2.0 REVIEW OF RELATED LITERATURE

2.1 LIVESTOCK RESOURCES OF NIGERIA

Although there is no reliable estimate of livestock population in Nigeria; information available on the Nigerian livestock resources survey on FAO website, reported that Nigeria has approximately 13 million cattle, over 56.6 million goats and sheep, over 3.5 million pigs and over 130 million poultry.(RIM,1992)

These animals are distributed throughout various ecological zones in the country with greater concentration of each type in a particular zone than others. According to available literature from Nigerian livestock resources(RIM,1992), 95% of the cattle population is found in the Sudan Savannah, 3% in the Guinea Savannah or middle belt and the remaining 2% in the Southern rainforest belt. The small ruminants’ enterprise such as goats, sheep, and pigs are subject to structural adaptations to environment. The poultry enterprise made up of chicken, ducks and geese, guinea fowl, turkey and pigeon constitute a foot-loose industry that is structurally suited to any ecological condition, chickens are by far the most typically maintained under traditional, low-input free-range systems of management, but substantial numbers are also reared intensively on commercial basis.

Although livestock are kept in different part of the country for a variety of purposes, the production for meat predominates. A large amount of protein and mineral elements are obtained from animal products such as meat, milk, and milk products and eggs (Abioye 2000).

2.1.1 Poultry

Poultry outnumbers all the other forms of livestock in Nigeria, and, not surprisingly, is found throughout the country, wherever there is human settlement. Although pigeons, ducks, guinea fowl and some turkeys are also widely kept, chickens are by far the most common. Typically they are maintained under traditional, low-input, free-range systems of management, but substantial numbers are also reared intensively on a commercial basis, particularly in the southern states. Commercial holdings account for some 10 million chickens, or 11 percent of the estimated population of 82.4million (watch 2006).

There was a boom in intensive chicken production in the early 1980s, when the government subsidized the prices of day-old chicks and feed ingredients. As the subsidies have now been withdrawn, however, both extensive and intensive commercialized production have tended to decline, especially in urban areas, despite the continued demand for chicken meat and eggs .The major constraint on traditional chicken production is Newcastle disease, which affects local breeds in particular, while for more intensive commercial producers it is availability of feeds and drugs that is limiting (www.fao.org/livestock/t1300b0g.htm)

2.1.2 Small Ruminants.

Small ruminants are almost as ubiquitous as poultry, though not so numerous .there is estimated to be a total of 56.6million head throughout the country, with goats outnumbering sheep by three to two .Although some seasonal movement of pastoral sheep does take place, the great majority of small ruminants are sedentary village livestock and their patterns of distribution mirror those of human settlement.

2.1.3 Goats.

There are three main varieties of goat in Nigeria: theWest Africa Dwarf, theSokoto Red and the Sahel. Goats are renowned for their hardiness and can survive in most environments: West African Dwarf goats are kept in the forest zones and Middle Belt; Sokoto Reds are kept throughout the north; andSahel goats are restricted to a strip along the frontier with the Niger. Although pastoral Sahel goats are found in the northern semi-arid zone, most goats are kept in villages. The most common production system is that of seasonal confinement .Northern goats were found to be markedly more productive than West African Dwarf goats, with lower ages at first kidding and shorter kidding intervals, although they produced fewer kids per kidding(www.fao.org/livestock/t1300b0g.htm)

2.1.5 Sheep.

There are four main types of sheep native to Nigeria: the Balami, Uda, Yankasa and West African Dwarf. Balami and Uda are kept in the semi-arid regions, West African dwarf sheep in the south and Yankasa throughout the country .Sheep are the second most numerous pastoral species, and small flocks accompany many cattle herds in the North and in the Middle Belt.

A comparison of pastoral and village stock shows that pastoral animals are generally more productive. The productivity of West African sheep was substantially lower than that of other breeds. All Nigerian sheep are used for wool, but they are rarely milked. In the north, they are eaten regularly and form part of the daily protein supply, but there is also a marked variation in demand coinciding with religious festivals. As a result, there are dramatic seasonal price fluctuations, and in some areas the household fattening of sheep for sale is a major economic activity. (www.fao.org/livestock/t1300b0g.htm)

2.1.6 Cattle.

Cattle are found throughout Nigeria, but they are most common in the Northern two-thirds of the country. Seasonal Transhumance does take place, but generally to a limited extent. Almost half the total cattle population is permanently resident within the sub humid zone. Humped zebu cattle are by far the most common, but limited numbers of Keteku, Muturu and Kuri cattle occur in the southwestern, southern and northeastern parts of the country, respectively (www.fao.org/livestock/t1300b0g.htm)

2.1.7 Pigs.

Thetraditional Nigerian black hairy pig is gradually being replaced by various exotic breeds, including the Large White ,Landrace, Hampshire and Duroc.Pigs are generally kept under systems of seasonal confinement in the North and Middle belt, but they are usually confined all year-round in the south, except in the Niger Delta region. Pigs must be given supplementary feeds, and in village systems lees of beer are often combined with household scraps for food. The production of pigs is obviously profitable and continue to spread in many parts of non-Muslim Nigeria.

