The CEO of Rhyss Farms, Olajide Basorun, has said high financing costs are driving underproduction in Nigeria’s poultry sector, as farmers are unable to fully utilise existing capacity despite sustained demand.
Basorun disclosed this in an exclusive chat with Nairametrics, where he said credit constraints, infrastructure gaps, and rising input costs are limiting expansion and efficient operations.
He added that the widening gap between borrowing costs and profit margins is making it difficult for producers to optimise output levels.
What they are saying
Basorun, whose farm is in Erikorodo Farm Estate, Lagos, said high financing costs are driving underproduction in Nigeria’s poultry sector, as farmers struggle to fully utilise existing capacity despite steady demand.
- “The number one challenge is access to finance, particularly farmer-friendly financing. People often think it is about lack of capital, but more importantly, it is the cost of that capital.”
- “For example, if I borrow N10 million from a commercial bank at 20–25% interest, I may only make about 15% margin on a full poultry cycle from day-old chick to market. That already puts the business under pressure, even before other costs are considered,” he said.
He said rising input costs and high interest rates are eroding already thin margins, forcing many farmers to scale down production instead of expanding capacity.
Using his farm as an example, Basorun said egg production has fallen from an installed capacity of about 1,500 crates daily to 700–800 crates currently, while broiler output has dropped from an installed capacity of 10,000 birds per cycle to about 4,000.
He stressed that this reflects funding and cost pressures rather than weak demand, adding that cheaper financing would help restore full capacity and boost sector output. He noted that underutilisation is now widespread due to working capital shortages.
More insights
Beyond financing, Basorun pointed to weak technical knowledge among new entrants, noting that many join the sector without an adequate understanding of feeding cycles, nutrition, and farm management, leading to inefficiencies and higher production risks.
- He also cautioned that proposed Federal Government partnerships with Chinese stakeholders to establish poultry hubs should prioritise technology transfer, equipment supply, and structured financing that keeps local farmers at the centre of production.
- Basorun identified infrastructure gaps as another major constraint, saying poor roads increase post-harvest losses—especially for fragile eggs—forcing farmers to sell at discounted prices.
- “Infrastructure is another key constraint, particularly roads and energy. Poor road access leads to losses—for example, eggs can crack in transit, and farmers are forced to sell at a discount or lose value entirely.”
He added that high energy costs, driven by reliance on diesel for storage and processing, further raise production expenses.
What you should know
Poultry farmers in Nigeria had earlier raised concerns over the proposed $900 million Federal Government–China partnership, warning it could undermine local producers if poorly structured.
- The concerns were expressed by the Poultry Association of Nigeria (PAN), which argued that policy should prioritise strengthening local capacity rather than introducing externally driven systems that could distort the market.
- Lagos PAN Vice President and Chairman of Aiyedoto Poultry Farmers Settlement, Foluso Adams, urged the government to focus on enabling domestic farmers to scale and remain competitive.
- The sector has been under sustained pressure from rising feed costs, inflation, and weakening demand.
Nairametrics had earlier reported that poultry farmers lost over N3 trillion in 2023, while the Poultry Association of Nigeria said more than 50% of farms shut down within the same period.
