Olam to build $150m Nigerian poultry operation

The Singapore-listed agribusiness giant sees vertical integration opportunities in its play to meet rising Nigerian poultry demand.

Singapore Stock Exchange-listed Olam International is developing a $150 million feed and poultry operation in the Nigerian states of Kaduna and Kwara.

The company is billing its $100 million integrated feed mill, hatchery and breeding farm project in Kaduna as the largest in Nigeria. Another integrated poultry and fish feed mill in Kwara will cost $50 million.

Olam’s chief executive for Africa, Venkataramani Srivathsan, said the projects will bring local farmers into the supply chain while producing meat for an underserved Nigerian market. The projects could also be vertically integrated with Olam’s Nigerian wheat milling and rice farming operations.

“Our investment in the hatchery will help boost poultry production and, in the long run, help reduce the country’s reliance on imports,” said Srivathsan.

“Domestically produced meat is being hampered by a lack of good quality feed, support for farmers and availability of young stock, but consumption is set to increase. By investing in poultry and fish feed, we can utilise the wheat bran from our wheat milling operations, as well as maximise our sourcing networks to buy corn and soy from local farmers.”

The two feed mills each are built to have an annual production capacity of 600,000 tonnes, while the hatchery will produce up to one million eggs a week. The new facilities will include 100,000 metric tonnes of storage capacity.

Nigeria faces a 25,000 tonne annual shortfall in domestic poultry production, according to an International Food and Agribusiness Management Review estimate.

The poultry sector is one of the best capitalised sub-verticals in Nigerian agriculture, according to the review. But a weak feed industry and the prevalence of small-scale producers make expanding domestic production difficult.

Growing populations and incomes are driving a spike in sub-Saharan poultry demand. Consumption is projected to jump 200 percent between 2010 and 2020.

Olam International operates in 70 countries and has holdings throughout the agribusiness value-chain.