An assessment of broiler value chain in Nigeria

1 Introduction

Agriculture remains an important sector in many developing economies. Its contribution to provision of food, generation of employment, and poverty reduction attribute cannot be overemphasized. In Nigeria, agriculture is the most important non-oil economic activity as it contributes 24% of National GDP. The sector grew at a rate of 4.1% in 2016 and accounts for 75% of non-oil exports. The sector is made up of several sub-sectors which offer prospects for an enormous number of different enterprises. This makes it possible for a large number of the labour force (70%) to be engaged in various agricultural enterprises (National Bureau of Statistics (NBS) 2019; Food and Agricultural Organization (FAO) 2019). The four main sub-sectors of the agricultural sector are: crop, livestock, forestry, and fishery, of which the crop and livestock sub-sectors are the drivers of the agricultural sector with their respective growth share of 73.73 and 17.74%, respectively (NBS 2015).

Animal protein market trends are rising globally, and the sector is expected to be one of the fastest growing agricultural sectors in the coming decades. Consumers in emerging economies are moving away from spending on basic foodstuffs in favour of higher-value items including dairy, eggs, and meat (OECD/FAO 2016). According to World Bank (2017), in Nigeria, the growth rate of the livestock sub-sector (12.7%) was higher than that of the agricultural sector (6.8%) in 2017. The higher growth rate in the livestock sub-sector was a result of increase in consumer demand orchestrated by growing populations, a shift toward urban living, and increasing incomes. The socio-economic development and nutritional security of the country hinge on the sub-sector as it provides about 37% of the total protein intake of Nigerians (World Bank 2017). Protein products such as poultry and fish are increasingly capturing market share from red meat driven by fast food expansion, consumer preferences, competitiveness, and health concerns over the safety of red meat.

The poultry industry is growing rapidly across sub-Saharan Africa and offers a multitude of potential economic and health benefits to these economies and their populations (Shaw et al. 2019). The poultry enterprise with about 180 million birds is the most dynamic and fastest growing of the livestock sub-sector in Nigeria (FAOSTAT 2017). In 2016, poultry meat in Nigeria from about 180 million birds stood at 45,000 metric tonnes. The improvement was largely due to increase in the number of broilers which produced more meat per bird. The growth in the industry can remain inclusive and create opportunities for small-scale and emerging producers in the value chain.

As noted by Africa Sustainable Livestock 2050 (2018), the majority of the birds (44.44%) are reared with extensive system of management, about one-third are reared with semi-intensive system, while the remaining 22% are reared using intensive system of management. This points to the fact that the intensive system of management (where raising of broiler belongs) is underdeveloped in Nigeria. Though most popular, the extensive and semi-intensive systems of management are characterized with low level of productivity. However, the enterprise contributes between 30 and 50% to total household income and its potential to improve household income can be enhanced. The poultry industry is now a huge business that is split into several operations including grandparent stock (GPS) and parent stock (PS) farm, hatcheries, broiler and cockerel farms for meat production, and pullet farms for table egg production. Meat and egg production in Nigeria stood at 650,000 and 300,000 tonnes, respectively, in 2013 and it is the second largest chicken producer in Africa after South Africa (FAOSTAT 2017; United States Department of Agriculture (USDA 2013). Heise (2015) reported that the consumption of poultry meat will increase by 200% between 2010 and 2020 in Nigeria. This is expected to grow between 6 and 10% year-on-year between 2020 and 2025 (Nan-Dirk 2017).

Nonetheless, livestock productivity in Nigeria is low. The low productivity has negative implication on the economy. For instance, the country is unable to meet its domestic demand and had to rely on illegal importation of 70% of its poultry needs. The difference between domestic demand and supply is projected to widen in future (World Bank 2017). Also, it leads to low income levels of households engaged in livestock production and perpetuates vicious poverty cycle. The low productivity of livestock could be attributed to constraints, such as lack of high yielding local breeds, high cost of feed and feed products, poor infrastructural facilities, and inadequate market integration and value chain. Therefore, modernization of the sector and improving the productivity of livestock by addressing the constraints associated with poultry value chains becomes non-negotiable (World Bank 2017). It is widely believed that some of the production and financial markets constraints that smallholder livestock farmers faced can be alleviated using value chain approach that brings chain actors, such as, producers, marketers, processors, and other service providers together to gain control over activities at each node of the chain in order to reduce transaction costs and boost the competitiveness of the whole chain (Trienekens 2011).

The USAID defines value chain as the full range of undertakings which are required to bring a good or service from its outset to its end use, including all the distribution channels available to all businesses. Kuwornu et al. (2013) define a value chain as the series of events which are required to bring a good or service from production to the final consumers in the desired form and their utmost disposal after use. An agricultural value chain can be defined as a “structure of production, marketing and processing which brings each actor together to partake in organized activities to add value to a given product or service, from its production till it gets to the final consumer” (KIT, Agri-ProFocus and IIRR 2012). Various actors in broiler value chain (BVC) do value-adding activities until the meat produced gets to the final consumer.

