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AEC00118 - ECONOMIC ANALYSIS OF BROILER PRODUCTION IN OLORUNDA LOCAL GOVERNMENT, OSOGBO


CHAPTER ONE

1.0       INTRODUCTION

1.1         Background of the study

            One of the major challenges facing Nigeria is the satisfaction of the ever-increasing demand for protein. As a result, wide spread hunger, poor, and stunted growth as well as increase in spread of diseases are evident in the country. Animal protein sources include fish, egg, poultry meat, beef, milk, beacon, pork, and mutton; but they are not affordable. The common sources accessible to most Nigerians are frozen fish, beef, and local chickens

            Nigeria’s poultry industry has its root in the initiative of regional governments from the 1960’s when the Western Regional Government entered into joint pilot poultry production schemes with some foreign partners, notably the Israeli government (Adene and Oguntade, 2006). The entry of private investors into poultry production in the late 1960s to early 1970s marked the onset of indigenous commercial poultry industry. It then spread from the west to the eastern region and parts of the Northern region. The first decade or so of this period witnessed a tremendous growth in the industry, especially in the West (Adene and Oguntade, 2006). The size of the industry grew from less than 1 million in the mid-1960s to over 40 million by the early parts of the 1980s. All along, the growth of the industry had been propped on by government initiatives and incentives especially in terms of training, technological support, input support services and others. Thus for example, many of the poultry technical staff was products of government subsidizing training programmes, while inputs like vaccines and diagnostic services were subsidized by government or even free initially (Adene and Oguntade, 2006). Meanwhile the national economic climate was enjoying a boost from the newly advancing petroleum sector and this visibly helped to propel national investment sector, including poultry rapidly forward. As from this time, the poultry industry had started to be self-supporting, viable and attractive to financial institutions. 

            This partly resulted from policy inconsistencies of the Government. During the Structural Adjustment Programme (SAP) between 1987-1994, the industry almost collapsed due to the ban on raw materials for the poultry industry. This was followed by guided deregulation in 1994, which resulted in a breakthrough and subsequent increase in poultry meat production from 63,000MT in 1994 to 73,000MT in 1995, 1997. In 1998, the Federal budget threw open the importation of live chilled frozen chicken and egg at a tariff of 150%, which was later, reduced to 55% in 1999. This led to reduction in local production which fell to 1.3% as compared with 2.7% in 1997. Similarly, the shift in lending policies in favour of food crops as against livestock industry exacerbated the situation. In this dispensation, banks were directed to increase lending to 50% for food crops production and distribution, 15% to livestock and 35% to other agricultural crops Onyeagocha, Ehirim, Emenyonu, Onyemauwa, and Nwosu (2010). 

            The importance of poultry to national economy cannot be over emphasized as it has become popular for the small-holders that have contributed to the economy of the country. In Nigeria, poultry contributes about 15 percent of the total annual protein intake with approximately 1.3kg of poultry products consumed per head per annum Ologbon and Ambali (2012). The poultry industry has assumed greater importance in improving employment opportunities and animal food production in Nigeria. An earlier report by Mbanasor (2002) showed that about 10 percent of the Nigerian population is engaged in poultry production, mostly subsistence and small or medium sized farms. 

            Broiler production is carried out in all parts of the country, with no known religious, social or cultural inhibitions associated with their consumption. Specifically, investment in broiler enterprises is attractive because the production cost per unit is low relative to other types of livestock, poultry meat is very tender and commonly used in ceremonies compared to other birds and broiler enterprises have short production circle. Owing to these obvious advantages of broiler enterprises, large number of farmers, men and women go into their production, many of whom do so for income generation purposes (Nwajiuba and Nwoke, 2000), besides meeting the protein needs of the household. The evidence of this is the preponderance of producers–hawkers of broiler products in the urban and rural markets particularly during festive periods, when their demands are highest and selling prices favorable.

            Poultry is a sub-sector in the livestock industry constituting a major component of the agricultural economy. The sector provides animal protein to the populace as well as employment for a considerable percentage of the population. According to FAO Report (2010), poultry comes fourth among sources of animal proteins for human consumption in Nigeria and contributes about 27% of the national meat production. Okoli et al. (2004) revealed that 85% of rural families keep small ruminants and local fowls primarily as an investment and sources of manure or meat at home or for use during festivals. 

