Adewole: Nigeria’s Poultry Industry is Worth over N1.2tn

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Poultry farming is getting improved attention especially with the Central Bank of Nigeria’s support for local farmers. Jonathan Eze spoke with the coordinator of natnuPreneur Broiler Outgrower Scheme by natnudO Foods, Mr. Gbolade Adewole, who put the value of the Nigerian poultry industry at over N1.2 trillion. Excerpts:

There seems to be opportunities in the Agricultural sector now especially poultry farming. How viable is the sector?
It is important to state that the opportunities in the broiler market are substantial and all we need to do is to take a closer look at the value chain. Take for example, the feed mills. If we are allowed to produce the 1.5 million tonnes of chickens consumed locally, the feed mills will have to supply about N700bn worth of feed, the hatchery N145billion worth of day old chicks (DOCs) and the animal pharmaceutical industry will have to deliver drugs and vaccines worth about N45 – N55 billion-naira.

Those numbers that I have given you put together is about N900billion. And that is just on the input side of the business but 70% of that money is not allowed to be made in our system because of the imported chickens blocking the flow. Ideally, Nigeria has enough poultry farmers who are ready to breed broilers because they have the space and the farm but because of this constraint, nobody is willing to fully exploit that market.

Does it mean that Nigerian poultry farmers don’t have the capability to produce what we can consume locally?

From available statistics, Nigeria consumes about 1.5 million tonnes of chicken annually but Nigeria produces only 30% of that. It is not that we do not have the capacity to produce 100% of what we consume, it is just that 70% of the chickens that we consume are imported (smuggled). Some people call them ‘cadaver’ chickens because of the long and poor storage process that they must go through before they get into the country. This is basically one of the biggest challenges confronting the broiler market in Nigeria. So, from an economic perspective, it’s affecting all the stakeholders in the value chain, namely: farmers, farm workers, transporters, input suppliers (feed, DOC,), laboratories, extension officers, veterinary doctors, financial service providers, processing plants etc.

1.5 million metric tonnes of chicken is 1.5 billion kilograms of chicken. The average breast chicken is 1.4 kg so that gives us 1, 071,428,000. That is the amount of chicken that we consume every year. Give or take, plus or minus 25% that depends on whose statistics you are looking at.

So, revenue on input alone will be about N900 billion if we were producing 100% of what we consume, since we are producing 30% of N900 billion that means we are losing N600 billion that cannot be done here. For example, people are opening feed-mills all over Nigeria which has brought about competitiveness among market forces, which is good for the farmers. However, it also means that some people will be knocked out of the feed market despite all the investments they have made. The ripple effect is what is more dangerous like job loss.

Let us do some ballpark numbers together, stay with me on this, 1.5 million metric tonnes of chicken is 1.5 billion kilograms of chicken, the average dressed chicken weighs 1.4 kg so that gives us 1,071,428,000 birds consumed annually. That is the amount of chicken that we consume every year. Give or take, plus or minus 20%- 25%, depending on whose statistics you are looking at. So, revenue to input suppliers alone will be about N900 billion if we were producing 100% of what we consume. Since we are producing 30% of N900 billion, that means we are losing N600 billion just on the input side of the business alone.

Please tell us about the feed side of this business?
The Feed side of the business has become highly competitive which is good for the farmers on the short to medium term. However, it also means that some firms will be knocked out of the feed market despite all the investments they have made. The ripple effect is what is more dangerous, like heavy job losses along every point of the value chain.

If Nigerian farmers are allowed to produce what we consume (1.5 million tons of chicken) this will translate into a lot of job opportunities. For instance, we should have well over 1 million attendants working on different farms. That is what we meant when we said across the value chain, our natnuPreneur scheme alone has the capacity to employ well over 2 million people. if we are to produce approximately, 1,071,428,000 chickens, you can imagine the number of people that we will need to produce them – the number of people we will need at the hatcheries, the feed-mills, in logistics, laboratories, extension officers, veterinary doctors etc., can only be imagined.

