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There are a few sectors that are predicted to do well post Covid-19 pandemic and the agricultural sector is one of them.
So for those that have been thinking of starting an agribusiness, now is a good time to start positioning yourself in your area of interest. But if you are among those that are thinking of shutting down their doors due to the tough challenges all farmers faced and are still facing; perhaps you may want to have a rethink and start thinking strategically on how to come out on top despite the tough times we are facing.
I am not going to deny or make light the fact that it has been a trying time for agribusinesses as well.
An article titled “Alarm bells as COVID-19 cripple’s poultry, fish farming biz” by Daily Trust brings to light how difficult it has been for farmers or agribusinesses in Nigeria. Millions has been lost and many agribusinesses have closed down.
It has indeed been a trying time for agribusinesses; however the prediction that the agricultural sector is one of the few sectors that will boom post covid-19 is plausible and this should encourage farmers and intending agribusiness entrepreneurs but only those who reposition themselves strategically will thrive.
Below I will be sharing with you the 10 Ways Broiler Agribusiness Owners Lose Money, Number 9 will shock you!
The list below is arranged randomly, so each point below is of utmost importance to the success of an agribusiness entrepreneur; however number 9 is a shocker!
1. Failing to control your expenses:
One of the most important thing you need to do as a business is control your cost. If you don’t, your business is not so far from running down but if you do, you will see your business grow in a timely fashion.
Controlling your cost is important but it is one of the hardest skills you will need to cultivate as an entrepreneur.
As an entrepreneur you need to find creative ways to cut cost so that you can maximize profit.
In broiler farming, controlling your cost starts from the amount you spent to purchase DOC (day old chicks) to the numbers of weeks you plan to raise them.
The amount you spent in purchasing day old birds will have a huge impact on your overall cost of raising the birds before sale and this is even more obvious if you are raising the birds beyond six weeks.
There are a number of areas where you should control your cost such as in the number of birds you plan to raise in a single batch, the type and quality of inputs and utilities used.
In the aspect of the number of birds raised, the more birds you have the lesser your cost because the cost of purchasing some certain inputs such as charcoal or shavers is spread on each bird.
For example, let’s say the cost of charcoal four farmers would use for keeping their birds warm during their early days is 3,000 naira and the farmers are raising 50, 100, 150 and 200 birds respectively. How much is the spread cost on each bird?
Farmer A: 3000 naira/50 bird = 60 naira per bird
Farmer B: 3000 naira/100 bird = 30 naira per bird
Farmer C: 3000 naira/150 bird = 20 naira per bird
Farmer D: 3000naira/200 bird = 15 naira per bird
From the above you can see that the higher the number of birds a farmer stock, the less he spends in regards to spread cost of some inputs.
The above is one way an agribusiness owner can prevent excessive spending. Technically in this case you could say farmer D spent less by spending more.
The above illustration is just an example of finding creative ways to control your cost so that you don’t lose money.
If you want to be successful in agribusiness, you need to study your business very well look at every details possible and find creative ways to cut your cost. The more you are able to control cost, the more money you make.
2. Failing to count your cost:
Another way broiler agribusiness owners lose money is by failing to count their cost. Many broiler farmers especially start ups fail to keep proper record of everything they buy.
Feeds, drugs, transport, fuel, lighting, repairs, hired labour, shavings and other utilities used on the farm for the proper management of raising the bird’s are all cost that needs to be properly documented so that you can track your expenses and control cost as mentioned earlier.
If you don’t do this, you won’t really know if you have over spent and this could have a grave impact on your overall profitability at the time of sales.
Counting your cost enables you to track your expenses and this will in turn help you to see where you may be over spending and where you may need to spend less and most importantly it helps you to determine where you can cut cost for profit maximization.
3. Poor marketed customer database:
Let’s face the fact, one of the many pains being faced in agribusiness is access to market. If you start your broiler agribusiness without doing a proper market survey, you would be setting up yourself for failure.
You have to do a marketing survey and find out if this business can thrive in the location you intend setting up your business.
Nearness to market is key but having a few ready buyers for your broiler chickens is very important.
You don’t ever want to be at the mercy of middle men or resellers.
If you wait till your birds are table size ready before you start the sales process for your birds you may end up spending into your profit because you have to feed the birds daily until you can sell them off thus losing money.
4. Failing to have market segments:
As mentioned above that it is important to have a few ready markets at hand before you start your broiler agribusiness. It is equally important to have a few customers in different segments.
The various kinds of customers in a broiler market are:
Off takers: These are mostly processors and they buy per kg
Resellers: These are mostly market women that buy life chickens from farms and resell directly to the consumer
Middlemen: These are marketers that connect buyers and sellers together in exchange for an agreed sum that is paid to them buy the seller.
Direct consumers: These are entities such as individuals, hotels and eateries that buy direct from farms. There are no middlemen involved in this transaction.
