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Broiler farmers cut production as demand dries out

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Mr. Christopher Kimani at his Kuki Farm in Limuru Kiambu County. PHOTO | SALATON NJAU | NMG

Until March when the first case of Covid-19 was reported in the country, poultry farming was thriving.

Pre-Covid-19, demand for broiler chicken products was on an upward curve amid proliferation of both local and international fast-food joints in the country.

Other attributable factors included a growing young population as well as adoption of home delivery services such as Uber Eats and Safe Boda that improved delivery.

But the sector’s woes began immediately the government imposed stringent measures such as social distancing and dusk-to-dawn curfew (7pm-5am) to contain the spread of the virus in March.

When it came into effect, this meant such eateries could no longer host the number of customers they used to nor operate beyond the stipulated timeline. Previously, such facilities would be a hive of activity with operations running on a 24/7 basis.

With a shrinking client base, they cut down on supplies, effectively hitting hard smallholder and commercial broiler farmers that counted on them.

One of the affected farmer is Solomon Kinyua who had to cut the number of birds from 30,000 to 2,000.

On his expansive Marwa Farm in Nyeri County, Mr Kinyua says market went dry, thus he lowered production.

“I can say demand dropped by 60 percent due to restrictions imposed by the State as well as dumping of poultry meat from Uganda and Tanzania,” Mr Kinyua who ventured into the business in 2018 says.

Currently, Uganda imposes a cumulative 25 percent duty on Kenyan poultry products; 18 percent VAT, six percent withholding tax and one percent road levy.

On the other hand, Ugandan poultry products enjoy free access to the Kenyan market.

This practice exposes the country to such challenges such as unemployment and food security.

EARNINGS DROP

Were the competition fair, Kenyan producers would have competed with their Ugandan counterparts favourably.

For example, a kilogramme of imported chicken from Uganda can sell as low as Sh200 in contrast to Kenya’s Sh300.

As a result, Mr Kinyua’s earning has plunged from a Sh6 million to a meagre Sh400,000 per rearing cycle (about two months).

“We request the government to slap poultry products coming from Uganda and other African countries with taxes to protect local farmers,” he urges.

In May, Kenya Poultry Farmers Association President Monica Wanjiru asked the government to impose tariffs on Ugandan poultry imports to create a level playing field.

“We, therefore, cannot over-emphasise the vulnerability of the Kenyan poultry industry from the regional attack,” Ms Wanjiru earlier said.

Similarly, Lina Chebet who is the proprietor of Embu Farm now rears 500 birds from previous 8,000.

She now makes Sh100,000 monthly, which is below Sh2.4 million she did previously. For her, business has fall by about 80 percent.

“The government should lower taxes on poultry feeds for smallholder farmers if we were to survive,” she adds.

On the tea farms of Limuru in Kiambu County, Arthur Kimani is the proprietor of Kuki Farm.

The 34-year old says the farm used to hold 9,000 chicks, which is now down to 2,900.

His clientele includes butcheries, City Market as well as food processors.

“We closed down the farm in March. Our last production was in February. We just started to come back in August when we kept about 600 and now is when we are trying to scale back up,” says Mr Kimani.

The farm had three permanent workers, butchers (six) and temporary workers (two), who have all been retrenched.

“As we are now trying to come up, we are having another issue of imports which are now affecting us greatly.”

“We thought with Covid-19 things will get back to normal but now we are coming back into the market and we are finding chickens from Uganda are coming in at Sh220 per kilogramme which we cannot compete,” he says.

From 9,000 chicks he could make up to Sh400,000 per cycle.

This comes at a time poultry meat prices have dropped by nearly 50 percent amid dumping of chickens from the neighbouring countries.

Zack Munyambu, the Poultry Farmers Cooperative Society director, told Business Daily early this month that a 1.5-kilogramme broiler now retails at Sh200 from Sh400 previously.

Mr Munyambu attributed the drop to sale restrictions — such as closing hours and social distancing guidelines — that reduced the time eateries operate. Previously, such facilities would operate on a 24-hour basis seven days a week.

“Because KFC, Chicken Inn and other takeaway restaurants now close at 9pm, chicken producers have lost a big chunk of their regular market,” Mr Munyambu said.

ACCESS WOES

Mrs Wanjiru says the price of a 1.5 kilogramme of chicken in some areas have soared to Sh500.

“A one kilogramme chicken meat that could cost Sh300 before, now retails at Sh400,” Ms Wanjiru said.

She said Kenyan poultry farmers find it difficult to access the Tanzanian market as the Tanzania Bureau of Standards (TBS) has imposed stringent requirements for compliance that bars many.

In 2016, Tanzania banned the importation of poultry and poultry products.

This was followed by the burning of 6,400 chicks that were exported to Tanzania from Kenya in 2018, for flagging local poultry rules.

In 2017, Kenya banned importation of poultry products in the wake of Avian Influenza virus outbreak.

In retaliation, Uganda banned importation of poultry products from Kenya. But this was later resolved through negotiations.

According to the data from the Kenya National Bureau of Statistics, marketed value of chicken and eggs recorded last year fell by 23.5 percent to Sh9.22 billion from Sh12 billion in 2018.

Early this year, in a joint statement between the ministries of Agriculture and Trade and Industry, the then Trade Principal Secretary Chris Kiptoo reckoned that tax charges by Uganda were contrary to the East African Community protocols.

''It is unclear why Uganda is imposing railway development levy, whereas the cargo railway line to Uganda is yet to be operationalised,” Mr Kiptoo said.