Intensive pig rearing is economically viable on the periphery of large cities because of the availability of industrial by-products, particularly brewers’grain.Units of between 50 and 200 pigs kept in concrete pens are common, especially in the densely populated regions of the south. Commercially managed piggeries with more than five breeding sows account for about 3 percent of the total estimated pig populations of 3.5 million. (www.fao.org/livestock/t1300b0g.htm)

2.2 SYSTEM OF LIVESTOCK PRODUCTION IN NIGERIA

According to Oxford Advanced Learners’ Dictionary, a system isdefined as an organized set of ideas or theories or a particularly way of doing something. Livestock production in Nigeria is carried out under different systems broadly classified as extensive, intensive, and semi-intensive. According to Umoh (1990), various modification and extension of these systems however exist in different environment and locations, production under the extensive system is characterised by low production and is not market oriented but carried out to satisfy subsistence objective Watch (2006). This system is the most unspecialized system of production and is the most predominant in Nigeria among small scale farmers.

The intensive system of production is employed by large scale producers and involves complete confinement of animals. Under this system, feed and water are provided. According to Eduvi (2002), intensive production involves a large capital investment in building and equipment, medication as well as high degree of skills in management. This system enables the animals to express their genetic potential since adequate nutrients are provided to satisfy requirement for efficient conversion and growth. This system is properly carried out, the productivity of the animals is expected to increase.(The poultry site.com 2007)

Between the extensive and intensive system of production is the semi-intensive system. According to available literature, this situation is more prevalent in most tropical countries where the economy of production does not justify intensive production. The semi-intensive system incorporates advantages of both intensive and extensive systems. It allows good control of feeding and management and animals are more protected under this system.

2.3 FACTORS LIMITING THE PRODUCTIVITY OF LIVESTOCK IN NIGERIA

Numerous physical, biological and socio-economic factors limit the productivity of livestock in the tropics, common among these are diseases and parasites, climatic condition, low genetic potential of indigenous animals, poor feeding and management, lack of training and experience of the local people in animal husbandry, absence of infrastructures necessary to supply the needed inputs for production, processing and lack of capital or finance. (Abioye 2000)

Climatic conditions is one factor which limit the productivity of livestock in Nigeria. According to Uguru (1981), climatic stress reduces appetite, feed and water intake. Grazing is also reduce hence growth and production in the animal are affected. The author also observed that high temperature and solar radiation cause heat stress on animals such as pigs and layers.

There is overwhelming evidence that majority of the livestock produced in Nigeria are managed traditionally by the local farmers with little or no educational background and proper knowledge about modern technique of livestock husbandry. Infrastructures and amenities such as electricity, provision of pipe-borne water and access road, lacking in most parts of Nigeria has contributed to keeping livestock production low. (Abioye 2000)

Efficient livestock production requires high capital investment in housing, feeding and medication. Apart from the factors enumerated the reasons for the low level of livestock production in the country can also be traced to government policy and fund allocation. The government has continually neglected the agricultural sector.

2.4 POULTRY FARMING

Poultry farms can be classified into two main types; farms for meat production and farms for egg production. The major component of poultry output is meat, it accounts for two-thirds of the value of output while eggs account for the remaining one-third. Broiler is the major component of poultry meat (Bhende, 2006).

2.4.1 Meat productions

In poultry farms focused on meat production, broiler breeds are raised mainly in environmentally controlled poultry houses. Fertile eggs are collected and transported to the hatchery, where they are placed in hatcheries for 18 days and then transported to incubators in the last three days (Beutler, 2007). After hatching, broiler chicks are distributed to producers who grow out the birds and send them for slaughtering and processing after 56 days. These broilers are chickens that are raised for meat production and have a larger body frame and weight than layers (Beutler, 2007).

2.4.2 Egg productions

In egg producing farms, day old chicks are purchased from specialized hatcheries that produce egg producing pullets. These pullets are either raised by the egg producer or a pullet grower until they are ready to start laying eggs which is usually at 19 weeks of age (Beutler, 2007). The egg production cycle last for about one year. Egg production chickens have been bred and raised for maximum egg production (up to 300 eggs per year). Dual purpose chickens are smaller in size than commercial meat breeds. They are used for meat as well as egg production and can produce about 200 to 230 eggs annually (Beutler, 2007).

