High interest rates force poultry farmers to cut output

By Abubakar Yunusa

The Chief Executive Officer of Rhyss Farms, Olajide Basorun, has raised concerns that prohibitive financing costs are crippling Nigeria’s poultry sector, forcing farmers to operate far below installed capacity despite steady market demand.
Basorun, who spoke in an interview with journalists yesterday, said limited access to affordable credit, coupled with rising production costs and infrastructure gaps, has constrained expansion and efficient operations across the industry.
He noted that the widening gap between borrowing costs and profit margins has made it increasingly difficult for producers to optimise output.
“The number one challenge is access to finance, particularly farmer-friendly financing. It is not just about capital, but the cost of that capital,” he said.
According to him, borrowing from commercial banks at interest rates of between 20 and 25 per cent leaves farmers with margins of about 15 per cent per production cycle, placing operators under significant financial strain.
Basorun explained that escalating input costs and high lending rates are eroding already thin margins, forcing many poultry farmers to scale down production rather than expand.
Giving an insight into operations at his Lagos-based farm, he disclosed that egg production has dropped from an installed capacity of about 1,500 crates daily to between 700 and 800 crates.
Similarly, broiler production has declined from a capacity of 10,000 birds per cycle to about 4,000 birds.
He stressed that the downturn is not due to weak demand but the impact of funding constraints and rising costs, adding that access to cheaper financing would enable farmers to maximise capacity and boost overall output.
Basorun further noted that underutilisation of capacity has become widespread in the sector, largely driven by persistent working capital shortages.