Poultry farmers, suppliers, retailers lament rise in price of eggs

GBENGA ADERANTI April 13, 2024

Many Nigerian families who have eggs on their menu lists are not likely to enjoy the ‘luxury’ anymore as the price of eggs continues to soar and poultry farmers are shutting down their businesses. GBENGA ADERANTI looks at the challenges faced by the farmers and how they affect the price of eggs and the economy in general.

Up until about three months ago, Mrs Tola Jacobs was getting between 20 and 30 crates of eggs from a poultry farmer in Ikorodu, Lagos every week. And when the poultry farmer sent a message to indicate that there would be a slight adjustment in the price of eggs, Mrs Jacobs was not bothered.

“I was not perturbed because I knew that the price increase would be passed on to the consumers. The owner of the poultry where I was getting egg supply said if things continued the way they were, he might be forced to shut down his poultry farm indefinitely.

“Many of us thought it was a joke, but true to what he said, we got there one Monday morning and he said he had suspended operation and had sold all his birds,” she said.

Since the poultry farmer shut down, a part of Jacob’s business has been affected. Before now, she was making a substantial sum as gains from her egg business, unfortunately, the supply has stopped coming and her fortune has nose-dived.

Mrs Jacobs is in a financial crisis as she can no longer continue with the payment of thrift savings she entered into.

Another Lagos-based poultry farmer, Mr. Anya Okaro, looked despondent when our correspondent visited his depot on Tuesday afternoon. He too had also suspended activities at his poultry farm in Ikorodu, Lagos.

”The current situation in the poultry business is not appealing to farmers,” he told The Nation dejectedly.

Before now, his depot at Akute, Ogun State, was a beehive of activities as retailers from Akute and environs converged on it to collect their supplies every Monday morning. That, however, has since ceased to be the case.

On that Tuesday afternoon, nobody was around except Okaro who had come to keep an appointment with our correspondent. “Most of the farmers are quitting the business because of the high cost of input, especially the grains and the soya beans which constitute parts of the recipe of the feed,” he said.

Today, according to Okaro, a bag of layer feeds sells for between N13500 and N15,000, with 200 birds consuming about a bag in a day, while they produce an average of 140 pieces of eggs per day.

He disclosed that the cost of feeding keeps increasing every day, and so also the price of eggs. Unfortunately, the disposable income of consumers is not getting better and many of them are quitting the consumption of eggs.

According to Okaro, the drop in the demand for eggs is what is causing many farmers to quit the business.

 “Realistically, a crate of eggs should sell for N4,000 for farmers to remain in business. Unfortunately, consumers are resisting the price increase. So farmers have no option; they either slow down or shut down the business,” Okaro said.

He opined that except people look for alternatives in terms of inputs that would pull costs down, the price of eggs would continue to rise.

He said: “A crate of egg in the open market now is about N4,000, but by the time you check the cost of producing one egg, you will find out that the profit margin for the farmer is very small. And for you to sustain the business, not to talk of expanding the business, the future is bleak. The government needs to do something.”

Before the new development, Okaro was producing an average of 100 crates of eggs daily, and 700 hundred crates in a week. But all that has gone into the winds and he has had to sell his birds pending when normalcy would return to the business.

He confirmed that the poultry farmers who remain in the business would continue to supply eggs but at exorbitant rates.

He disclosed that many things are competing for the components used in producing feeds, warning that with time only a few people would be able to afford eggs on their menu lists.

 Okaro warned that if the trend is not addressed, the price of eggs could go beyond the reach of ordinary Nigerians. “I heard that they are already selling a crate of eggs for N4,500 in some places. We would be talking about N6,000 in the next two weeks,” he said.

Investigation revealed that most farmers who could not cope with the cost of feed have shut down their businesses while others have scaled down their operations.

Like some of his colleagues, Donald Ibegbu, another Lagos-based poultry farmer, has also shut down his poultry farm. Until recently, he was an average poultry farmer, producing about 100 crates of eggs daily.

He said with the high cost of feeds, most poultry farmers are struggling to remain in business. “Presently the future is very hazy, and unless something extraordinary happens, it will get worse.”

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He said, warning that poultry farms will continue to fold up if the present trend continues.

Mrs Suliat Aderinto, an egg supplier in Lambe, an Ogun community, was before now collecting more than 30 crates of eggs every week and within a week would run out of stock. However, since the increase in the price of eggs, according to her, demand has been very low, and this has forced her to reduce the number of crates she collects from farmers. Today, she collects between 18 and 20 crates a week.

“Eggs are expensive. People are not even willing to buy. This has also forced me to reduce the number of crates I buy from the farm.

“Many of my colleagues have stopped the business while some who are still in it have reduced the quantity they collect from farmers,” she told The Nation.

She also disclosed that many farmers have sold off their birds because they could not afford the cost of poultry feeds. As a way of keeping their customers, many of the farmers who have shut down are referring their customers to their colleagues who are still producing in the hope that when normalcy returns, their customers will come back.

