RATIONALE FOR THE REPORT
Following the recent alarm raised by the World Bank about a potential rise in food insecurity in Africa exacerbated by the COVID-19 pandemic, this report examines the key factors limiting investment in poultry production and recommends measures for unlocking the inherent potentials.
As many countries and organizations continues to mount special efforts to keep agriculture safely running as an essential business, through markets well supplied in affordable and nutritious food during the ongoing pandemic, this study serves as our contribution to sustainable supply of protein in Nigeria through poultry production.
Since the ban on the importation of poultry products in 2003, Nigeria has gradually developed a significant poultry industry which contributes significantly to agricultural products and the nation’s economy at large. For instance, the country is second only to South Africa on the African continent in the production of eggs, as well as major production of broilers.
Yet, the 2016-2020 Agriculture Promotion Policy document released by the Federal Ministry of Agriculture and Rural Development (FMARD) puts Nigeria’s potential annual chicken consumption at 200 million birds and the domestic supply at 140 million birds, indicating a gap of 60 million birds. This gap is currently being covered by the smuggling of frozen chicken through the land borders into markets across the country. This presents continuing health concerns due to contamination and other hazards.
Also, this has caused a huge outflow of foreign exchange on annual basis and has consequential impact on employment opportunities for Nigerians. If local production were to meet demand under internationally competitive conditions, it would have a very positive impact on the economy and unemployment.
In 2016, the CBN published a list of 41 items, including poultry products, as ineligible for forex through the Nigerian interbank market to encourage local production, manage foreign reserves and create the much needed employment. While this increased the price of poultry products in the country (reducing expenditures on informal imports) it did not do anything for the competitive position of the Nigerian poultry industry.
Impact of the recent closure of land borders on poultry farmers
Since July 2019 when the land borders were closed, reduced volumes of illegally smuggled frozen chicken and turkey has led to an increase in the demand for local chicken within the country, increasing local prices. While this has helped to reduce pressure on foreign exchange reserves in Nigeria, and is stimulating more local production, it has increased the cost to the consumer.
These increased prices are stimulating local production, with many farmers being motivated to expand their production to meet up with exponential rise in demand but constrained by inherent local challenges to scale up.
This drawback is magnified by new downsides presented by the Covid19 pandemic such as lockdown, market closure, scarcity of feeds and logistics crises. Before the pandemic, it is noted that the two main underlying impediments were vaccine shortfalls and illegal importation.
|Poultry Products||Price Movement over the last Two Months||% Rise in Price||Location|
|1 carton of Nigerian chicken||Currently sells between N12,000 and N12,500 as against N8,000 and N10,000 sold before the border closure||25%||Lagos|
|1 carton of imported frozen ‘Orobo’ chicken||Currently sells at N15,000 from N8,500 – N9,000 before the border closure||67%||Abuja|
|Prices of live broiler (Nigeria)||Currently sells at N3,500 as against N3,000 sold before the border closure||17%||Ondo|
|Layers (Nigeria)||Currently sells at N2,000 as against N1,700 before the border closure||18%||Jos|
Source: Market Development in the Niger Delta (MADE) Survey, 2019
FACTORS LIMITING INVESTMENT IN POULTRY PRODUCTION
Limited Capacity of NVRI to deal with the Newcastle Disease Virus
While the large commercial farms are the primary institutional suppliers in Nigeria, SHF contribute the most significant numbers of birds for local consumption in the country. Top among the challenges encountered by SHF in Nigeria is the high mortality of birds coupled with incessant cases of birds’ diseases. For instance, FMARD in its 2018 Assessment Report showed that Newcastle disease virus (NDV) is responsible for about 54.3% of all bird diseases, with mortality rate of 30% in smallholder farms. This high mortality reduces profitability and forces a large number of small holders and new poultry farmers out of operation.
More so, the NVRI which is the only approved and authorized domestic producer of vaccines for the entire country is faced with constraints such as meager public funding, poor maintenance of vaccine manufacturing machinery, unreliable and costly resources (electricity and water) needed for the manufacturing process. In addition, there are inefficiencies that compound the bureaucratic process of procurement by the NVRI.
