CHAPTER ONE

INTRODUCTION

1.1     Background to the Study

Poultry refers to all birds of economic value to man as source of meat, egg and fibre. Egg production involves the use of good layer birds for the purpose of table egg production (Ogunlade and Adebayo, 2012). Eggs are major sources of animal protein in human diet. According to Oji and Chukwuma (2013), the poultry goes a long way in providing animal protein for the populace because it yields quickest returns and provides for meat and eggs in a very short time.

Esingmer (2011) and Banerjee (2012) added that poultry eggs nearly approach a perfect balance of all food nutrients. The yolk and albumen contain 17.5% and 10% respectively protein by weight. It was also found by the Food and Agricultural Organization of the United Nations (FAO, 2010) that eggs rank second to cow milk in terms of nutritive value and are the most economically produced animal protein.

Animal protein is an essential part of human nutrition because of its biological significance. Iwena (2013) reported that proteins are required for the growth of young ones, formation of gametes in reproduction, formation of digestive juices, repair of worn-out tissues or cells, production of anti-bodies as well as enzymes and hormones in the body.

Tijjani (2012) reaffirmed that animal proteins are more “biologically complete” than vegetable proteins with regards to their amino-acids composition. The dearth in the quantity and quality of protein supply in Nigeria is a challenge that is beyond dependence on plant protein alone. According to Fasasi (2014), Nigeria has a total land area of 98.3 million hectares out of which 71.3 million hectares are cultivable, while 34.2 million hectares representing 48% of the cultivable area are actually being cultivated and less than 10% of the arable land is irrigated. It suffices therefore, to explore quality protein of animal origin of which poultry egg is of prime importance.

Globally, egg production is growing rapidly (39% over 10 years) with Asian countries in particular having the high rates of increase; China and India with increase of 42% and 67% respectively (Scanes, 2013). Nigeria hosts more than 45% of the poultry in the West African sub region (WHO, 2006) and its poultry population is estimated at 140 –160 million comprising of 72.4 million chicken, 11.8 million ducks, 4.7million guinea fowl, 15.2 million pigeon and 0.2 million turkeys (FAO, 2006). This figure accounts for 71.38% of the total livestock kept in the country and supplies 17% of animal protein need of the population (Oji and Chukwuma, 2012).

The Ministry of Agriculture and National Resource (2011) and Eduvie (2012) stated that Nigerian poultry industry is dominated by small-holder farmers who on the aggregate raise bulk of the birds for egg production and meat, but individually rear less than 1000 birds using different production strategies in consonance with little resources available to them. Farming in general, has to use available inputs as efficiently as possible to achieve optimum production (Udoh and Akintola, 2001) and (Etim et al., 2015). This study intends to evaluate the economic and financial analysis of poultry farms in Kaduna South Local Government Area of Kaduna State.

1.2     Statement of the Problem

Hunger and malnutrition remain among the most devastating problems facing the world poor. The Food Insecurity Report by FAO (2012) estimated that 799 million people in 98 developing nations are not getting enough food to live a normal, healthy and active live. The supply of agricultural products from any nation to satisfy human wants and resources used in their production are very vital, due to their limited supply and stiff competition for them by many enterprises (Fasasi, 2016).

Most developing countries, including Nigeria have the problem of insufficient food production and protein deficiency. Nigerian agriculture belongs to the real sector of the economy and it is characterized by multitude of small-scale farmers scattered over wide expanse of land area, with small holdings ranging from 0.05 – 3.0 hectares per farm land, rudimentary farm systems, low capitalization and low yield per hectare (Fasasi, 2016). This may be one of the reasons why the production of food in the country has not increased at the rate that can meet the increasing population. The Central Bank of Nigeria (2014) confirmed that while food production increases at a rate of 2.5%, food demand increases at a rate of more than 3.5% due to high rate of population growth (2.83%) leaving a food deficient of 1% currently experienced in the country. In another study by the Federal Ministry of Agriculture Water Resources and Rural Development (2010), it was revealed that Nigeria’s agriculture, not only failed to meet up in its food production in order to meet the food requirement of the increasing population, its greatest problem is that of inadequate animal protein in the diets of a large proportion of the population especially in the rural areas which constitute over 70% of the Nigerian population. This is supported by Ikhatua (2010) who said that in a nutrition profile on Nigeria, it was reported that the protein supply per caput was 44grams out of which animal protein constituted less than 2%. He added that average value for Nigerian is estimated to be 7.5g/head/day.

The aforementioned reasons made it very difficult to ensure the attainment of FAO recommendation of thirty-five grams (35gm) per caput of animal protein per day (Ojo, 2013). The current level of food insecurity calls for well defined approaches in meeting the desired objectives. One of the generally adopted approaches is through increased production and productivity of the poultry sub-sector. Increasing productivity and efficiency within the agricultural sector particularly among small-scale poultry egg producers require a good knowledge of the current efficiency or inefficiency inherent in the subsector as well as factors responsible for this level of efficiency or inefficiency.

This is because despite the growth in the egg production industry since year 2000 in Nigeria (Tijjani et al., 2016), local demand has not been matched by local supply.

1.3     Research Questions

Research questions are very fundamental when research of this magnitude is to be carried out.

In view of the above, this study attempted to provide answers to the following research questions:

i. What are the socio-economic characteristics of poultry farms owners in the study area?

ii. What is the scale of operation of poultry enterprise in the study area?

iii. Is poultry enterprise profitable in the study area?

iv. What is the technical efficiency of poultry farm in the study area?

v. What are the factors influencing technical efficiency in the poultry

     production?

vi. What are the constraints faced by poultry-egg farm owners in the study area?

1.4    Objectives of the Study

The broad objective of this study is to carry out the economic and financial analysis of poultry farms in Kaduna South LOCAL Government Area of Kaduna State.

The specific objectives were to:

i. Describe the socio-economic characteristics of poultry farms owners in the study area.

ii. Determine the scale of operations of poultry production in the study area.

iii. Determine cost, returns and profitability of poultry production in the study area.

iv. Determine the technical efficiency of poultry production in the study area.

v. Identify the factors influencing technical efficiency in poultry production

vi. Identify the constraints faced by poultry farms owners in the study area

1.5    Significance of the Study

Poverty, inefficiency and unemployment have been suggested by many empirical evidences as the areas of great concerns to policy planners as well as policy makers in developing countries. Nigeria has a great potential for better economic growth both in the short and long run than current experiences. The need to efficiently allocate productive resources as well as analyze profitability for development purposes cannot be over emphasized. Therefore, any attempt at studying efficient allocation of resources and measuring profitability on the farm represents an important source of achieving growth in the economy.

Another major motivation of this study stems from the belief that understanding the levels of inefficiency or efficiency can help address productivity gains in poultry egg production. The findings of the study will therefore help in identifying the most efficient means of combining increasingly scarce resources so as to maximize output from poultry-egg production, which will assist in bridging the gap between poultry products (protein) demand and supply in the study area in particular and the country in general.

The ability to quantify efficiency and profitability will help decision-makers to monitor the performance of the units under study. The study will serve as a means of providing information on the cost and returns structure for prospective investors in poultry egg production in the area. The knowledge of the scale of farming that is more technically efficient and profitable will help the farmers in decision making. To policy makers, the work will serve as a guide towards appropriate policy formulation. When the sources of inefficiency are identified, policy formulations to improve farmers’ performance can be effectively done. Finally, the results of the study will serve as a reference material to students and researchers for future studies.

1.6    Hypotheses

i. Poultry producers are not technically efficient.

ii. Poultry production is not profitable.

iii. There is no difference among the technical efficiency of the different structures operated by the poultry producers.

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