How Maize Prices Decide Your Poultry Profit in Ghana

Follow one kilo of maize from the field to the bird

A kilo of maize does not walk into the trough by itself. It gets bought at a market or a farm gate, bulked by a trader, sold on to a mill, mixed into a bag, carried into your store and finally scooped into the feeder. Each step adds a cost and a delay, and each one can hide a change from you until it is too late to plan around.

Most farmers watch only the last link, the price on the bag. By the time that price moves, the maize behind it was bought weeks earlier. That lag works in your favour when prices fall and against you when they climb.

Maize is half the bag, so half of every kilo moves with it

In a typical grower mash in Ghana, maize often makes up close to half the mix by weight. Soya or another protein source, minerals, premix and the remaining ingredients fill the balance. A rise in the maize price therefore goes straight into the feed price, and roughly half of it stays there.

The simple version: if maize goes up by one cedi a kilo and it is half the ration, the feed has gone up by about fifty pesewas a kilo. The other ingredients have not moved, so the whole change comes from that one line. Check the real share on your mill's formula sheet. A ration with more maize passes on more of the rise. A ration with more protein or more by-products passes on less.

If you also run layers, the same line hits the flock in a different way, because a hen eats for eggs and not for weight. Our layer day-old chicks page covers the bird side, and the maize side is the same sum with a different intake figure.

The sum to run on your own sheets

You need three numbers. The first is the rise in the maize price per kilo since the last batch was priced. The second is the share of maize in the feed you are actually buying. The third is the feed each bird eats from placement to sale. Multiply them together and you have the extra cost per bird.

1. Write the rise in maize price per kilo, in cedis, from your supplier's figures or the market.
2. Write the maize share of the feed as a decimal, from the formula sheet.
3. Write the feed eaten per bird from placement to sale, in kilos, from your feed records.
4. Multiply the three, then multiply by the number of birds in the batch.

For the arithmetic in the next section we assume each bird eats 3.5 kilos of this feed before sale, and that maize is half the mix. Those are teaching figures. Put in your own intake, because a faster grower or a heavier market weight will eat more. Our article on feed cost per egg and per bird uses the same kind of arithmetic for layers.

Worked example: 240 birds at three different rises

Take a batch of 240 birds, half maize in the mash, and 3.5 kilos of feed eaten per bird. The table shows what three different rises in the maize price do to the batch. The rises are examples of the arithmetic, not a forecast of what the market will do.

Notice that doubling the rise doubles the bill. There is no threshold where it suddenly becomes safe. The extra cost moves in a straight line with the maize price, so decide in advance how much of it your margin can carry.

Set the extra cost against what each bird brings in

A few hundred cedis sounds small until you see what the batch earns. On our list, a dressed broiler is 120 cedis and a live broiler of about 2.5 kilos is 110. Even at the dressed price, 240 birds bring in 28,800 cedis. The 420 cedi squeeze in the middle row of the table is a little under one and a half per cent of that sale value.

That looks manageable, and on a well-run farm it often is. The trouble comes when the margin is already thin. If your costs were low and the birds sold well last cycle, a squeeze that size can take the profit of the whole batch. Farmers who price from the margin they hope for, rather than the margin they measured, are the ones who get caught. To see how the squeeze moves your break-even price, work through our break-even analysis guide.

The lag: why the squeeze arrives after the news

Mills buy maize in bulk and carry stock for weeks. Traders hold it when they expect prices to rise. So when the market turns, the cost of your feed often moves in steps, and later than the headlines suggest. The good news is that you have some warning. The bad news is that by the time the bag price changes, the next few weeks of feed were already bought at the old price.

Use that lag. When you hear that maize has moved sharply at the market, ask your feed supplier when the bags will be repriced and whether the current stock is held at the old cost. Put that date on your calendar. It tells you when to check the next delivery and when to recalculate the batch.

A cheap lot of damaged maize is not cheap

A lot priced low per kilo can cost more per kilo of usable energy. Broken grains, mould patches, insect damage and foreign matter all reduce what the bird can digest, and some of them carry a risk of aflatoxin. A mill or a careful farmer will refuse a lot that fails the check, and you pay for the refused lot in time and transport.

When you compare two offers, compare the price of a kilo of clean, dry maize with the price of a kilo of the lot on offer, after you have sorted it by hand. If the gap is smaller than the discount you were promised, the cheap lot is not cheap. Our article on maize in poultry feed in Ghana goes through the quality defects one at a time.

Place the batch against the maize calendar you can predict

In most years maize is cheapest around the harvest and tends to climb through the lean months that follow. That pattern is not a law, and you should check the market yourself each season, but it is the pattern most traders plan around. It means a batch whose heaviest feeding weeks fall in the lean months carries the most exposure to maize.

If you have a choice of placement date, look at the finishing weeks first. Can you place the birds so that most of the grower and finisher feed is bought at harvest and stored dry? That is the cheapest hedge most small farms have. It needs cash, a clean store and chicks that arrive when the house is ready. If you are planning a placement date, our broiler day-old chicks page and the day-old chicks guide set out the options. Our article on group buying shows how farmers pool orders to make this easier.

Questions to put to your feed supplier when maize moves

When maize moves, a short list of questions gets you a better answer than a long phone call. Ask them in writing if you can.

• What maize share is in the grower and finisher mash, as a proportion of the formula?
• Is the current bag priced at the old maize cost or the new one?
• When will the next delivery be repriced, and what will the new price be?
• Is the maize in the mix from one lot, and what are its moisture and mould results?
• Can you hold the current price for a fixed quantity if I pay for it in advance?

Lock in part of the price, not all of it

You do not have to choose between buying the whole month at the spike and buying none. Many farms do well by fixing part of the next month's requirement at the current price and leaving the rest open. Agree the quantity, the price and the delivery date in writing, and never pay for a volume you cannot store. If the market falls, you will feel the missed saving, and that is the cost of certainty. If it climbs, the fixed part protects your margin.

If a fixed price is not on offer to one farm, a group of farmers buying together usually has more bargaining power than one farm buying a bag at a time. Pool the orders, agree a single delivery point, and split the lot by the bags each farm actually takes.

What we see farmers do wrong when maize climbs

The first mistake is to cut protein to offset the maize rise. The birds slow down, the batch takes longer to reach weight, and the saving disappears in extra weeks of feed and house cost. The second is to switch to an unknown mill because its bag is cheaper, without comparing the formula. The third is to stop updating the feed sheet, so nobody sees the rise until the cash runs short. The fourth is to panic buy a large stock at the top of the market and then store it badly.

The fix for most of these is the same. Measure the change, write it on the sheet, and decide before the feed arrives.

A monthly maize check you can finish in ten minutes

Keep the check short enough that you will actually do it every month. Put it on the same card as your feed count.

1. Write down the maize price you paid for the last delivery, per kilo.
2. Write down the maize share in the mash you bought, from the formula sheet.
3. Work out the extra cost per kilo of feed since your last check.
4. Multiply by feed per bird and by the birds in the house to get the batch cost.
5. Compare the batch cost with the margin you planned.
6. Decide now whether to fix part of the next delivery, change mill, or hold.

If the batch cost eats more than you can carry, talk to us before you place the next order. We can help you plan chick numbers and placement dates on WhatsApp at +233 24 915 1503, and you can start an order at the order form. Delivery terms are on our delivery page.

Questions farmers ask