The more market ready segments you have at hand the quicker you can sell your birds when they are matured and ready for sell thus saving you the cost of feeding the birds when you should have sold.
5. Failing to acquire the right technical skills:
You can’t just wake up one day and say hey I am going into broiler farming agribusiness; you need to have the right technical skills to succeed in it.
First of all you need learn the techniques and management skills required to have a successful batch and this includes the brooding management, feeding, water, drug and vaccine, pen house, environmental and bio security management systems.
Secondly you need to learn the marketing and sales process. If you don’t have this skill the chances are your first production batch will be a failure and so will be your next production batch; that is if you are resilient enough to try again.
6. Failing to sort on time:
Any experienced broiler farmer will tell you how amazing it is to have uniformity in your stock. I know some of you may ask what do i mean by uniformity.
Uniformity is when over 90% of your stock has a positive growth rate, size and weight. To the viewing eyes, all the birds are of the same size, height and weight.
You get to sell your stock faster (if you have taken care of the sales process) with a positive uniformity.
However, when you don’t have uniformity, it may take you a longer time to sell the birds hence you may have to either sell those birds at a reduced rate or spend a little bit more to feed them to the appropriate size and weight before selling.
Both ways you are either losing money by selling at a lower price or you are losing money that should have been saved by buying more feed to feed the birds to the right size.
In order to prevent this lose of money, early sorting is required.
You have to sort them into separate pen house based on their size and continue this process until you sell the birds off.
7. Purchasing poor quality brooder stock/Rouge agents:
I remember when I first got started fully in broiler production business; I had booked for 150 day old chicks with a farmer center.
When they delivered the chicks, I was forced to reject the birds because I could easily tell that the chicks were of poor quality.
They were week; some were dead on arrival and a whole lot of signs to show that if I took these birds, I was in for a huge loss, so I rejected the birds. It’s a good thing I booked the birds from a reputable farmer center or else I had already lost before I even begin.
Many farmers lose money this way.
Another thing is booking your DOC from just anywhere is a huge risk because you can’t be sure of the hatchery they are getting the birds from.
It has been reported that some dubious people make use of the cartons of reputable hatchery to stock poor quality birds from another hatchery and sell to farmers through unsuspecting agents.
I will also advise to physically verify with the agent before purchasing; I am saying this because I have noticed a lot of agent post on social media platforms to advertise DOC to farmers and later on we see a farmer who does business with some of these agents complaining of their birds dying or worse they paid an agent who failed to deliver.
8. Staying at the primary level of production for too long:
Between the agribusiness owner operating at the primary level of production (crop production and animal husbandry) and one who is into processing, who is more likely to lose money?
Don’t respond yet.
When you operate at the primary level in the agricultural sector, the tendency is higher for you to lose money for the following reasons in regards to broiler production:
If you don’t have ready customers to buy your chickens, you risk losing money by feeding the birds into your profit.
If there is a crisis or glut in the market as it can sometime happen per location which leads to low sales, you still have to care for the birds which cost money.
But a processor can easily process the birds into frozen chickens which can last for a long time at least until the market become favourable again without having to care or spend more money.
As an agribusiness owner operating at the primary level, you can’t command premium price on your birds as well, in order words you earn less per kg than a processor.
When you multiply that by the number of birds you produced and sold in one year you would see that it amounts to a huge chunk of cash that you could have made.
9. Purchasing brooder stock at an high cost:
There is a lesson in the stock brokers world which says buy low, sell high. This same lesson applies in real estate as well.
A savvy real estate investor looks for an area with good potential for growth and development and buys a good number of lands cheaply and then sell when the area is now well developed.
In broiler agribusiness, profit or lose at the end of production begins from the purchase cost of day old birds.
If you bought high, by the time those who bought low had spent just 1000 naira per bird, you might have spent as much as 1,200 naira per bird.
If you do the math’s by multiplying that amount by let’s say 500 birds, you would see that you spent 100,000 naira more than the other person and that is a lot of money or potential profit lost.
You see these hatcheries tend to increase their price when the demand for the birds gets high due to increasing orders from farmers who are trying to target the festive sales period.
But let me tell you a secret and this is a bonus tip as a thank you for visiting our page, and for reading up to the end of the article.
You see there is a myth that says you have to produce your chickens to target the festive seasons. It is assumed that if you don’t produce to target the season, you have missed the opportunity to produce and make some money.
This causes many farmers to order almost at the same time causing the price of day old chicks to rise and glut in the market at the time of sales and this could have a negative impact on profitability if you don’t have a strong market base.
Here is the shocker; there is huge market for chickens, the consumers of chickens, eat it almost every day.
If you know what you are doing you will produce your chickens and sell both in festive period and off market with no stress.
As a matter of fact you can be selling your life chickens every week and making a healthy sum of profit at the end of each week season in or out.
There are more secrets and lessons available but they are reserved for our inner circles.
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