            In spite of this, livestock production is not keeping pace with the protein requirements of the rapidly increasing Nigeria population. Demand is more than supply. Since the responsibility of any civilized government is to provide adequate food and assure an atmosphere free from hunger and malnutrition, the Federal Government of Nigeria placed a ban on importation of frozen chicken and turkey parts to encourage massive poultry production locally (Agricultural Transformation Agenda, 2012). This policy has encouraged many investments in poultry production in Nigeria. It has therefore, becomes a full time job for many and is considered to be a commercially viable enterprise.

1.2         Statement of the Problem

            Poultry production in Nigeria is largely in the hands of our local producers who produce mainly for home consumption with little for sale to other consumers. In 2002, the Federal Government banned the importation of poultry products into the country. This posed a greater pressure and challenge to our local farmers to produce commercially so as to meet the ever-increasing demand of poultry products in our diet. Protein obtained from poultry products (meat and egg) is needed for the growth and development of the entire populace, thus increases the standard of living and income of the poultry farmer.

 Presently, the industry has been adversely affected by major problems associated with the raising of broilers such as their susceptibility to diseases and sensitivity to feeding and other environmental factors such as temperature, ventilation, light and sound (Adebayo &Adeola 2005). Study by Ojo (2003) revealed that, the industry falls short of its aim of self-sufficiency in animal protein production in the country. Annual protein consumption is put at 5gm/capita per day which is a far cry from FAO recommended level of 35gm/capita per day. Also, in the past years, many small-scale operators in the poultry industry have been forced out of business due to problems ranging from shortage and high cost of feed, high cost and inadequate veterinary services and drugs, poor quality of equipment and other inputs. Lack of proper management in terms of feeding, housing, health care and traditional methods used by poultry farmers among other factors are responsible for the low productivity. Ajibefun, (2006) says that inefficiency is a problem in raising production and productivity in Nigerian Agriculture. The issue of efficient choice and use of resources/technology has received less attention in developing country like Nigeria. Feder, Just., and Zilberman (1985) says that unless an existing technology is fully utilized, benefits from new technology may not be realized thus it is possible to raise output of broiler farmers if new technologies are the targets of farmers.

            Other problems include rising cost of the major inputs such as feeds, drugs, and equipment (Sekoni, 2002) which is a constant set back in poultry industry. Also, the storage of poultry products is another problem, which is largely due to epileptic power supply and as such farmers incur extra cost of hiring generators in order to avoid the spoilage of these products.

            Durojaiye (2000) argued that luck alone does not explain the differences in the profitability levels of farms or ranches with the same resource endowment. Management is therefore a key factor determining the success or failure of a business enterprise; be it a firm or a farm. Therefore, poultry production like any other agricultural business activity requires that a farmer has a wealth of experience in the management of the enterprise. The farmer is out to make profit and in order to actualize this; he should be able to produce at a level that will make him recoup his cost, at the least.

            Over the years, Nigeria government and individuals have tried to design policies that will encourage increased broiler production. These were due to the profitability of the business.The aim to meet the growing need of protein (balanced) diet) for a thinning population to be self-sufficient. Today, the decline in the growth of poultry industry has continued unabated. It is against this background that this study was undertaken to ascertain the feasibility and viability of producing broilers.

1.3       Research Questions

  • What is the socio economic characteristics of broiler producer in the study area?
  • What is the profitability of small scale broiler production?
  • What are the resource use efficiency in broiler production?
  • What are the problems associated with broiler farmer?

 

1.4       Objectives of the Study

            This study will examine the economic analysis of producing broilers, investigating the cost and returns of broiler production and the factors affecting its productivity. The broad objective of the study is to determine the economics of broiler production in Olorunda Local Government Area, Osun State, Nigeria.

The Specific Objectives include to:

  • Discuss the socio economic characteristics of broiler producers in the study area.
  • Determine the cost and returns associated with broiler production
  • Analyze the resource use efficiency in broiler production
  • Examine the problem associated with broiler production

1.5       Hypotheses

            Socio economic characteristics of small-scale broiler farmers do not significantly affect their economic analysis in Olorunda LGA.

1.6       Limitation of the Study

            The study is restricted to the performance in the broiler industry over a period of time say 2-3 cycles was considered. The result should have been somewhat different. This therefore opens up another area for investigation