New Poultry Feed Prices & Their Implications

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Poultry farming is no longer a profitable business. I am going to sell off all my birds – a farmer lamented. This and many more complaints have been brought about by the recent hike in feed prices. Around November 2020, you could get a 50kg Layer mash for GH₵ 93. Fast forward to July 2021, the price is now around GH₵ 137 (a 47% increase in feed prices in just seven months). As gloomy as this sounds, all hopes of succeeding in poultry farming is not lost yet, and I will explain why.

First of all, let’s talk about the problems with the hike in feed prices. Poultry farming, even before the feed price increase, was a very capital intensive business to pursue. As of November 2020, farmers needed GH₵ 20,000+ to raise 200 layers which meant some farmers had to go into debt. Now, you can imagine the consequences of being in debt to your eyeballs only to learn that feed prices have increased another 15% – this could cause serious solvency issues.

To offset this solvency issue, you must, of course, increase the prices of your eggs. You might be thinking that if you raise your egg prices, sales will drop. Sure, maybe in the first week, some of your customers will complain, but eventually, they’ll get used to the new prices. However, you may find that some of your competitors may not necessarily increase their prices to reflect the rising feed prices.  

For instance, on the 6th of June 2021, you could get Eco Feeds layer Mash 2 for GH₵ 129, but approximately one month later, the same product would increase by 6.2% to GH₵ 137. Given this, assuming you were rearing 500 layers, and feed costs made up 63% of your total operating expenses, you could make an average monthly profit of GH₵ 1,262.67 (17.44% margin). However, the new increase in feed prices within this one month would reduce your average monthly profit to GH₵ 993.53 (13.72%) if you maintain your egg prices. Now, some people will be ok with this profit margin but settling for a 13.72% margin monthly when you could be making 17.44% or more is a very short-sighted business decision.

Sure, the increase in feed prices is undoubtedly going to increase the cost of starting a poultry farm and hence make your products more expensive but obviously, eggs will probably still be in high demand, so the recent price hikes shouldn’t necessarily discourage you from starting a poultry farm.

In a nutshell, contrary to what some people will tell you, poultry farming in Ghana is still a lucrative business despite the recent surge in prices. All you need to do is to channel your marketing toward direct customers, not middlemen. This way, you can sell your eggs for higher profit margins so that even in the event much bigger farms decide to absorb the feed price increases, you save yourself from being outcompeted.

This is the time for you to strategize properly before starting a poultry farm because a lack of capital could lead to the early demise of your business. Because of this, you can contact us for your professionally drafted business plan on poultry farming so that you can raise the right amount of money to commence or expand your farm.