In terms of revenue, how many farmers do we need to rear 1.5 million metric tonnes of chicken? if we assume, for argument’s sake, that an average capacity farm supplies twenty thousand birds every circle which is about 100,000 birds a year at 5 cycles per annum, if you divide 1,071,428,000 birds by a 100,000 that is approximately 11,000 broiler farms. These numbers are taken from a pessimistic perspective, since we know that the average Nigerian broiler farmer based on our scheme does about 5000 birds per cycle, approximately 25,000 birds per annum.

On inputs alone, I easily calculated N900 billion. Take another example – transportation – movement of Day old Chicks, Feed, and Live birds back to the processing plants. The average cost of transportation in a cycle is 6.85% of the total cost of production, if we add the other nodes in the value chain, in terms of percentage, we get a revenue of about N1.3 trillion-naira swirling around in this value chain. But, alas, we are doing only 30% of this. Thus, the revenue we are generating for the players in this broiler sub segment of the poultry business is only about N430 billion which is still miniscule compared to what we can do as a country. This is where we have a problem” he said.

What can be done legislatively to discourage smuggling of chickens especially from neighbouring countries?

We have reached out to the Consumer Protection Council and some members of the House of Representatives. The Group Managing Director of Amo Group, Dr. Ayoola Oduntan, has also served on a senate subcommittee on this smuggling issue. So, what we have done is provide government with as much information as possible because they are concerned about what is happening. We are also working with the CBN and NIRSAL on the Anchor Borrowers Programme (ABP) to help increase local production as much as we can.

I will also like to begin with the interesting hypothesis that says that smuggling of chicken has been banned. The goal is to focus, as we have done, at AMO Farms, through the NatnuPreneur scheme, on farmer profitability. As long as we can work out how the average broiler farmer can make and increase his profit, year by year, then we can be sure that the production will grow to fill this 70% gap created by the importation of ‘cadaver chickens’.

What are some of the challenges confronting the broiler business?
The core focus on farmer profitability is the main building block of the natnuPreneur scheme. Based on the research we undertook at inception, we discovered that a substantial number of broiler operations of various sizes around the country had failed. So, it was in a bid to unravel and solve the causes of these farm failures that we designed our system.

Firstly, even if they had everything working for them, the market wasn’t there for them to sell into in bulk at the time, problem solved by our guaranteed off taking, we are not talking about rearing 5-10 chickens to sell during festive season. Rather, we are talking about rearing 10,000-20,000 chickens and not having a ready market to sell it to. Secondly, the quality of inputs fluctuates depending on the source, thereby harming the final result for the farmers, problem solved, we provide high quality inputs that has been tested through over 10,000 cycles. Apart from the very good farms such as Amo Group and a few other notable companies who mill for their farms, farmers often get bad inputs.

The practice of getting maize from different places and mixing them up generally reduces the quality and results in all kinds of lapses. Thirdly, management practices were a major point of failure, many of them had no training on the basics of broiler management, most especially bio-security. Funding was also one of the issues, problem solved, we provide extension officers that visit these farms weekly to monitor and train and advise the farmers, each cluster of extension officers is headed by a veterinary doctor.

So, based on these findings, we now tried to design a system to resolve these challenges. It is this system that we designed to help that we adjust everyday as we move along. So, we need more companies to do what Amo Group is doing with the natnuPreneur scheme.

One of the major discoveries that have turned out to be our driving force is that the smallest unit in the whole value chain is the farmer and the farmer must be profitable for the scheme to be successful. So, when we did all that designing, experimenting, training extension officers, process optimisation etc., we realised that farmer profitability was the key. To ensure that this happens consistently, we focused on getting our trained extension officers to enlighten them on the reasons why their farms should not fail and how they can ensure they make profit consistently.

Do you get feedbacks from farmers as per the progress made using your technical models?

Farmers have given us feedbacks on how they have increased their capacity following our template and systems. It is important to note that, after the delivery, we usually write what we call a post evaluation report to show the high capacity farmers how well they performed in the cycle and where they need to do better to make more profit. Lastly, we also learn from the farmers through the feedback we receive and use this to consciously improve the process, and I must say, while its not perfect yet, we have come a long way via a steep learning curve on both sides of the equation. What we are saying, in other words, is that we need more AMO FARM type operations in the country to bridge the gap.