Record high feed costs is making poultry business more difficult and precarious, according to industry operators.
Speaking with The Nation, the Vice President, Association of Small Business Owners, Mr Stephen Oladipupo, said prices of feeds have been increasing due to the rising cost of corn.
He said feed costs are a key element to the profitability of a poultry unit, stating that poultry farmers are now engaged in the production of feeds for their chicks to reduce the cost of running the business, he added.
Stephen said although this option appears cost-effective, it was difficult for farmers to source good ingredients to replace imported wheat and soya beans.
Rising prices ofgrain and its impact on feed continues to be the greatest concern for the industry, he said, thus forcing animal feed manufacturers to divert to other businesses, while others are operating at half installed capacity and struggling to cover cost.
He said farmers are currently running their farms at a loss and as a result, many have already started to reduce numbers, especially in poultry. Oladipupo urged the government to address the issue to ensure continued viability. He urged the government to give farmers more control on the sourcing of protein by providing alternative home-grown solutions.
The Director, Africa Region, Cassava Adding Value to Africa, Dr Kola Adebayo, said feed costs was critical in the industry since it represents approximately 70 per cent of the variable production cost. For this reason, feed manufacturers are switching to low cost substitutes such as palm-kernel cake, groundnut cake, fish meal, and by-products of agro-processing.
Chairman, Lagos Chapter, Poultry Association of Nigeria, Mr Adedotun Agbojo, said the industry is facing uncertainty and is on the verge of collapse because of high cost of feeds, which he argued, has reduced returns on investment.
Because of the shortage of grains, by-products, oil cakes, prices of animal feeds have been on the rise necessitating an increase in the cost of animal feeds to a point where most farmers are not able to sustain their products.
He said farmers are managing their chickens at a loss and as a result, many have already started to reduce numbers, especially in poultry. Poultry feeds by their quality and price, he said, are some of the major factors in determining the cost of poultry products such as eggs, broilers and profitability of the poultry farm.
He added that the prices of major raw materials used to make the feed have gone up tremendously. Farmers, he noted, have had to absorb the increases without being able to increase the price of a crate of eggs or chicken.
He warned that if the trend persists most if not all poultry farms would have to reduce their operations or close shop.
Poultry feeds produced by commercial feed mills, he said, are handicapped on account of raw materials, which are transported from the north. He added that the increase in diesel cost by about 70 per cent has added to the problem.
Given the increased demand for Soya beans by China and other producing countries, there are indications that the trend may lead to a significant change in buying patterns and cause a tight supply problem for local poultry producers.
He lamented that that the increase in the cost of production due to high feed prices has not led to the rise in egg prices. With egg prices ruling below the production cost, he said the sector suffered heavy loss.
Poultry farmers are now engaged in the production of feeds for their chicks to reduce the cost of running the business. A bag of feed cost N2,400 in the open market. More poultry farmers opt to mill their feeds rather than buy from the market to get something cheaper than the market price.