Fundamentally there is also the difficulty in the sourcing of the 50 dose bottles for the vaccines. The bottles are imported, and cost of packaging is same for 50 and 200 dose vaccines. This leads to an extremely limited vaccine production level that is unable to meet demand for vaccines, and effective coverage for the control of the Newcastle disease virus with adverse consequence on mostly medium, small, rural and new operators in poultry farm.
Fragmented Local Production Structure
Drawing on the opinion of representatives of the Nigerian veterinary services, previous studies (Adene & Oguntade, 2008; Abimiku, 20014) and feedback from the operators, the four sectors in Nigeria may be roughly divided as follows in terms of scale of production, with backyard and rural categories accounting for a significant proportion of total production in Nigeria:
|S/No||Category||Scale of Production|
|1||Commercial||more than 10,000 birds|
|2||Medium-scale commercial||2,500 – 10,000 birds|
|3||Small-scale commercial||500 – 2,500 birds|
|4||Backyard||a few – 1,500 birds|
|5||Rural||a few – 200 birds or more|
MADE Poultry Report, 2019
Expanded mandate of NVRI limits its ability to deliver Poultry vaccine
NVRI was established in 1924, with an initial mandate to combat the Rinderpest outbreaks that had devastated Nigerian cattle populations in the late 19th and early 20th centuries. Over the years, NVRI grew to become a pioneer institute in the production of veterinary biologicals and therapeutics in West Africa.
The current mandate of the NVRI has expanded to encompass a broad range of activities to support animal production and health in Nigeria and beyond. According to feedback from the industry players, it is widely held that the institute should focus solely on research and innovation while the task of production/ distribution should be left for the private sector and necessary regulation, surveillance and monitoring for NAFDAC.
Other Challenges limiting NVRI performance
The institute is affected by inherent red tape and bureaucracy, resulting in complex webs of unclear and frequently-changing processes.
Such an environment not only makes it difficult for entrepreneurs in poultry sector to do business, but also allows for unstable supply of vaccines and inconsistent price of poultry drugs. In a bid to avoid the red tape, poultry operators seek alternative source of drugs which come at a higher cost with greater chances of being exposed to substandard or adulterated vaccines in the open market.
NVRI is faced with lingering challenges which affect its ability to be a regular supplier of critical vaccines. This include inadequate public funding (leading to poor maintenance of vaccine manufacturing machinery), unreliable/costly inputs (electricity and water) needed for the vaccine manufacturing process, inadequate technical personnel, inadequate innovation and diagnostic facilities, inadequate sources of data/database, and weak enforcement of relevant veterinary legislation.
According to many of the stakeholders interviewed, NVRI in its current set-up and structure lacks the requisite capacity to serve the need of livestock operators in Nigeria. All the respondents called for urgent and holistic reform of the Institute.
Alternative measures for coping with NVRI vaccine supply lapses:
To cover the shortfall created by NVRI, farmers are left with the option of using imported vaccines from other countries such as Ethiopia, Uganda, Kenya and Ghana, India, Cameroon and China. One key challenge is the practicality of importation – particularly the importation process; import regulations and other issues such as maintaining the cold chain from point of origin to the end farmers which is capital intensive.
The National Agency for Food and Drug Administration and Control (NAFDAC) has the responsibility for the registration, control of veterinary medicines and biologicals and even gate-keeping on importation. NAFDAC’s process guidelines is cumbersome, time consuming and not cost effective; and this is further underpinned by weak capacity and infrastructure deficit.
JUSTIFICATIONS FOR INVESTMENT AND SECTOR REFORMS
The Nigerian Veterinary Research Institute (NVRI) which is the only legally approved domestic producer of vaccines for the country is unable to ensure steady supply of appropriately sized and affordable poultry health products especially small dose thermo-tolerant vaccines targeted at small scale poultry farmers in rural areas.