Generally, the key actors in BVC are: input suppliers; farmers, marketers, processors, and final consumers. Both vertical (backward and forward) and horizontal integration exist among the actors in the value chain for the aim of ensuring effective flow of goods to satisfy their clients, create healthy competition, and enhance productivity that results in profit maximization for the value chain actors and overall development of the chain. The activities of the key actors in a given value chain can be categorized into three stages such as production, marketing, and processing, with each of the stages adding value to the produce (Nguyen 2010). Value chain analysis involves a methodical way of identifying, describing, and estimating the functions and associations of persons and establishments that exist in multifarious and dynamic settings and systems (Haggblade et al. 2020). It comprises knowing the movements of resources, goods, and value-adding activities among the different actors in the value chain. The broiler enterprise found in Nigeria qualifies as a value chain because it consists of input suppliers, broiler (breeders and commercial) farmers, marketers of mature live broilers, and processors. The chain is poorly developed due to weak linkages between the actors.

Few studies have been conducted on BVC in developed and developing countries. Joubert (2017) examined South African BVC. The focus of the study was on quantitative and qualitative analysis of South Africa broiler industry. The results show that the industry was complex and made up of several role players interacting with each other through the system. The key actors identified as shown in the value chain map include: breeder farmers; commercial broiler farmers; and processors who dressed the chicken for local consumption and export. Irvine (2015) employed value chain analysis to assess veterinary surveillance system for poultry in Great Britain. He found that the main actors along the chain include the input supplier, producer, trader, processors, and consumers.

Ncube (2018) analysed BVC in Southern African and focused on linkages between corporate strategies, investments, and agro-industrial policies. The results of BVC mapping in Zambia and Zimbabwe identified GPS farmers, PS farmers, hatchery operators, broiler growers, processors, retailers, and consumers as the main actors in BVC. Likewise, Carron et al. (2017) explored value chain framework to study animal and product flows, governance, and sanitary risks on broiler meat system in Kenya. The main participants identified in BVC as indicated in the map were hatchery operators, veterinary service providers, broiler farmers, processors, brokers, retailers, and consumers. Mensah-Bonsu et al. (2019) examined BVC in Ghana based on gender. The study identified farmers and traders as the main actors in BVC and that, while male dominated the production stage, trading stage was dominated by women. Also, while the highest value was added by producers, the male actors added the highest value compared to their female counterparts.

From the foregoing, it is to be noted that differences exist in the identified participants in BVC across countries in the reviewed articles. That said, most value chain analyses are location- and commodity-specific (Mani et al. 2017). To the authors’ best knowledge, little or nothing is known about BVC analysis in Nigeria. Such evidence becomes necessary for identification of challenges hindering the development of the broiler industry. It will allow for adequate planning for the industry so as to contribute to the reduction in the high rate of unemployment and support national food security policies of the government. Hence, this research focused on mapping of the BVC and constraints encountered by each of the actors along the value chain.

2 Materials and methods

3 Results and discussion

3.2 BVC mapping (1$ = ₦500 at parallel market as at the time of survey)

Value chain mapping for broilers refers to making a pictorial illustration of the links between actors and various enterprises in the value chain. The map shows the movement of broilers from producers (farmers) to final consumers and the interrelationship among various actors in the broiler industry in graphic terms. Figure 1 shows the main actors involved in BVC. This study focused on actors that are highlighted orange in the map. As shown in the figure, five main actors (highlighted orange) considered are: GPS farmers, PS farmers, commercial broiler farmers, marketers, and processors. This result is tandem to the report of Oloso et al. (2019). These main actors receive supportive services from feed suppliers, veterinary personnel, hatchery operators as well as processing plant suppliers which are also indicated on the map.

Figure 1

BVC mapping in Nigeria. Only the actors highlighted orange were considered for this study. Source: Adapted from Irvine (2015); Carron et al. (2017); Ncube (2018); Mensah-Bonsu et al. (2019) and modified.

3.2.1 Grandparent stock farmers

The farmers import grandparent day old chicks (DOCs) and/or eggs from Europe due to lack of genetically viable local breed, purchase feed and/or feed ingredients, feeders and drinkers, drugs and vaccines, and other inputs from suppliers. The grandparent DOCs are reared for about 22–24 weeks when they start laying eggs under the supervision of a Veterinary Doctor. About four weeks after, the eggs are sold to PS farmers and/or sent to the hatchery for 21 days. For those who imported grandparent eggs, the eggs are sent to hatchery for 21 days and the grandparent DOCs produced are reared till when they start laying and the eggs are sold to PS farmers. Importation of genetically viable DOCs is a constraint in the development of the chain in addition to the pressure it puts on the exchange rate, thereby influencing the economy negatively. The importation of grandparent DOCs is contrary to the submission of Carron et al. (2017) who reported that selection of GPS was done locally in Kenya.