“The truth is that most farmers have folded up. Some who had 300 birds before do not have more than 60 to 70 birds now, which would only give them two or three crates of eggs in a day,” Aderinto said.

Shortage of egg supply has had a serious impact on Aderinto’s business.

She said: “Imagine how much I was making from selling 30 crates of eggs every week. The gain I was making from the business was enough for me to cater to my needs.

“If the eggs had been cheap, people would buy them. Those who were buying crates have stopped buying crates; they now buy half crates.

“The money we make from the business has drastically reduced,” she said.

Lending credence to the doldrums in the poultry business, former President of the Poultry Farmers Association of Nigeria (PFAN), who is also the Chairman of Tuns Farms International, Asiwaju Khamis Tunde Badmus, told The Nation that while Nigeria has enough infrastructural facilities, most poultry farmers do not have the working capital.

“Most of the farmers producing 100 percent before are now producing 50 percent because the working capital has been eroded.

“In addition, there is no purchasing power to buy feed in large quantities,” he said.

Tuns Farms, one of the biggest suppliers of eggs in Nigeria, is also feeling the pain. As big as the farm is, it currently produces 20 percent of its capacity.

“Many farmers are indeed closing down because their poultry farms do not have money to buy feed,” Badmus told our correspondent.

According to him, with the current price of poultry feeds, it would be difficult for many poultry farmers to feed 5,000 chickens.

“Unfortunately, the cost of feed is always increasing. If you transfer the cost of production to what you are selling, those who want to buy it do not have money. Egg has become a rich man’s commodity,” Badmus lamented.

Our correspondent observed that eggs, which used to be regular commodities at parks, are fast disappearing. Before now, you would hardly visit bus stops and parks without seeing the boiled egg hawkers. But they are gradually disappearing.

Also, many homes with eggs on their menu lists are already doing a rethink as the price of eggs goes beyond their reach.

While the fear of scarcity increases, Badmus insists that there is nothing to fret about as the federal government has continued to address the challenges facing the economy.

He, however, added a caveat: things could get worse if there are no urgent steps to assist poultry farmers.

“We have the infrastructure to produce enough chickens to feed the whole of Africa. We have enough machines to produce the feeds,” he said.

The poultry industry is said to be worth N10 trillion, sharing about 25 percent of agriculture’s contribution to the GDP as the sector employs more than 20 million Nigerians.

Last year, a crate of eggs sold for between N2,500 and N3,000. But currently, a crate of eggs is sold for N4,000, and before the year runs out, it could cost between N5,000 and N6,000, as more and more farmers shut down their operations.

Business under threat

Investigations conducted by our correspondent revealed that while there are other essential components in the production of feed, soybeans and maize, the most essential ingredients, are grossly in short supply.

It was gathered that since insecurity in the northern and middle belt zones of Nigeria became aggravated, many farmers have stayed away from the farms; a situation that has caused the scarcity of these important poultry feed components. The development has taken feeds beyond the reach of the average poultry farmer.

And unlike before, when poultry farmers enjoyed a form of protection from the government, things are quite different now. Badmus said the practice before was for the government to give farmers maize from its reserve, but things have changed as the government is now more concerned about feeding its human population.

While the increase in the price of poultry feeds has made it difficult for many poultry farmers to continue the business, Ibegbu is optimistic that with the naira appreciating, the prices of poultry feed would also come down.

He, therefore, warned that the government should do something about components like soybeans and maize which are not dollar-dependent.

Will there be scarcity of eggs?

Ibegbu was of the view that there could be scarcity or glut, depending on the disposable income available to the average Nigerian.

“How many people can buy a crate of eggs for N4,000?” he asked. “You know it is a function of demand and supply. If the farmers produce; can the people afford it?

“If people can afford it, the scarcity of eggs may not be there. But what happens to the majority of Nigerians who use eggs as their source of protein? If they cannot afford it, malnutrition will set in. 

“Yes, there will be scarcity in the sense that many of the farmers are going underground. Very few farmers are producing, meaning that we may not be able to produce enough. And if the number keeps going down, the class that will be able to purchase it may not be able to see it to buy. That may be the reason for scarcity.”

Okaro also disclosed that shutting down has had a serious impact on him as it is difficult for him to fulfil some of his obligations.

He said: “We still have the same bills to pay, and we are suffering because most of the things we were able to do before, we are not able to do today because of the disposable income we have at the moment.”

Okaro is of the view that the challenge currently faced by farmers is temporary.

 “These things come as a circle. We are going down the hill, but we won’t continue this way. At a point when the government is doing what it is supposed to do, everything will become normal.

“Every challenge also brings an opportunity for us to improve. But as of today, it looks bleak.

“You are going to see the trajectory going up again, maybe in the next two years,” Okaro said.

In the early 90s, many West African countries depended on Nigeria for their supply of eggs. Then, the poultry business was at its peak. It was a time when the government did everything possible to protect poultry farmers and support them with different kinds of incentives.

