Global downturn lands home, wiping out gains made by poultry farmers

John Njoroge, a poultry farmer in Wangige near Nairobi, has seen better days. Having retired from the Civil Service in 2006, he used the bulk of his retirement benefits to set up a poultry farm at a time when the economy showed signs of growth.

The investment of almost Sh350,000 did not disappoint.

“I was able to send two of my daughters for further education in Australia from poultry farming in 2006. The business also bought me a pickup vehicle and enabled me to renovate my house,” said Mr Njoroge.

With the buoyant economic growth of 2007, Mr Njoroge reared between 1,000 to 1,500 broilers, distributing meat to top hotels in Nairobi on a weekly basis.

In the same year, during the IAAF World Cross Country Championships that were held in Mombasa, more business beckoned and he diversified to layers as eggs were also in high demand.

But that was then. Since the beginning of last year, the business has contracted almost three-fold. With travel bans issued by various Western countries following the post-election violence in the first quarter of 2008, demand for his products fell drastically.

But just when the country was recovering and tourists were resuming visits, the effects of the global financial crisis hit home. Following the massive layoffs abroad, many would-be tourists are tight on budget, shelving or scraping all together their travel plans — this applies to domestic tourists too.

Mr Njoroge is just one example of the many poultry farmers who have suffered major losses since last year.

Hospitality industry
For years, the hospitality industry has been the biggest market for poultry farmers’s products. Yet tourism is just one facet of the story.

Local colleges as well as some high-end primary and secondary schools have also stayed away from the luxury of white meat for alternative cheaper foods. Individuals can also not afford chips and chicken. The cost of potatoes has increased almost four fold.

According to the National Bureau of Statistics, month on month overall inflation rate increased from 25.8 per cent in March 2009 to 26.1 per cent last month. The increase has been orchestrated by the rise in the price of English potatoes, maize grains, onions and sugar, among other food items.

Rising inflation comes at a time when the increasing cost of doing business has created new hurdles for farmers. For instance, Ngecha Feeds and Tosha Feeds, which distribute poultry feed to parts of Wangige, Kikuyu and Limuru, have increased their prices by almost 100 per cent.

A 70kg bag broiler mash that Mr Njoroge ordinarily bought at Sh1,200 early last year now goes for between Sh2,350 and Sh2,600, depending on the supplier. For 1,000 chicks, about 60 bags are required for the six to seven weeks needed for broilers to develop into maturity.

By this time they should reach at least 1.5 kg. During good financial times, the broilers would fetch anything between Sh300 and Sh450 each, depending on the weight.
Nowadays they fetch less by almost 50 per cent, bringing in no profit.

High cost
This is a result of the high cost of fuel, maize scarcity, and low consumer purchasing power. Maize is the primary source of poultry feeds.

And now chick suppliers are feeling the pinch. Kenchic, the market leader in supplying both layer and broiler chicks , has had to contend with low sales since late last year.

Speaking to Business Daily, Mr Moses Owino, Kenchic’s Nairobi depot manager, said on a good week during buoyant economic times the firm sold at least 120,000 chicks per week in Nairobi. Nowadays, selling 70,000 is considered great business.

“We have even devised ways to lure sales by introducing offers such as buy 100 get five free, but the farmers are between the rock and a hard place,” said Mr Owino.

He said poultry farmers were switching from rearing broilers to layers since the sale of eggs had gone up. One egg is currently going for up to Sh10, from about Sh5 early last year. As a result, the sale of layer chicks has increased by 100 per cent to 20,000.

A broiler chick goes for about Sh59.50 while go for demand Sh85.