3.2.2 Parent stock farmers

These set of farmers purchase PS DOCs from GPS farmers or also import DOCs from Europe and purchase feed and/or ingredients, feeders and drinkers, drugs and vaccines, and other inputs from their suppliers. The parent DOCs are reared for about 22–24 weeks when they start laying eggs under the supervision of a Veterinary Doctor. About four weeks after, the eggs are sent to hatchery for 21 days and the commercial DOCs produced are sold to local commercial farmers and DOCs distributors with no export.

3.2.3 Commercial broiler farmers

Commercial broiler farmers: The farmers purchase commercial DOCs from PS farmers and/or distributors and other inputs as in the case of GPS and PS farmers. Birds are reared for about 6–10 weeks with or without the services of a Veterinary Doctor and then sold to local consumers, live broiler marketers, and processors. While weighing of broilers to local consumers and live broiler marketers was not popular, birds were sold to processors/kg at the rate of ₦500–₦1,300 with the average selling price of ₦856.72. The high price recorded may not be unconnected with the fact that Nigeria economy went into recession between 2016 and 2017 and this survey was conducted during the last quarter of 2017 and first quarter of 2018.

3.2.4 Live broiler marketers

These actors buy mature live broilers (from 8 weeks old) from commercial broiler farmers in bulk and sell in small quantity to household consumers and occasionally in large quantity to group of people for the purpose of one celebration or the other. The birds are neither weighed before purchasing from the farmers, nor were they weighed before selling to each of the consumer categories. Prices were fixed based on the size of the birds and the season of the year. Average price range/bird as at the time of the survey was ₦1,700–₦3,500.

3.2.5 Processors

They purchase mature live broilers from commercial farmers; purchase and install processing and packaging plants from marketers; purchase and install storage plants and other processing and packaging equipment from their suppliers. The birds are then processed, packaged and weighed as whole chicken, cut chicken, gizzard, as well as heads and legs. The packaged chicken are sold at between ₦870–₦1,100 per kilogram with the mean price of ₦955.83 per kilogram. The sales of processed chickens are done to household consumers (12%) and others (88%). Others here refer to fast food outlets (50%), hotels (8%), restaurants (10%), and supermarkets (20%) who in turn sell to either individual or household consumers with no export. Gizzard and heads/legs are also sold to both household consumers and other outlets.

The results showed that the chain was fairly short with moderate number of participants and low level of coordination among them. The commercial farmers are the most coordinated of all the actors involved in the chain. They were able to achieve this by adequately managing the key inputs used in the production of mature live broilers and keeping adequate record of the same. The commercial actors are said to be efficient due to their ability to produce relatively consistent quality at a large scale for large customers (Ncube 2018).

4 Conclusions

This study has examined BVC in Nigeria by mapping BVC and identifying the constraints at every node of the chain. The study identified five main actors in BVC and the level of integration among the actors in the country. Other supporting actors are also shown in the map. BVC in the country is still at informal stage with little or no level of coordination among the actors. Each node of the chain is plagued with numerous constraints which have been hindering the development of the BVC in the country. Broiler farmers showed that high cost of feed, unreliable market, and disease outbreak are the foremost constraints; marketers indicated that lack of credit facilities, seasonality in demand and supply as well as poor road networks are the most pressing constraints; while the processors fingered at weak infrastructure, high cost of storage facilities, and high cost of mature broilers as the most worrisome of the constraints.

To improve BVC in the country, the following recommendations were made:

• There should be improvement on the level of coordination among the actors. This will help in the development of the value chain, thereby addressing the lack of poultry meat export in the country.

• Stakeholders in the feed industry should work on production of high quality and cheap feed to lower the cost of producing broiler.

• National Animal Production Institute and National Veterinary Research Institute should collaborate with other related research institutes to develop improved and disease-resistant breed of broilers. This will go a long way to solve the challenge of high cost of DOCs and disease outbreak.

• Investment in infrastructural facilities will benefit all the actors in BVC either directly or otherwise.

• Agricultural engineers and other related stakeholders should focus more on production of simple processing and storage facilities which will reduce dependence on imported ones that are out of reach of processors.

• Bank of Agriculture and other financial institutions should make credit accessible to actors in BVC.

• Ministry of Agricultural Resources and Rural Development in collaboration with NBS should embark on comprehensive national survey on BVC in the country without further delay. This will ensure availability of data that will guide formulation of policies that will enhance the development of BVC in the country.

• Government should enforce the ban on importation of frozen chicken to promote local production and ensure quality control of processed chicken by relevant authority.

This study has limitations, notable among which are:

• The study was restricted to one zone each from the northern and southern parts of the country. The zones are south west and north central due to the concentration of broiler farms in the zones. Future research can extend the study to other parts of the country to provide a more generalizable conclusion.

• This research focused on five main actors (GPS farmers, PS farmers, commercial broiler farmers, marketers, and processors), while other actors indicated on the map were omitted. Hence, future study can push the frontiers of knowledge by including the omitted actors.

• Furthermore, this study was only able to map the actors and their activities along the chain with constraints encountered at each node of the chain. Hence, further studies for estimating the value added by each actor as well as the level of employment generated at each node are required.