High Production Costs Hit Poultry Farmers

The high cost of production is pushing poultry farmers out of business as the industry in Ghana is on the verge of collapse.

Poultry products are the largest source of animal protein for Ghanaians but local stakeholders face numerous challenges presently.

Currently, some factors such as unfair competition from the highly subsidized imported frozen dressed chicken popularly known as “Akokofunu”, low purchasing power of consumers, high cost of feed, and high interest rates charged by the commercial banks among other factors are hampering the growth of the sector.

Hannah Asomaning said the local producers are not doing much to make Ghanaians trust them.

“One of the factors is that even though nobody likes the ‘Akokofunu’ from abroad, the local poultry is probably triple the price of the foreign one.”

This assertion could be true and would remain so until the constraints facing the sector are addressed, said Kofi Agyei-Henaku, Executive Secretary of the Ghana National Association of Poultry Farmers.

Giving a breakdown of the production cost, Mr Agyei-Henaku said it costs the local producer about GH¢7 to produce a kilo of packaged chicken, adding, “The imported sells at GH¢3.70 because they are subsidized and the foreign producers have access to cheaper loans.”

Slow Death

At least Ghana’s over 23 million people require a daily protein requirement of 55 grams, according to the World Health Organization (WHO) standard and a greater part is provided by the poultry industry.

Between 1960 and 1980, the poultry industry in Ghana achieved an unprecedented growth of between 10 and 20 percent per annum.

In 1992, farms like Darko Farms and Afariwa Farms, among others, supplied 95 percent of Ghana’s poultry requirement.

Currently the local operators supply less than 11 percent, and more than 40,000 tonnes of imported chicken mostly imported from European countries valued at about 30 million dollars flood the domestic market.

But big farms, such as Prampram based Farmer George Limited with the minimum housing capacity of 540,000 birds per annum, are operating below capacity.

The influx of the imported poultry products is threatening the survival of the local producers.

In order to survive, some large-scale farmers have had to cut down production while the small scale produces have folded up.

Currently Akati Farm, a poultry farm operated by the 2006 National Best Farmer, located near Kumasi in the Ashanti region and Yiadom Farms have ventured into other businesses such as the construction of school buildings on the farm lands.

The number of operators has reduced from 5000 to less than 1000 and they are only focusing on layers and egg production with the broiler production completely scrapped off.

Taste For Imported Chicken

Cold stores are springing up on every available space in the urban centres.

The imported products are sold in cold stores, supermarkets, restaurants, fast food outlets and live chicken sale markets across the country.

Beyeeman Freezing Company Limited, which imports frozen poultry products, brings in about 12 of the 40-footer containers every month.

The company stores products for an average of 50 clients at a time.

The highly subsidized chickens, according to records at the Ghana National Association of Poultry Farmers, are sold at 30 percent below the cost of production.

“Why should a chicken, which sells at four or five pounds in the United Kingdom, sell at one-pound-50 in Ghana, despite freight and handling charges?” quizzed Ernest Owusu-Afari, Managing Director of Afariwaa Farms, a previously vibrant local poultry farm, which is now operating at 10 percent capacity.

Crisis

“We are in crisis” said Mr. Agyei-Henaku, “The assumption that the high cost of local production is mainly due to the inefficiency of the local producers is a fallacy. The main reason is the high cost of production in Ghana.”

Usually the breast or chest of the chicken sells at a premium price in the exporting countries while other parts such as legs, wings and thighs are easily dumped at a giveaway price.

These chicken parts end up on the Ghanaian market and sell at very affordable prices.

Exporting them to countries like Ghana is even more convenient for the foreign producers as it is even more expensive to dispose the less premium parts off.

According to the World Poultry Magazine, volume 15, the US pays up to $650 per tonne as export subsidy on poultry products.

The European Union, the source of most of the imported chicken, provides 43 billion Euros to its farmers annually.

In 2000, Robert Shaver, Chief of Trade Policy at the IMF blamed the European Union for providing export subsidies and marketing arrangement to the tune of 1.5 percent of its Gross Domestic Product (GDP).

High cost of feed, Mr. Agyei-Henaku noted, is serving as a disincentive for the local poultry farmers.

Cost of feed constitute about 70-80 percent of the production costs while the high cost of electricity, fuel and chicken feed had battered the sector to its lowest profitability ever.

Another major challenge facing players in the industry in addition to these factors is the absence of a market while the break out of bird flu, which led to the death of a significant number of fowls, pushed many operators out of business.

The poultry industry has been branded as high risk business and this is making it difficult for new farmers to access loans, A poultry disease such as coccidiosis, which is terminal, affects mostly young birds, and the most obvious symptoms are emaciation, thirst, listlessness, ruffled plummage, bloodstained faeces.

Chicken Consumption

The Director-General of the World Trade Organization (WTO), Pascal Lamy, who attended the recent ECOWAS Trade Ministers Meeting in Accra, said unfavourable domestic policies, with a low tariff regime, have contributed to the continuous dumping of foreign poultry products on the Ghanaian market.

Statistics indicate that Ghana now accounts for as much as 30 percent of all poultry products imported into the West African sub-region from the European Union.

Operators have argued that their participation in the School Feeding Programme would help them.

To them such a move would provide a ready market for local producers to help improve the nutrition of Ghana’s future generation.

In the meantime, Mr. Agyei-Henaku urged the public to increase their consumption of locally breed chicken to create a ready local market for the breeders.

Even though a craze for imported products has caught on with Ghanaians, Peace Amanfu, a consumer affirmed that “we are tired of eating foreign dead chicken.”

Tetteh Homeku, Programmes Manager of Third World Network-Africa, a Non-Governmental Organization (NGO) that lobbies for free and equal trade for developing countries, said options such as provision of subsidies or lowering bank interest rates, raising tariffs, setting quotas or placing outright bans could save the ailing industry.

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