Some months ago, the Chairman of the Poultry Farmers Association of Nigeria (PAN), Lagos State Chapter, Mr. Mojeed Iyiola, said 50 per cent of its members had shut down their poultry businesses due to sectoral challenges.

According to Mojeed, poultry farmers lost over N3tn in 2023. The Lagos PAN chair said economic conditions had forced a significant number of poultry farmers to exit the industry.

Scarcity likely to linger

The Lagos PAN chair had hinted that the poultry farmers were facing difficulties in meeting the increasing demand for poultry products due to the closure of a significant portion of their farms; an indication of a possible short supply of eggs.

According to him, “Most poultry farms in the country closed down last year due to difficulties faced in the sector.”

“We are currently unable to meet the demands for eggs due to the shortage of poultry farms. Presently, we have a very low supply of eggs in the face of growing demands.”

He disclosed that the problem has been aggravated by the astronomical rise in the prices of poultry feeds as well as the production cost.

The price of maize, for example, has increased by 79.23% year-on-year from N329.05 for 1kg in December 2022 to N589.75 by December 2023. The monthly increase was 5.47% from N559.18 recorded in November 2023.

According to the National Bureau of Statistics (NBS) food price index for December 2023, the cost of chicken feed rose by 81.71% year-on-year from December 2022 to December 2023.

Also, the price of medium agric eggs has increased year-on-year from December 2022 to December 2023 by 52.09%. For month-on-month inflation in eggs 4.39%.

The Nation also gathered that the cost of poultry feed kept soaring as a result of insecurity as most farmers are finding it difficult to get to the farm. They are not producing soya beans and maize.

Okaro insisted that while there is demand for maize and soya beans, there is no supply. According to him, the price of eggs would have skyrocketed if not for the ingenuity of some farmers who still want to stay in business.

“Most of the poultry farmers have cut down the cost of production by working on internal efficiencies, making sure that the cost of production is reduced.

“But in a situation where you cannot control it, you either fold the business or you scale down production,” he said.

Mojeed also blamed the greed of some farmers for the increase in the price of eggs. According to the Lagos PAN chair, maize and soybeans, which are components of feed, are being exported to other countries by some greedy farmers.

Arresting situation

Most farmers have called for the importation of essential ingredients like maize and soybeans at least temporarily. But in the long term, the solution is for more people to go back to the farm, and for more people to go back to the farm, their security must be guaranteed.

“The government must provide security for farmers to go back to the farm,” Okaro said. He also said it is not out of the way to subsidise fertilizers and seedlings, especially during the rainy season.

While not denying the fact that other items are essential in feeds, he is hopeful that if the cost of maize and soya beans comes down, with other micro-ingredients from abroad being affordable and “with the stability and improvement we are hearing about foreign exchange, if the prices of the things added to boost the feeds also come down, things will be better,” Okaro said.

Badmus implored the government to go back to the era when poultry farmers were assisted. “At that time, we had a glut of egg production in Nigeria. The federal government gave us an import licence. We were allowed to import soybeans and feed, it prevented any form of scarcity of eggs.”

Realising that the federal government has invested heavily in maize, he advised that the importation of the feed component should be a stop-gap process till the poultry sector is stabilised.

“Again, the government should make available the working capital, because those who had 20,000 birds before can hardly boast of 10,000 now. If the government makes funds available and each farmer can go to the development banks instead of commercial banks, things will be better,” he said.

A few of the poultry farmers who were able to access the funds were able to survive. They produced eggs and chickens in large quantities because there was a market for local poultry production; there was demand and everybody invested.

This made it possible for the poultry farmers to do out growers’ schemes successfully.

Speaking on the success of the scheme, Badmus said: “We would give you a day-old chick and feed. When these chicks come of age, you return to us and we slaughter them. It grew, we were in the Republic of Benin, Togo, Ghana, and at a stage, we were supplying KFC Ghana chicken.

“When another government came, it scattered the whole process and since then things have become worse. It was a bit difficult to do business. But irrespective of what is happening in the sector, we have the infrastructure on the ground in Nigeria to produce for local consumption and export, the challenge is lack of working capital.”

Badmus revealed that at a point when the poultry sector was in crisis, the country depended on imported frozen foods to the extent of importing chicken from Brazil and other parts of the world; imported turkey parts flooded the Nigerian market.

As a way of bringing sanity into the sector, the presidency formed a committee to revive the poultry industry. Then the government gave poultry farmers a special tariff.

Contrary to proposals in certain quarters that the country could embark on the importation of eggs as a temporary measure, Badmus warned that it would be dangerous for the country to embark on the importation of eggs, saying, “We are exposing ourselves to big risk because we could be poisoned through this.”

To prove that the danger is real, he gave an example of the imported frozen chickens that are being preserved with formalin, a chemical that is used in preserving dead bodies. He disclosed that Nigerians risk cancer by consuming imported chicken preserved with formalin.