On the immediate, there is need to increase interventionist fund and timely budgetary allocations to Nigerian Veterinary Research Institute (NVRI) specifically to upgrade its vaccine manufacturing machinery especially freeze drying machines, filling line, and a capping machine, and increased importation of bottles vials.
Funding for alternative power required for the manufacturing process. On the medium to long term, there is need to consider the privatization of the vaccine manufacturing unit of NVRI. In addition, there is need to identify and map the poultry health distribution channels across the country and trace the vaccines to ensure that small doses vaccines get to small holder farmers instead of large commercial farmers.
Implementing frameworks that will enhance the collaboration between NVRI and other local, regional and international organisations will be very helpful to build trust and eliminate duplicity. In addition, the continuous streamlining of processes by the institute aimed at reducing internal bottlenecks and bureaucracy is essential coupled with the need for steady communication and enlightenment of farmers on trends/ new developments in the vaccine eco-system.
Challenging import process of animal drugs, vaccines and biologicals from other countries leads to high cost of vaccine and intermittent scarcity. Thus, employing frameworks that will enhance the collaboration between NAFDAC and other agencies responsible for import clearance, regulatory and monitoring functions such as the Nigerian Customs and Standards Organisation of Nigeria (SON) will be very helpful to enhance efficient vaccine importation process.
Moreover, there is need to unbundle the NAFDAC approval process to identify the bottle neck in its process with the approval of the Director General. It is suggested that resources dedicated to the veterinary unit of NAFDAC should be increased to address the inherent weak capacity and facility deficiency in other to reduce importation approval time. Importantly, dedicated investment in infrastructures for cold chain from point of origin to end farmers such shared cold rooms and mobile cooling trucks/vehicles for vaccines and biologicals is germane.
There is limited private sector investment in the domestic production of vaccines and biologicals leading to high cost & scarcity of vaccine and increased frustration of small poultry farmers. While there is no policy limiting the involvement of private sector actors in vaccine production, there is need for a business plan that showcases the investment profile and bankability of domestic vaccines and biologicals production as against importation, disseminated to encourage private sector involvement.
Such investment would reduce the pressure on NVRI for vaccine production leaving the institute to focus mainly on research and innovation. There is also need for stimulus funding or single digit long term loans to encourage interested private sector actors’ investments in vaccines and biological productions as the heavy financial investment and the long period before return on investment are barriers to entry for most private sector actors.
While we believe that there is genuine case to increase the budget size of key research institutions in Nigeria, the sustainable measure to improve vaccine production and distribution is NVRI’s commitment to drop manufacturing and distribution/marketing activities and face the core task of vaccine research, innovations and breaking of new grounds.
The national assembly, trade associations and relevant advocacy groups has a huge role to play to make this happen over the medium term. Any approach to address funding issues in the institute must first deal with the inherent issues that allow wastes, operational infractions to occur.
In addition, there are currently about 125 active pharmaceutical companies currently operating in Nigeria as manufactures, importers or trading firms. It is believed that privatization of the vaccine manufacturing unit of NVRI presents yet a new investment opportunity for the private sector.
Participation of private companies in the production and distribution value chain of the vaccines will eliminate the challenge and lack of ideal storage conditions and unstable supply flow of poultry vaccines across the country.
Incentives such as duty waivers for plants, equipment, raw materials importation, tax holiday and pioneer status should be considered and extended to willing investors in vaccines production. Such incentives can be tied to certain conditions such as output performance thresholds and predetermined set timelines.
- Assessment of the Nigerian poultry market chain to improve biosecurity: http://www.fao.org/3/a-ak778e.pdf
- Communique issued at the end of 2 Advocacy Roundtable Sessions in the Poultry and Palm Oil Sectors held on November 7, 2019 in Abuja.
- Market Development in the Niger Delta (MADE) Survey, 2019
- Advocacy Note for Steady and Stable Supply of Vaccines to Smallholder Poultry Farmers by
Written by Dr. Vincent Nwani
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