Olam expands into animal feed business

Olam International Limited has disclosed that its grains platform plans to expand into animal feed and related businesses in Nigeria.

According to Ade Adefeko, head, corporate and government relations at Olam Nigeria Limited, the expansion involves investments in setting up poultry and fish feed mills as well as hatcheries to produce day-old chicks. “These investments are consistent with Olam’s strategy to selectively invest in prioritised platforms, which includes the grains platform,” he said.

He further highlighted that “the global animal feed industry is a large and growing part of the agri-commodity complex with attractive returns and a strong growth outlook, particularly in emerging markets.

“Post a detailed study of the sector, the company has chosen Nigeria as its preferred entry market as it ranks favourably on the country selection criteria, which include meat consumption per capita, degree of fragmentation, extent of vertical integration and of commercial feed penetration, scalability potential as well as supply and demand factors impacting the feed raw material trade.”

On the focus on the Nigerian market, he said “in Nigeria, increasing urbanisation and a change in consumer preference towards more protein-rich diets is driving a strong demand for poultry and aquaculture products, and the commercial feed market is expected to grow at over 10 percent Compound Annual Growth Rate (CAGR) over the next five years.”

The investment is expected to build on Olam’s existing strengths in origination, which in the words of Adefeko “includes extracting raw material cost efficiencies, sharing of port infrastructure, sourcing arbitrage, trading, ocean freight and risk management.

“The company has deep expertise and execution capabilities in Nigeria, where it has been successful in executing cost-competitive projects, both brownfield and greenfield, and operating them at world-class efficiency levels. For example, Olam has a profitable and growing wheat milling business.”

In addition to bran from its flour mills, Olam will leverage its local procurement network to source a majority of other inputs required for producing poultry and fish feed. This will reduce import dependence, benefit local farming communities and generate youth employment, which are key priorities for the Nigerian economy today.

There is optimism that the investment will also contribute to the development of the Nigerian poultry and aquaculture sectors by providing competitively priced inputs and technical support to local poultry and fish farmers, thereby improving productivity and returns for the sector.