Cartels in the poultry and packaging industries in Nigeria have been manipulating the markets and driving up prices.
This is according to Tunji Bello, CEO of the Federal Competition and Consumer Protection Commission (FCCPC), reports Premium Times. He said that some of the more powerful players in the poultry market have colluded to fix prices at a high level. As a result, the smaller companies have been forced to charge more, he said, making poultry meat more expensive for all of the country’s citizens.
Until the cartel was formed, Bello said that owners of small flocks were able to make a profit by selling day-old chicks at 480-590 naira (NGN; US$0.29-0.36). Declining to identify the companies, he said that the cartel members expanded gained control of up to 90% of the market in some areas, and set the selling price of day-old chicks as high as NGN1,350.
He described this as “a curious reversal of the law of the economy of scale which otherwise stipulates that the more the production rate, the lower the unit price.”
As a result, prices remain high in spite of federal government support for the market, which aimed to keep prices of basic foods affordable for all.
Among the measures introduced to stabilize the poultry market were nationwide subsidies for broilers, vitamins, feeds, and other financial aid packages. Nevertheless, Bello said, poultry meat is becoming ever more expensive.
In April of this year, the FCCPC announced it would use existing legal frameworks to enforce fair competition in markets, including price hikes. The agency said it would address consumer complaints, and take action against businesses engaging in anti-competitive practices.
Blaming the extreme challenges in the Nigerian poultry market, Punch reported in July that around one-third of the nation’s poultry farms had closed for business over the firth six months of the year.
Prices rise despite controls
The Premium Times report highlights an ongoing escalation in feed prices in Nigeria.
For a poultry starter diet, it cites a doubling of the price from NGN11,000 in October of 2023 to NGN23,500 in the same month this year.
Following citizen protests over continued food prices inflation in the country, the Nigerian Customs Service announced the temporary waiver in import levies for selected key commodities in August. According to the USDA Foreign Agricultural Service (FAS), this waiver included corn, for which the rate dropped from 5% to zero. The waiver was set to remain in effect until the end of December this year.
Corn is the key ingredient in Nigerian poultry feeds, which account for around 70% of the cost of production for poultry farmers.
Citing figures from the National Bureau of Statistics, FAS reported that the prices of corn, eggs, and chicken meat rose by 164%, 96%, and 71% between June of 2023 and the same month of this year.
Over roughly the same period, overall food price inflation in Nigeria rose from 27% to almost 40%.
More on the Nigerian poultry market
Domestic chicken meat production amounts to just over 355,000 metric tons (mt), according to the statistics arm of the United Nations’ Food and Agriculture Organization, FAOstat. Meanwhile, national output of hen eggs was 663,609mt. These figures are for 2022, the most recent year for which data have been published.
The World Bank puts the human population in Nigeria at close to 224 million.
