Poultry Farming in Tanzania: Margins getting thin with the farmers getting thinner!

In Tanzania, poultry farming has consistently provided affordable protein to a price-sensitive market. However, this resilience comes at a considerable cost to farmers and producers, who face rising operational expenses without a corresponding increase in farm gate prices for poultry.

In a casual conversation with Jeremiah Kilato , we briefly delved into the past five years of the industry, trying to uncover insights that highlight the pressing need for strategic interventions to sustain the sector.

Factors affecting the profit Margins

Broiler farming is a high volume and low margins commodity globally. In Tanzania, this dynamic is further strained by rising operational costs, including feed, day-old chicks, energy, water, transport, and labor. Despite these escalating costs, the farm gate prices of broiler meat have remained static, reflecting the extreme price sensitivity of the Tanzanian market. Any increase in poultry product prices risks reducing consumption, as poultry is the most affordable protein source in the country. This situation forces farmers, poultry feed producers and day-old chick’s producers to absorb increased costs, squeezing their profit margins and challenging their operational sustainability.

A realistic look into the near Past and where we are now.

In 2020, as a university undergraduate, I ventured into broiler farming. Comparing that period with 2024 reveals significant changes in cost dynamics. The price of day-old chicks has remained relatively stable, averaging from 1,800 TZS to 1,850 TZS, a modest increase of 2.8%. However, feed prices have surged dramatically to generally over 20% as of June 2024. Starter feed rose from 61,500 TZS to 79,000 TZS per 50Kg Bag, a 28.5% increase. Grower feed increased from 60,000 TZS to 74,000 TZS per 50Kg Bag, up by 23.3%, and finisher feed went from 60,500 TZS to 73,000 TZS per 50Kg Bag, marking a 20.7% rise. Given that the amount of feed required to raise a broiler to market weight remains constant at about 2.5 kg to 2.8 kg over 30 days, these rising feed costs significantly squeeze the margins for poultry farmers, impacting their profitability.

Additional operational costs have also seen a steep increase. Fuel prices have skyrocketed, with petrol costs jumping from 1,902 TZS to 3,339 TZS—an increase of 75.5%, and diesel prices climbing from 1,803 TZS to 3,221 TZS—a 78.6% increase. Furthermore, charcoal prices have surged from 38,500 TZS to 55,000 TZS, a rise of 42.9%. With inflation escalating, maintaining the same wage levels annually becomes increasingly challenging. Despite these significant cost increases, the average farm gate price for broiler chickens has remained stagnant at 6,500 TZS in regions like Morogoro, with some areas like Dar es Salaam experiencing a decrease to 6,200 TZS. This pricing stagnation, amidst soaring costs, sharply highlights the severe financial pressures confronting poultry farmers and local producers of feeds and day-old chicks. The cost to raise a broiler to market standard is typically between 5,400 TZS and 6,000 TZS, underscoring the extremely tight margins that farmers operate under.

The situation in poultry farming starkly contrasts with that in beef farming, where prices have escalated by over 50% during the same period. Specifically, beef prices increased from 6,500 TZS in 2020 to 10,000 TZS in 2024, driven by rising operational costs and the impacts of climate change. This discrepancy underscores the ability of beef producers to pass on increased costs to consumers, a flexibility not afforded to poultry farmers due to differing market dynamics and consumer behaviors.

Notably, 80% of poultry sales occur in informal markets where transactions are not based on weight but per head. This pricing structure makes it challenging for poultry farmers to be compensated for efforts to enhance bird performance through parameters like feed conversion Ratio/efficiency (FCR/FCE) and performance efficiency factor (PEF).

With all these increased operational costs and changes in poultry Market Dynamics and the fact that the price of poultry has never really increased over the past four years, it's clear that someone in the value chain is absorbing the punches, the question is who is it? My intelligent guess would be.

1. Poultry Farmers
2. Local investors in feed mills and day-old chicks' production
3. Definitely Not the Government.

Poultry farmers have been forced to adopt creative strategies to cope with tight margins and improve their longevity in the business which is reported to be less than a year for newbies some of these strategies impair the quality of the products they produce.

• Using drugs and antimicrobials preemptively to reduce mortality rates, a practice that can lead to antimicrobial resistance (AMR) Smallholder farmers cannot tolerate even slight mortality rates, as losing 15-20 out of 300 birds (5%-6.67%) can eliminate profits.
• Additionally, some farmers dilute high-quality feeds with cheaper, local ingredients to cut costs, compromising the nutritional quality of their poultry.
• Sourcing chicks from other countries where they are cheaper further compromises the industry by introducing biosecurity risks and quality issues.
• Many are forced to sell their birds early at three weeks (21-25 days) to save on feed costs, compromising food quality and safety. Unlike other markets, the poultry industry in Tanzania sells birds per head, not per kilogram, making weight gains crucial for profitability.

The poultry sector in Tanzania is a vital provider of affordable, high-quality protein, driving significant investment and job creation, particularly among women and youth, attracting investments of over 200 million USD and creating jobs for millions of Tanzanians—66% of whom are women and 87% are youth— across the value chain the sector remains vulnerable without government strategic support. The industry's ability to remain sustainable and profitable is in jeopardy due to these ongoing challenges.

Recommendations

1. Tanzania is a net importer of non-GM soybeans and meals from SADC, mainly Malawi and Zambia being an insignificant producer herself. However, the country heavily taxes non-GM soybean or meal imports from outside SADC at 10% import duty adding on to the operational costs especially recently when producers seek to source soybean and meals from outside SADC after low production in these countries due to adverse weather and various bans.?
2. Establishing a grain reserve for poultry feeds will enable local feed mills to secure grains (maize and soya) when prices are good and store it for future use without heavily investing in storage, allowing these investments to be redirected towards technology and quality feed production. This will also reduce the effects of price volatility in maize, which often affects the price of poultry feeds.
3. Implement multifaceted approaches and advocacy campaigns to unlock the potential of the poultry market in Tanzania. Focus on regions outside Dar es Salaam with high malnutrition rates, such as Iringa, Njombe, Rukwa, and other southern regions, targeting children and women who are key influencers in household nutrition.
4. Provide training on the essence of commercial farming and quality food systems to ensure good quality products by adhering to principles of biosecurity and proper drug use. Leverage technology to improve operational costs and unlock profit margins.
5. Adopting weight-based sales for poultry in Tanzania would incentivize farmers to improve their farming techniques and invest in quality feed and care. This pricing method rewards farmers for producing healthier, heavier birds, directly linking their income to the quality of their output. Such a system encourages better farm management practices, ultimately leading to enhanced productivity and bird health. This shift not only supports farmers financially but also promotes higher standards within the poultry industry.
6. Provide poultry farmers with access to low-interest credits, grants, and flexible payment schedules that adhere to production cycles of specific birds. Increase creativity in methods to make poultry farmers creditworthy, ensuring their growth and expansion.

Although the article primarily focuses on the challenges faced by broiler farming, layer farming experiences similar issues. Rising operational costs continually squeeze the margins of poultry farmers and investors in Tanzania. It is essential to ensure that poultry farming remains not only a cornerstone of the agricultural sector but also a profitable and sustainable venture. The government's commitment to addressing these challenges through strategic planning and private sector support will be crucial in revitalizing poultry farming as a lucrative business once again.