The Director-General of the Poultry Association of Nigeria, Dr Onallo Akpa, explains how the naira crisis is set to crash the poultry industry, in this interview with OKECHUKWU NNODIM
Your association recently said the poultry sector was facing imminent collapse. Explain what this means.
There are two basic products of production in poultry – egg and meat from the chicken. Now, daily, the layers continue to lay eggs. It could be either the breeders continue to lay the eggs for hatching, or the commercial layers continue laying the eggs as table eggs. Now, the essence of investments in poultry production is to have the two basic products. You have to raise the chickens to a state that they will start laying eggs daily for you to sell, to have a return on your investment, and to also have money to feed the chickens on daily basis. If it is for meat, you raise the birds to a certain life weight, you slaughter them for people to buy as meat, and you also have money to go back into production activities to raise another set of birds. So it is a cycle.
But during this period of currency swap, there is near the absence of naira and people have no access to money to even buy basic food items. In this part of our developing world, eggs are seen as luxuries for it is when you can eat food and have your stomach filled up before you would now add protein. However, nowadays, people buy eggs either for breakfast or as additional value to other menus. But what we are facing since February is that people have no access to cash. The wholesalers who buy at the farm-gate price are to retail these eggs to consumers or retailers. But the consumers have no money to buy the eggs; even when they have the money in their accounts, they don’t have the cash to pay for it. This is because many of the poor masses don’t have the resources to buy a crate of eggs, which are 30 in the crate. People pick five eggs and fry them for immediate consumption, while those who make tea and other light food on the road, buy half crates or at times 10 eggs, and these are based on cash transactions. But because of the near absence of cash to do this sort of daily transaction, a lot of our people have been unable to sell their eggs from the first week of February till now, March.
Now, we have over 76 million commercial layers laying eggs daily. We also have breeders laying eggs daily. So if farmers have no cash, there’s no way they would buy day-old chicks and restock on their farms. This is because daily, you need money to buy feed, medication and other important things. And if you don’t get money, how will you buy all these things to keep these birds alive? Also, you know that eggs are perishable. You can’t keep eggs for a maximum of 14 days, and unfortunately, this is a hot period. So if you are unable to sell these eggs in one week, they’ll go bad. This is where the colossal amount of money involved in the unsold eggs and the damaged eggs comes from. And if this continues in the next month or before we get the new government, then every other poultry farmer will close shop. This is because you can’t produce and you are unable to sell. How do you get money to continue feeding the birds? The chickens do not know whether you’ve sold eggs to get money to feed them. This is because every day they continue to produce and you must feed them. You can’t leave them to die, because that would lead to a great loss of investment.
What could be done to avert this imminent collapse of the sector?
Let the government come and assist. In other climes, when you have this kind of situation, the government comes in to mop up the eggs. What they do with it is that they either distribute it to citizens as part of social investment programmes, or they send some to schools, hospitals or to the peacekeeping forces. You see a lot of palliatives being given by the National Emergency Management Agency. Why can’t we add eggs, because the most important thing is the health of the citizens and eggs contain virtually all vitamins and minerals. So if we say the poultry industry is collapsing, it is because if you are unable to sell and make revenue, how do you continue to be in business? That is what we are saying.
Therefore as an interim measure to control and save the industry from further losses, we recommend that the government mops up the eggs through the association for distribution to the most vulnerable old populations as part of the social investment support to Nigerians. it should encourage the armed forces in various peacekeeping operations, Nigerian prisons, Internally Displaced Persons and places, and primary schools under the school feeding programme, to be immediate off-takers of the eggs.
It should also appeal to the presidency to direct the National Emergency Management Agency, the Directorate of Peace Keeping Operations of the Nigeria Armed Forces and the Social Investment Programme of the Ministry of Humanitarian Affairs, Disaster Management and Social Development to work with the association on how immediate reliefs can be extended to poultry farmers across the country to prevent the imminent collapse of the poultry industry. The government can also available direct grants and financial support to the industry through the association in special packages to be worked out by the government and the association.
What’s the quantity of unsold eggs, as well as those that have gone bad?
There is already trouble on our hands, for if out of 15 million crates of eggs, what has been off-taken is less than 20 per cent, then there is a crisis. You can’t slaughter your birds. Most operators who concentrate on hatching eggs are no longer doing so. And if this continues, investments in poultry will be threatened daily. As it is now, no poultry farmer makes more than a five per cent margin (profit), but since it is a turnover business, we just have to continue pushing daily. And I think you should know that most of the investors in this industry took loans from commercial banks at high-interest rates, with some for as high as 35 per cent. But now you are unable to sell to make earnings and pay these loans back. Most raw materials used in producing feeds are also got on credit, for as you sell your eggs or meat, you have money to come back to pay your suppliers and other service providers. But today you are unable to sell eggs or chicken. You are owing grain merchants, drug suppliers, as well as other service providers.
So it is just too much of a problem for the industry. People who sit in the comfort of their offices do not know the intricacies of most of these things. What most people think is that the chickens would just lay eggs and anybody can go and buy. It is not that simple. A lot of things go into making the eggs and chicken ready for people to buy. And this cost a lot of money. But today you are producing eggs and you are unable to sell. How do you pay your creditors? How do you pay your bank?
People should understand that the poultry industry is one of the most consolidated sub-sectors of Nigeria’s agriculture sector, contributing about 25 per cent of the agricultural Gross Domestic Product and employing over 25 million Nigerians directly and indirectly. Over the years, the poultry industry has been a major employer of labour and a great source of financial empowerment and livelihood for many families, especially women and youths. The industry is completely private sector driven, worth N3tn. The industry has been able to contribute to the local domestication of investments in the country. But at the moment, the poultry industry is on the verge of total collapse and extermination because of the negative and devastating consequences of the currency swap on the sector. That is what we are saying. The near absence of naira notes for Nigerians to make daily transactions has made businesses in the poultry industry more difficult.
Is there an estimate of your indebtedness to financial institutions, based on the crisis you face currently?
It is not my indebtedness, rather it is the indebtedness of my members. Every person in the feeds sector, inputs supply industry and the direct production of poultry are my members. So every person has suffered one form of loss or the other. What we have been able to do was aggregate these losses into the eggs. But the more it continues on daily basis, these losses will continue to rise. It has been on the increase since February this year. So the indebtedness is at the level of individual operators, but what we are now saying is that by the time you aggregate the total sum of the production of eggs, and what is supposed to be the selling prices of these eggs, that is the value we have, which is N30bn.
Now, when you do that it forms a total loss, because if the eggs were being sold and farmers were meeting their bank, suppliers and service providers’ obligations, then this debt we are talking about will not be there. Also, the loss and plummeting of this industry, just like we are crying about, will not be there. Now what I just told you was as of last week, but the truth is that on daily basis, the losses are increasing. Farmers are shutting down, for when you are producing and cannot sell, how do you continue? To even find the cash to buy daily food is a problem.
So poultry farmers across the country have lost over 15 million crates of eggs, being unsold and damaged. The average loss to the poultry industry is more than N30bn.
