market and make your profit,” Vinod explained.
According to him, Olam’s objective is to support local farmers in terms of providing healthy and quality day old chicks year round so that small businesses can focus on growing without worrying about too much fluctuating prices.
The hatchery has a production capacity of 1.65 million chicks per week, comprised of 650,000 layers (for eggs), 650,000 cockerels (for backyard meat production), and 350,000 broilers (for organised meat production).
The company’s involvement in the poultry industry has been described as an effort to streamline activities so that players in the value chain can benefit from it, and this includes provision feeds and the chicks which will be reared.
Emmanuel Ijewere, Vice President, Nigeria AgriBusiness Group (NABG) in an interview described the investments by Olam “as a very commendable thing”.
According to him “The biggest problem of poultry today is the feed, and its cost. The three most important ingredients; maize, soya and palm kernel cake are the biggest challenges. Maize has gone through 2-3 years of poor yield mainly because of army worms. Secondly, you have the issue of soya that has always been undersupplied for so many years; not so much the bean but the cake which comes from it. More and more poultries have been established, but when the cake is bought, it is not properly preserved.”
Olam however aims to address this by partnering smallholder farmers, and providing them with inputs to scale up production. In its 844 hectare Kaduna facility, soybean is also being cultivated to ensure demand is constantly met.
The company’s feed mills in Kaduna and Kwara states aim to address the poultry feed supply gap in Northern Nigeria, and by extension, the 40 percent gap in the market for animal feed in Nigeria. The two mills supply local farmers with a total of 720,000 metric tonnes of feed per annum, which the company also describes as specially formulated feed.
Majority of feed ingredients are sourced from local farmers, while Olam is also developing an agronomy programme to increase local soybean production from 500,000 metric tonnes to two million metric tonnes over the next five years.
The feeds being produced include Chikun; an entry level brand, and Ultima; which is a premium brand. Both brands are fortified with amino acids, vitamins, minerals, and feed additives to meet national and international standards.
Speaking with poultry farmers between last year, and earlier this year was often filled with lamentations in feedback, a situation likely to change if integrated poultry facilities like that of Olam can be replicated across the country; following in the footsteps of the standards being set.
“A lot of farms are being closed down because so many people cannot afford to feed their birds,” an agitated Onalo Akpa, director general, Poultry Association of Nigeria (PAN), had told BusinessDay by phone, “If you have a (poultry) farm and you cannot feed your birds then you better shut it down!”
Bode Adetoyi, chairman, Poultry Association of Nigeria (PAN), Lagos state chapter had also said that the “Poultry industry and feed business is already collapsing and farms, feed mills are closing every day,”
Similarly, Bayo Adebanjo, CEO, Tard Farms said “The bigger problem is the drop in quality of the feeds as the millers are also cutting down on some of the nutrients to manage their costs & margin. Most farmers now get below 60% efficiency from those standard feeds. I believe the millers are also faced with unstable / escalating exchange rate and other raw material sourcing challenges.”
The challenges confronting the poultry industry can now be permanently resolved, as government’s recent revision of the Pioneer Status Incentive (PSI) list, now means the business can become more profitable.
The review of the PSI list of 27 industries has in it, Processing and preservation of meat/poultry and Production of meat/poultry products. By implication, the poultry industry which has been struggling can now get on one hand, inputs to operate and thrive as provided by facilities such as Olam’s integrated feed mill and hatchery, as well, as FG’s tax incentives.
The pioneer status incentive is a tax holiday given to companies to enable them hit the ground running (or expand) so that they can thrive and be profitable. The tax holiday is given for an initial three year period and renewable for another two years as a way of stimulating growth and development of Nigeria’s economy. This privilege may also be a seven-year tax holiday in respect of industries located in economically disadvantaged local government areas of the country.
CALEB OJEWALE
