Uganda: Cost of Feeds Drives Poultry Farmers Out of Business

The scarcity of poultry feeds has hit the industry hard forcing some farmers out of business. The key ingredients in the production of chicken feeds include: maize bran, rice bran, cotton seed cake, wheat bran, palm kernel cake, groundnut cake and fish and mukene (silver fish).

Miss Esther Genza, an employee at Kagodo Feeds, says the industry's biggest challenge has been the scarcity of maize and maize bran.

"Towards the end of last year, a 100 kilogramme bag of maize cost Shs70,000. It now costs between Shs140,000 to Sh150,000," she said. She attributes this to the exportation of maize to neighbouring countries especially Juba.

Mr Aga Sekalala Jnr, who runs Ugachick, one of the leading poultry companies in the country, agrees that prices are leaping upwards.

"In February, we used to buy a kilogramme of maize at Shs480 but today, a kilogramme goes for Shs1,650. There are inputs that we have to import like breeding facilities and this automatically increases the cost of doing business."

Just like Ms Genza, he explains that maize is the denominational commodity which has more than tripled in prices. "Much of the grain that's grown locally is lucratively sold in neighbouring South Sudan and Kenya leading to a shortage and natural increase in price."

Ms Resty Nakamya is a wholesale dealer in maize bran and she explains that the commodity has more than doubled in the last three months.

"From the beginning of the year up to about April, a 100-kilogramme bag of maize bran cost Shs40,000 but today it goes for Shs100,000. The customers have reduced but we have to live with this because maize grain is expensive due to shortage locally. Most of it is exported to Kenya, DRC and South Sudan," Ms Nakamya explains.

Notwithstanding the price of maize bran, the country has also been hit by the scarcity of mukene, which phenomena has been attributed to depleting fish in Uganda's fresh water sources making the commodity very expensive due to high demand. Most of it is got from Lake Victoria, Kyoga and Albert. Also, early this year, the Ministry of Agriculture banned fishing of mukene from Lake Albert, but even after the ban was lifted a few months later, the supply remained low. This explains the increased price of mukene currently at Shs80,000 a sack up from Shs60,000 in March.

Two months ago, a bag of chicken feed cost Shs55,000. "The same feed is now at least Shs75,000," says Ms Genza.

Mr Sekalala explains that they are trying so hard to incur short term losses to be able to sustain business in the long term.

Ms Genza adds that the problem is compounded by the relatively stable prices of chicken products.

"It is very hard to increase the price of a tray of eggs or chicken because the market response is poor. Few people buy at higher prices," Ms Genza says.

In a week, Mr Sam Mukasa would on average sell 400,000 day-old chicks. But today, he's resorted to selling eggs for the chicks are no more. Mr Mukasa is the Director of Biyinzika Farmers, one of the leading poultry farm enterprises in the country.

Mr Mukasa says he's made a loss of up to Shs2.4 billion between June 1, and the end of the first week of last month.

"Instead of hatching chicks for sale, I sell the eggs at a lower price. The rising dollar rate continues to affect me because I have to import vaccines and yet the loans that we get are serviced in dollars. This is in addition to operational costs. With the constant power black outs we have to use generators and diesel isn't any cheap," Mr Mukasa explains.

Ms Rehma Musawo, the proprietor of Farmrite Agro-Vet Enterprises, says in order to cushion her business, she has decided to stock less. She sells day-old chicks and brooded chicken.

"In January, I could afford to buy stock worth Shs5 million but from April up to today, I buy stock of about Shs2 million because customers have considerably reduced since more farmers have decided to leave poultry farming," Musawo explains.

She adds that her profit margins have reduced by 50 per cent since February. Initially, she used to import chicks from Belgium for good breeding but she has since stopped due to the high dollar rate.

"Late last year and beginning of this year, we used to sell chicks at Shs3,000 each but with the dollar rate at the high, we sell a chick at Shs4,500, which the farmers cannot afford," she says adding that she used to sell 10,000 chicks in a week but today she sells between 500 to 1,000 chicks.

As a way forward, Miss Genza says some farmers have resorted to selling off the birds at giveaway prices especially the layers because they cannot afford the cost of maintenance.

"Other farmers are actually exchanging eggs for feeds," she says.

In a direr situation, some farmers have opted out of the business citing tough conditions.

"The business is not breaking even. We sell the birds at a loss to get rid of them because the more they stay, the more money you spend feeding them," Mr Eric Kakoole, a poultry farmer said last week.

"I spend about Shs5,000 or more on one bird in the six weeks that we rear them. Each bird goes for Shs5,000 on the market meaning you do not earn any profit."

Like some poultry farmers, Ms Eden Kaitesi, opted out of poultry farming and ventured into piggery.

"Hatching a chick becomes very expensive because we have to run the business on generators for most of the day, using up to 300,000 litres of diesel so when you add your costs, you are making no profits. So what we are resorting to is selling chicks for as low as Shs2,300. There is a time we went to as low as Shs1,300 per chick but still failed to find a buyer so I ended up feeding the chicks to the pigs," Ms Kateisi of Eden Stores says.

The increasing operational costs have sprawled into increase in prices of poultry products like eggs; where a tray of egg that used to cost Shs4,800 now ranges between Shs6,000 and Shs6,500.

Ugachick has increased chicken prices by Shs5,000 currently being sold at Shs14,000 in different supermarkets in the country.

"Chicken has become a luxury now that its price is going up," Mr Sekalala adds.

Mr Mbowa says that Biyinzika Farmers has extended a 30 per cent bonus to farmers buying day-old chicks to help them deal with the current crisis.

"We also give our farmers advice on the right formula so that they can mix their own feed instead of buying. This is because some unscrupulous dealers are mixing the wrong and/or inadequate ingredients and/or ratios in the feed, leading to higher losses," he says.

Miss Genza is urging the government to stem the rate at which maize is exported to Juba particularly; to have alternative reserves or silos of grain for times like these; and to offer financial assistance to farmers even those on the NaadS programme.

The Monitor News Paper
24-Aug-2011