2.5 FACILITIES FOR A POULTRY FARM

Facilities on a poultry farm are related to the purpose of the farm. In general, all poultry farm share common facilities and equipment such a feeders and drinkers. However, depending on the purpose of the farm, some facilities vary. For instance, meat production farms include slaughter house facilities. The purpose of having these slaughtering facilities on a broiler farm is to minimize costs and increase profits through vertical integration.

Egg producing farms are equipped with nest boxes if birds are raised on the floor or if raised in cages, automated belt system are installed for collection of eggs (Wood et al., 1998).

2.5.1 Housing

The size of the house depends on the population of the birds. The foundation should be made of solid blocks with concrete floor. The wall should be short for good ventilation and adequate supply of light. Wire mesh should be used to complete the short walls upwards to the roofing level. Care should be taking to ensures that all holes are covered upwards to the roof. This is to prevent reptiles and other wild birds from entering into the house.

2.5.2 Feeding

Feed costs have a major impact on profitability of poultry operations. The high cost of feed is related to the energy and protein contents of the diet. In unbalanced diet with excess protein, feed cost more thus increasing feed cost. With low protein diets, chickens would take more time to grow and could be at higher risk of catching diseases. Excess dietary nutrients are often excreted in faeces. The excess nitrogen and phosphorus cause a threat to the environment. For this, managing feed formulae for accuracy is an important step in poultry farm management to safeguard the environment and reduce operating cost (Karacher, 2009).

2.5.3 Disease Management

For the operations of a poultry farm to be successful, a good prevention programme should be available for the introduced chicks to avoid any future losses. Disease could be transmitted via humans, other birds, newly introduced chicks or contaminated equipment. Controlling diseases from the beginning is important for the success of the operation (Mobley and Kahan, 2007).

2.5.4 Vaccination

Vaccination is an effective way to reduce the negative effects of disease that can cause losses in a poultry operation. Disease can be caused by virus, fungi, bacteria, protozoa, mycoplasmas and parasites. Viruses are the number one cause of poultry diseases and are considered to be threat to poultry farms. Viruses can cause several diseases such as Marek’s disease, Newcastle disease, fowl pox, fowl cholera etc (Mobley and Kahan, 2007). There are several vaccination methods. Some vaccines are administered via drinking water, others can be sprayed whereby the spray enters the nostril or eyes to form antibodies. Another way is by injecting using automatic syringe in theneck some vaccines are marketed as mixtures to prevent more than one disease (William, 2007).

2.6.5 Slaughtering and Processing

In the final phase of poultry operation in both egg laying farms and meat production farms, slaughtering has to occur. In egg producing farms, older hens must be culled when egg production is reduced. The hen is sold to another farm, or more commonly slaughtered. At the slaughtering faculty, all poultry must be brought to a holding area where a good shelter and sufficient time for rest and water are provided before slaughtering (whole some meat and fish Act, 2005). Prior to slaughtering, all poultry are stunned using the correct voltage depending on the size and weight of the bird. Slaughtering should be as humane as possible allowing blood to drain for about 90 seconds after killing. Hot water at about 82oC should be available to case removal of feathers. After the feathers are removed the bird is eviscerated washed and the carcass is cut into pieces. The knives should be sanitized frequently to avoid disease transmission. After cutting and chilling of the chickens, packaging takes place at an area close to the slaughter house. Packaged chicken meat is then stored in the refrigerator before going to the market (whole some meat and fish slaughter – House Act 2005).

2.7 SYSTEMS OF POULTRY PRODUCTION

Poultry can be managed under any of the following systems, Intensive, Extensive and Semi-Intensive system.(The poultry site.com 2007)

2.7.1 Intensive System

The intensive systems are used by medium to large-scale commercial farms, and are also used at the household level. Birds are fully confined either in houses or cages. Capital outlay is higher and the birds are totally dependent on their owners for all their requirements, production is higher. There are three types of intensive systems:

(i) Deep litter system: In this system birds are fully confined (with floor space allowance of 3 to 4 birds/m2 within a house, but can move around freely. The floor is covered with a deep litter of grain husks, straw, wood shavings or a similarly absorbent (but non-toxic) material. The fully enclosed system protects the birds from thieves and predators and is suitable for specially selected commercial breeds of egg or meat producing poultry (layers, breeder flocks and broilers).

(ii) Slatted or wire floor system: This is made of wire or wooden slatted on raised walls. The birds are kept in the slated or wire floor. The droppings which collect beneath are collected for disposal occasionally thereby reducing the contact of birds with their faeces or droppings.

(iii) Battery cage system: In this wire cages are used to enclose the birds in a house. Each cage can accommodate two or four birds depending on the size of the cage. Feeds and water are provided along the sides of the cages.

