[Poultry] Tanzania: a broader scope for being successful in the poultry sector

The poultry sector is a growing market that is stimulated by urban growth, an increasing number of restaurants in East-Africa and the growing demand for animal proteins. Luc Battel, co-owner of Frostan Limited, and Shanel Ngowi, representative of Koudijs, identified opportunities they see for the production of poultry and chicken feed for the local market in Tanzania. In addition, a quick scan identifying further opportunities in the poultry sector in Tanzania was completed mid October. These opportunities are in line with the international objective to achieve food security.

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Tanzania has a population of 51,82 million citizens, which is mainly youth. The young population and the growing economy, makes Sustainable Development Goal 2, achieving food security in the country a challenge. One out of nine world citizens is still suffering from hunger, which makes zero hunger and achieving food security an important objective. According to Luc Battel, co-owner of Frostan Limited in Tanzania, the international attention for food security results in interesting opportunities in East-Africa.

The international importance for food security results in business opportunities for entrepreneurs who respond actively to the local demand for food

Besides the international attention for food security, also the demographic location, the population growth of Tanzania, the opportunities for industrialization, the futuristic economic zone of Bagomoyo, and the growing demand for chicken are important reasons for Luc Battel and his business partner to invest in Tanzania. The company is primarily focusing on the production of chicken for the local market.

Business opportunities: from a luxury product to an affordable product

The price of a kilo chicken is the same as the average daily salary in Dar es Salaam, namely 2,50€. This  means that a chicken is considered a luxury product. An important cause of the high price of chicken is the high cost of animal feed, which constitutes 70% of the total production costs of a chicken. Moreover, overall the poultry sector is producing very minimally. With only 3% of the indigenous poultry industry raising more than 40 birds, whilst indigenous chiken production contributes 60% to the total chicken industry. This means that the potential of the industry remains largely untapped.

To support the local poultry sector in Tanzania, the government has introduced a ban on the import of poultry products. For this reason, there are many business opportunities to develop the local poultry sector in Tanzania. In October 2018, a quick scan is therefore completed to identify opportunities for the Dutch involvement in Poultry sector in Tanzania. Furthermore, a cluster of Dutch companies will visit Tanzania for a poultry mission in the same month.

Shanel Ngowi, stresses that there are different business opportunities for the professionalization of the poultry sector in Tanzania with Dutch technical knowledge about agriculture. For example, the Dutch company Koudijs, produces chicken feed existing for 80% out of maize grains. To control the price of chicken feed, there are modern post-harvest, storage- and cold chain facilities needed. Shanel also sees the establishment of meat processing plants and cold chain facilities for logistics from the slaughter to the market as opportunities. Making a link between the cold chain facilities and infrastructure is needed. Currently, a chicken is transported alive to the local market to be slaughtered there and sold for consumption. On top of that, the quick scan also identifies the supply of poultry equipment & technologies and the need for breeder- and hatchery farms as possible opportunities for the private sector.

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Koudijs, a Dutch company in Tanzania, produce in cooperation with Marenga Millers her own chicken feed in Tanzania.

Both entrepreneurs, Shanel Ngowi and Luc Battel, agree that there is a need for professionalization of the sector which provides different opportunities for the private sector. For upscaling of the poultry sector there is an integral approach needed that includes the whole value chain. The Tanzanian market has an enormous demand for a protein rich diet, which provides a large potential for the private sector.

The need for professionalization and the upscaling of the poultry sector provide different business opportunities for the private sector

Challenges: promoting a new product

Just as other sectors, there are also challenges in this sector. According to the Dutch Holding Frostan, common challenges are the mindset and technical- and academic skills of the employees. Frostan has selected employees based on motivation and provides intensive training to their employees to avoid these challenges. Through training employees and by creating work employment, this company is actively contributing on sustainable development goal 8, which is promoting sustainable and inclusive employment.

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Luc Battel, give explanation to his employees.

Besides this the competition with local farmers is also a challenge. Small farmers have easy access to the local community. A solution is to get contracts with buyers who are looking for a consistent supply. You can also provide consistency through selling chicken by kilo instead of pieces. Moreover, it is important As an entrepreneur to invest in relationships with local authorities to stay informed about the current regulations in Tanzania.

Another challenge for Frostan is the sales of frozen products. Tanzanians are mainly interested in fresh products instead of frozen products. Frostan was able to create a market for a new product by creating awareness about the longer preservability of frozen products compared to fresh products and the comparable quality of frozen products.

Success; becoming the second largest company in the poultry sector in Dar es Salaam

Frostan is still in a starting phase, and it still has a long way to go. However, in the last two years the company was able to become the second largest company in the poultry sector in and around Dar es Salaam. An important success formula for the company is not to be only focused on the production of chicken, but also on the production of other meat products, such as pork and beef. The production cycle of fully grown chicken only takes two months, which means that it has a shorter life cycle than other livestock products, such as meat products made of cow. Through focusing on different products, the company is not dependent on one specific sector. Luc Battel advices other companies not to focus on one specific sector, but to have a broader approach to other sectors as well. For instance, it would be interesting for companies not only to focus on the production process, but to add value to do their own packing of the products.

Doing business in Africa is different than doing business in Europe. In Europe it is needed to focus on the specialization of your products, while in Tanzania it is needed to have a more broader scope and approach” – Battel says.

Future

Luc Battel is looking forward to the future and is convinced that the market for the products is present. Frostan has the ambition to become an Tanzanian market leader in providing a protein rich diet based on a variety of local products. The company has developed a strategical, market driven and pragmatic plan which puts the company in a position to transfer the potential of the sector. The objective is to transform the sector to achieve an exponential growth in the next coming five years!

Tanzania is a country with infinitive business opportunities for the agriculture sector and offers chances for entrepreneurs to come with innovations that at the same time support food security. We are supporting companies to share their solutions and innovations with us. Do you also have an innovative solution and would you like to share your story or do you have questions? Send an email to dar-lnv@minbuza.nl 

Elke Nijman

Agriculture team Tanzania & Kenya

Twitter @NLAgriKenya

November 2018

Tanzania: a broader scope for being successful in the poultry sector