Poultry industry: Productivity increase, revenue sharing key to contract farming success

Marginal farmers of broiler chicken are struggling to continue production following the price-hike of poultry feed and feed materials in the global market.

Many farmers say their business is in no longer profitable because production costs have increased, but they cannot raise price of their product. So, they lose money and fall into debt to just keep their farms operational.

In this context, poultry sector leaders are trying to offer a sustainable business model to help farmers stay in business.

Contract farming is a system which delivers inputs free of cost and guarantees farmers a minimum income with incentive for higher productivity. Contract farming is becoming popular among small farmers.

"I made huge losses more than once and could not run my farm with my own money or borrowing from others. When I got the opportunity to join contract farming, I started bouncing back," Md. Jahangir Alam (42), a farmer of Dumbari Chala in Sreepur, Gazipur, said.

Owner of Jahangir Broiler Farm, he recalled that he had lost more than Tk 150,000 till 2019 and become indebted to the dealer who had supplied him inputs on credit. As on December 30, he was growing 2,000 chickens in two sheds under a contract farming deal with Kazi Farms.

The farmer received Tk 37,000 as growing charge from the company for 1,600 broiler chickens in the previous farming cycle of 35 days. According to the revenue sharing formula, the farmer gets a higher fee if he achieves higher productivity.

"I have my shed but most of the time I don't have capital to operate the farm, so contract farming is good for farmers like me, in terms of capital and knowledge the company shared with us," Jahangir added. His neighbour Rais Uddin (29), another contract farmer, said he is not in a position to take the risk of borrowing money to run his farm. "I cultivate my land to grow some vegetable and rice. Poultry farming helps me earn the cash we desperately need," he pointed out.

When an independent farmer spends Tk 134 for producing a kilogram of broiler, the production cost per kg is lower under contract farming, said Humayun Kabir Shoan, Assistant Manager at Gazipur office of Kazi Farms. "The company does not sell feed or chicks to the contract farmer. The company sells the broilers, and the farmer will get a growing fee even if the broiler price is low," he mentioned.

Hafizur Rahman, GM of contract farming at Kazi Farms, explained that "The company officers and doctors train farmers to keep the birds healthy without using antibiotics and manage their farms in a better way. The farmer who achieves higher efficiency earns more," he said.

A few companies including Kazi Farms are engaged in contract farming, using different revenue sharing formulas. Thousands of farmers have opted for this system.

Mosharaf Talukder is one of 400 such farmers in Shakhipur, Tangail. Owning three sheds with capacity to grow 3,000 birds in Protima Bongki village, he joined contract farming a year ago with seven years of experience in poultry. "What I found different here is that I don't need capital, have no risk and I am assured of a fee, whatever the market price. When someone cannot afford to do broiler farming independently, it is the solution," he said.

Kalu Miah (50), a former truck driver, now runs his family by means of contract farming of broiler at a leased farm in Gourh Gobindapur, Shakhipur. "Contract farming helps me to earn cash. I myself can't run big farms but contract farming is doable," he said.

Normally farmers lose money when broiler price is low, but under the contract farming, they don't make loss even if the company loses money, according to Kazi Zahin Hasan, Director of Kazi Farms.

"The company that organizes contract farming takes the risk and makes profit when price goes up. Revenue is shared with the farmers, and middlemen are removed from the process. This is a win-win formula for farmers and for the company," he added.

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