- Alternative Feeding for Poultry - September 17, 2021
- 7 Great Advice from Super successful Individuals for Entrepreneurs - May 12, 2021
- 6 Strategies for Combating the Current Price Hikes in the Broiler Production Sub-sector - August 13, 2020
The cost of purchasing day old broiler chicks is at an all-time high right now in Nigeria.
The current price of day-old chicks sits between ₦430 and ₦450, which is over 20% increase from the previous price. In addition, the rising cost of poultry farm inputs such as chicken feed, drugs and vaccines has made the business much more difficult for farmers in this sector and these current inflations are negative signals for intending investors and entrepreneurs.
As at the time of writing this article, there is a 10% increase in the price of chicken feed and this is a big deal because feed constitute about 70% of the cost of a broiler production batch.
The hike in price of feed is due to rise in the price of key ingredients such as corn and soybean meal. According to an article by feedstrategy.com, the price of soybean meal has risen by 12% to ₦123,000 per metric ton while corn has risen by 70% to ₦165,000 per metric ton adding to the fact that corn supplies has become scarce most likely due to the recent import ban of corn by the federal government and the covid-19 lockdown measures which may have restricted farmers activities earlier in the year.
The biggest challenge right now for small scale poultry farmers who constitute over 70% of poultry farmers in Nigeria is in the area of sales. They are not financially buoyant enough to expand their business operations to include processing and so they majorly sell their table size birds as life birds to resellers who sell directly to the consumers.
However, there is usually no corresponding increase in the selling price from farmers to resellers despite the inflation because the resellers also complain of the challenges, they face in selling the birds as consumers are not willing to buy beyond a certain price point. Adding to the fact that many of their customer’s income have been slashed due to the current Covid-19 pandemic impact on the economy and so it is farmers who are forced to cut down their selling price with lower profit margin.
Ultimately, broiler farmers success for each batch right now will depend on their bargaining power ability and the leverages they have in place to ensure the sustainability of their agribusiness.
This hike in prices favours no one but hatcheries and poultry breeders who are satisfied with the price hike which in their own defense could help them bring in more revenue thereby stimulating re-investments into the sector.
Small scale poultry farmers are at the bottom of the pyramid and so it is the smart broiler production agribusiness owner that will definitely remain in business if these inflations ensue.
Below are some strategies that you can implement as a broiler production agribusiness owner in order to combat the current price hike:
Expand into processing:
The current hike in price will definitely cause most small-scale poultry farmers to shut down production; only farmers who are able to quickly apply the strategy of expanding their operation to include processing will be able to remain profitable. However, there are cost implications towards implementing this strategy, but in the long term this strategy will help farmers save cost because they can easily stop spending more in feed purchase as soon as the birds reach target weight within 6 – 8 weeks by processing, deep freezing and selling them as frozen chicken.
With this strategy, famers will be able to control expenses on feed and can focus more on marketing their brand and products to frozen chicken dealers, retailers or supermarkets.
Formulate your own feed:
Another good strategy that you can implement right now is to formulate your own feed, although this will require a little more effort on your part but this strategy will definitely help you save cost especially if your production batch is of sizeable quantity. To implement this strategy farmers may need to undergo necessary training in feed formulation and must know how to mix the ingredients in their right quantity. However, working with a miller may make the work easier for you.
Start your own feed ingredient farm:
If you have access to land meant for agricultural purpose, it may be useful to consider farming feed ingredients such as corn, groundnut and soybeans used in feed formulation. This will help cut down on the cost of purchasing inputs used in feed formulations. However, this may not help you combat the current price hike and will require extra effort and cost implication to set up the farm, but it is a good strategy to have in mind.
Start a farmer’s support group:
The fact is a majority of poultry farmers in Nigeria are small scale farmers and are currently faced with the same challenge right now and in the future, therefore it may be a good strategy to support one another by pulling funds together that will enable them to set up systems that an individual farmer may not be able to do.
By pulling funds together to set up systems that will enable them the fare better in a future that is always uncertain is smart. By pulling funds together the risk of setting systems such as a processing center, a feed ingredient farm and a small-scale feed mill; is spread among the group.
Hold and buy:
Implementing the hold and buy strategy is a good strategy especially in this period where the production cost has risen by almost 30%. This strategy requires that farmers hold on until the price of day-old chicks and possibly farm inputs reduces. The rule follows that when the price reaches peak price and demands begins to drop, there will be a corresponding reduction in price so as to boost demand once again. The hold and buy strategy may be the most implementable strategy right now for most small-scale poultry farmers but this would mean that they might have to look elsewhere in the interim for income.
The final strategy ensues from the hold and buy strategy.
You see we live in a world where a predictable future is not certain and this is even more so in the agricultural industry in Africa where we mostly depend on factors outside our control to remain sustainable. Therefore, as a farmer it is smart to diversify your investment or business decision internally, externally or both internally and externally.
Diversifying internally means that you expand your operations within the same subsector (processing the chickens) or sector (starting a cassava production business) while diversifying externally here means expanding your business operations to include a whole new industry for example the transport sector.
That is, it for now, bookmark our platform on your browser for future updates or article.
We hope you have enjoyed the article or found it useful, kindly leave a comment using the comment box below. We would love to hear your thoughts or suggestions.