Feed milling industry in crisis as maize prices soar 80% — Poultry farmers call for import licence

Ghana’s feed milling industry struggles to maintain production capacity due to severe shortages and soaring prices of essential raw materials, particularly maize. 

From about 1,000 metric tonnes, the production capacity has dipped to about 700 metric tonnes.

The ongoing drought has compounded the issue, driving maize prices up by 80% in just eight months.

Sharing further insights into the grievous development in an exclusive interview in Accra, Eric Manteaw, the Executive Secretary of the Association of Feed Millers of Ghana (AFMOG), said the industry relies heavily on maize (50-55%) and soya beans (30%) for feed production.

However, the drought has led to raw material unavailability, resulting in steep price hikes.

“Maize prices have escalated from GH¢200 per 50 kg bag in January to around GH¢360 per bag currently,” Mr Manteaw said adding that, “This volatility has forced us to reject orders and drastically cut down production.”

Mr Manteaw said the unavailability had led to steep price hikes, with maize prices soaring by nearly 80% in just eight months.

This means that prices have escalated from GH¢200 per 50 kg bag in January to around GH¢360 per bag, leaving feed millers struggling to maintain production capacity.

The phenomenon has forced a drastic cut down in production. The prices have become so volatile that we are seeing inconsistencies in supply agreements and many cases, we have had to reject orders that don’t meet our requirements and that has affected our production lines heavily,” he said.

Factors contributing to price hikes

Mr Manteaw said, “although the drought is the main cause of price increment, the unavailability of the other ingredients also plays a role. Increasing capacity management and the imbalance of supply and demand are factors as well.

Those who have maize available at this time of year are hoarding, a development which is driving prices higher. Normally, we would have harvested around this time but we’ve had to stock up on maize instead,” he said.

He added that despite these challenges, feed producers raised their prices by a meagre 8% to absorb the rising costs and minimise the impact on consumers.

Mr Manteaw, who is also the Chief Executive Officer (CEO) for Agricare Ghana, said although his business was struggling, it hasn’t compromised on producing quality feeds.

“As a company, our product quality hasn’t been impacted much but we’re still struggling. We’re rejecting a lot of produce because of the inconsistency in prices being offered to us”, he stated.

Call for import

Meanwhile, the Ghana Poultry Farmers Association (GPFA) has made an urgent call to the government to issue a maize import permit to enable members to import the needed quantities of the grain to make up for the shortfall in the country.

The call comes at a crucial time when the survival of the fragile industry is faced with severe shortage of maize, a precarious phenomenon that is seriously threatening the very survival of the local poultry industry.

The association said its industry was faced with significant challenges due to insufficient domestic maize production, leading to periodic supply deficits and price
Ghana’s feed milling industry struggles to maintain production capacity due to severe shortages and soaring prices of essential raw materials, particularly maize.

From about 1,000 metric tonnes, the production capacity has dipped to about 700 metric tonnes.

The ongoing drought has compounded the issue, driving maize prices up by 80% in just eight months.

Sharing further insights into the greivous development in an exclusive interview in Accra, Eric Manteaw, the Executive Secretary of the Association of Feed Millers of Ghana (AFMOG), said the industry relies heavily on maize (50-55%) and soya beans (30%) for feed production.

However, the drought has led to raw material unavailability, resulting in steep price hikes.”Maize prices have escalated from GH¢200 per 50 kg bag in January to around GH¢360 per bag currently,” Mr Manteaw said adding that, “This volatility has forced us to instability, which were worsened by the current drought conditions as some farmers are hoarding their commodities.

It warned that should the government decline the call from the association, consumers could face a sharp increase in the price of chicken and other poultry products, particularly as the Christmas season beckons.

Speaking in an exclusive interview with the Graphic Business on the impact of the drought on their operations, the Executive Secretary of the GPFA, Lawrence A. Tetteh said, “Ghana has never built its capacity in maize production.

It will be good if we put in measures to build our capacity progressively but as it stands now, we have not gotten there yet, so in anticipation of a shortage of any of these commodities, it will be prudent that the government issues a permit to members to import to make up for the shortfall.

Once that happens, those who are hoarding the maize will be compelled to release them and ensure that producers don’t take advantage of buyers,” he said.

To clarify his point, he was quick to add, “we are not promoting import over local production; we have not built our capacity in that area and it will take a progressive effort to realise that. But once we have not, any attempt to deprive us of importing now will lead to a total collapse of the entire industry,” he added.

Background

The Ghana Meteorological Agency (GMET) early last month predicted intermittent dry spells during this year’s cropping season, but the situation has turned into a near-drought, with continuous dry spells disrupting crop production.

The worst affected regions are the Upper West, Bono East and Northern where maize, rice, groundnut, soybean, sorghum, millet and yam crops are experiencing severe water stress.

According to the Minister of Food and Agriculture, Dr Bryan Acheampong, the dry spell has resulted in significant losses for farmers, with an estimated investment loss of GH¢ 3.5 billion and a revenue loss of GH¢10.4 billion.

The minister also expressed concern about the potential crop failures and low yields, which could have a ripple effect on the agricultural value chain, including farmhands, aggregators, processors, traders and transporters.

The situation is also expected to impact food supply across the country.

Historical occurrences

Ghana has experienced droughts in the past, suggesting that the country is vulnerable to droughts, particularly in the northern region, which is a recurring hazard.

Droughts in Ghana and West Africa tend to occur in cycles of about 30 years, with recent studies suggesting a cyclical pattern of high rainfall followed by drought every decade.

Festive season

In response to how ready the sector was for the festive season, Mr Tetteh expressed the industry’s commitment to support food security and meet the heightened demand for poultry products during Christmas.

However, he warned that the current maize shortage was forcing many farmers to scale back their operations.

“As poultry farmers, we have always been committed to adding up to ensure food security, especially knowing that the Christmas festival is one occasion when demand for chicken soars.

We are eager to position ourselves for that, however, we are being compelled to either withdraw from producing or operate below our expected capacity. With the current drought, it is becoming threatening,” he said.