2.7.2 The Extensive System

The extensive system production can also be called free or open range system. In Africa, Asia and Latin America, 80% of farmers keep poultry in this kind of system (FAO, 2009). Under this system, the birds are not confined and can scavenge for food over a wide area. Rudimentary shelters may be provided, and these may or may not be used. The birds may roost outside, usually in frees, and nests in the bush. The flock contains birds of different species and varying ages. Production under the extensive system is characterized by low production and it is not market – oriented but carried out to satisfy subsistence objective (Afolabi 2007).

2.7.3 The Semi-Intensive System

The semi-intensive systems: These are a combination of the extensive and intensive systems where birds are confined to a certain area with access to shelter. They are commonly found in urban and peri-urban as well as rural situations. It allows good control of feeding and management and the birds are more protected under this system than they are under free range system. The semi-intensive production system is sometimes referred to as back yard production system (Sonaiya, 2000).

2.8 IMPORTANCE OF BROILER FARMING

Poultry meat is an important source of high quality proteins and vitamins to balance the human diet (Idachaba, 2004). Specially developed breeds of chicken meat (broilers) are now available with the ability of quick growth and high feed conversion efficiency (Abiola, 2007). Depending on the farm size, broiler can be main source of family income or can provide subsidiary income and gainful employment to farmers throughout the year (Effiong and Onyeweaku 2006; Abiola, 2007). Poultry manure has a high fertilizer value and can be used for increasing all crops (Effiong and Onyeweaku, 2006; Abiola, 2007).

The advantages of broiler farming are;

Initial investment is little, lower than layer farming.

Rearing periods of 6-8 weeks only.

More number of flocks can be taken in the same shed.

Broilers have high feed conversion efficiency. I.e. least amount of feed is required for unit body weight gain in comparison to other livestock.

Demand for poultry meat is small compared to sheep or goat.

Poultry meat is very tender so its palatability and acceptability is very high.

It provides feathers for pillows and mattresses.

Its faeces serve as a source of manure.

It is a source of marketing related or incidental jobs like processing.

2.9 THE CONCEPT OF COST

Cost is a monetary measurement of the amount of resources used for some purpose. One of the reasons why poultry farmers introduce costing system into their business is the hope that it will help them to know the cost of production and in fixing the selling prices. The cost of production is usually categorized into fixed and variable cost. The fixed cost of the farmer, are cost which cannot be used up during the course of production. These include poultry house, equipment for feeding and water, cages, wheelbarrow, spade etc. the variable cost, and include day old chicks, feeds, drugs, labour and electricity (utility). Any farmer/seller wants to charge a price that will cover the total production cost at given level of productions. At the moment, the available information on the actual predictive function and models of poultry production in Nigeria is still scanty (Etuket al., 2007). From past literature, it is clear that different models have been tried in the poultry industry. The commonest analytical model recently used in profitability/viability analysis in Nigeria along with regular econometric models include Return/Naira Invested (R/NI); Gross Margin (GM); Rate of Return on Investment (RRI); Rate of Return on Fixed Cost (RRFC); Rate of Return on Variable Cost (RRVC) etc. (Olukosi and Erhabor, 2005; Emokaro et al., 2009); Adesina and Kehinde, 2008; Ayinde et al., 2011). The gross margin concept is equally of great relevance in cost analysis. It involves evaluating the efficiency of an individual enterprise and is very useful planning tool in situations where fixed capital is a negligible portion of the farming enterprise (Olukosi and Erhabor, 2005), as observed in smallholder poultry farming.

2.10 EMPIRICAL STUDIES ON COSTS AND RETURNS

Eduvi (2002), in a study on the cost and returns in alternative production management system of layers asserted that, intensive management is more profitable than semi-intensive management system as indicated by the benefit cost ratio of 2.2 to 1.0. It was concluded that, poultry eggs production under intensive management is more profitable.

Ayinde et al. (2011) also carried out a study on the economics of poultry egg production under different management systems, making use of budgetary techniques and profitability ratios, the result showed that the gross margin under battery cage system per bird/year was N8, 089.56 while he farm income per bird/year was N1,773.17, as compared to deep litter system with gross margin per bird/year of N1,029.43. The profitability of an investment is based on comparison of the returns and cost of the investment. Oladeji, Yakubu, Dodo, Maiangwa and Popoola( 2012), in a study on the profitability analysis of broiler production in Dawakin-kudu LGA of Kano state reported that feed constituted the highest cost of production of N 50,000 which means that feed is the most required input in poultry production. He concluded that if efficiently utilized it will yield more profit. Therefore, cost and returns analysis is the basis for the measurement of profitability of farm enterprises. The procedure involves itemizing the various costs of inputs and returns from the production more often, the values obtained are further tested statistically to verify differences between the values. Furthermore, monetary units should be used as the basis for measuring all inputs and outputs in cost and outputs in cost and returns analysis from cropping systems (Olukosi and Erhabor, 2005).

Net-farm income analysis forms that basis for farm profitability analysis.