Case Holder:
Balkh Poultry Company

Promoting a poultry buyback system

Promotion of Youth Employment in Fragile Settings

Background & Context

Constant conflict in Afghanistan has rendered the security situation precarious and with an obvious negative impact on the economic and investment climate. Despite reforms to the legal and regulatory framework, there are still serious shortcomings in terms of developing the private sector, which is not yet sufficiently competitive. Years of warfare have meant that successive regimes have struggles to govern centrally and are often impotent, largely due to the lack of a tax base or a legitimate indigenous source of revenue. One of challenges is to create jobs and/or business opportunities for the nearly 400,000 people entering the labour market each year. Approximately half of the Afghan population is underemployed or unemployed, and the lack of work particularly affects women. The participation of women in the labour force is low – only 29 percent of women are economically active (consequently women headed households are the poorest in the world) and around 66 percent of this female labour force is engaged in agriculture and 24 percent in manufacturing. The majority of women still work in backyard farms with little access to markets and production networks; a challenge to developing the prospects of women in the agricultural sector is to develop linkages between commercial scale poultry factories and family enterprises.

The poultry industry in Afghanistan

The poultry sector is key to the livelihoods of thousands of people in Afghanistan, with over 10,000 poultry farms currently operating. Consumption of chicken has increased with increased demand from poor households who cannot afford red meat. Due to good market prices and demand, family-poultry farming can be a beneficial way to improve the income of poor rural households. In Mazar, almost 600 commercial scale poultry farms operate in chicken raising. These commercial farms mainly produce eggs and live chicken (broiler chicken) and offer 2,000-3,000 chickens to the local market every week.

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The Problem

The poultry industry in Balkh Province is a key sector but is facing a number of challenges and constraints. It is heavily dependent on imported inputs (especially for broiler commercial farms) due to the lack of commercial hatcheries and modern facilities. The industry imports broiler chicks, eggs, poultry feeds and medicines from Pakistan and other neighbouring countries, which is expensive. Establishing a commercial hatchery for broiler chicks (keeping parental stocks of broilers to produce eggs for chicks) with modern laboratory facilities is a challenge, as the local business investment climate is uncertain. Releasing the broiler chicken production out to small poultry farmers could be a solution, however there are obstacles. Poultry farmers lack the technical knowledge of poultry-raising methods, hygiene and vaccination services.

“I want to expand my poultry business but last month many of my hens died from a disease no one could identify. I need to access vaccination services and find a buyer…”

Mahmmad Habib, 38, Poultry grower

Objective

The overall objective of this intervention was to introduce a broiler buy back system for household women and marginalized groups, to increase their income and create more jobs for the women and men out-growers in the broiler poultry sector in Mazar.

The project would promote sustainable business practices which would have a positive and lasting impact on the lives of poultry farmers and companies. The beneficiaries would be 60 (20 women and 40 men) farmers, who previously had a business in poultry but left due to lack of access to inputs and technical knowhow. These beneficiaries would be trained with the necessary knowledge of poultry-raising methods, hygiene and vaccination services.

Buy-back is a jobs generated project, which not only increases the income of women, but also envisaged on the larger canvas of the ‘buyback’ scheme is the fostering of community development, gender empowerment and protection of the environment.

Value Proposition & Activities

R2J partnered with the Balkh Poultry Product Company (BPPC), a prominent chicken production company in the Balkh province, to establish a buy back scheme with selected farmers who would participate as outgrowers. The chosen 60 outgrowers with a proven record and interest in poultry farming and the BPPC had a mutually beneficial agreement. The BPPC trained outgrowers on how to rear chickens using inputs ( one-day chicks, feed) and equipment (cages, ventilation, headers and feeders) appropriately. This equipment and input was supplied on credit. The company hired one poultry management trainer and one assistant trainer for the training of the outgrowers. After five months the chicken was sold back to the BPPC, who then sold them on to the market via butchers and distributors.

By the end of Jan 2017, all of the 60 selected outgrowers had been trained in 3 separate training sessions in overall poultry management issues.

R2J contributed 40% of training and coaching costs while the BPPC was responsible for covering the remaining 60% and for providing the above equipment and inputs. The scheme ran from April to September 2017, after which BPPC would bear the full operating costs.

Learning & Results

I was initially successful but had to drop out as I could not access a loan to buy more livestock when my first hens were killed by foxes. I am thinking of forming a collective with two neighbouring farmers so we can find a loan…” Azyan Farha, 32, Poultry Farmer.

To date ( May 2018) the scheme has continued to operate without R2J’s support, which is a clear indication not only of its success but also of the market player’s willingness to adopt the model and benefit from it. There were particular challenges in achieving the projected incomes ( for both companies and farmers) resulting in numbers below the initial expectations. Two factors contributing to this were, in the first place, the low market prices for chicken during the period of the scheme and the difficulties faced in the first round for participating women ( most of whom dropped the scheme after the first round.)

The company stated that women had dropped their participation because they had been unable to reach expected outputs. Both men and women had been given the same level and type of support despite facing different needs and constraints. In the case of women there is a need for more raincoats, feeders and heaters and greater access to loans, as opposed to the men who in many cases could access loans.  Women were all participating as individuals while most of the men joined in groups. Results showed that collective work is more profitable and productive than individual work.

Complexities of Working in a Fragile Setting

In a particular context such as Northern Afghanistan the constraints inhibiting the participation of women and men in the market ,may substantially differ. The setting is already marked by lack of services, poor infrastructure ( making it difficult for women and men to travel) and poor access to financial services. Women struggled in this case to reach the expected outputs – for the next phase it is essential to address the root cause of the low capacity of women to participate in the project.

Conclusion & any future variation

The intervention has provided positive net income for both outgrowers and companies. At the same time, the BPPC has stopped receiving support from R2J after August 2017 and is now running the model on its own, although with a lower number of participating farmers and modest profits. There were particular challenges in achieving the projected incomes (for both companies and farmers) and number of jobs, resulting in numbers below the initial expectations.Two factors contributing to this were, in the first place, the low market prices for chicken during the selling time and, in the second place, the difficulties faced during the first round for participating women (most of whom dropped the scheme after the first round). For future variation the constraints inhibiting women’s participation in the buyback scheme need to be addressed, to indicate the level of support needed in the intervention. Preliminary findings point out the need to support women cooperatives or groups. In this way, women outgrowers can work collectively, exchange experience and knowledge, and address constraints in common as they arise. There’s a need to link women (through cooperative or producer groups) with suitable financial services.

Certainly, the capacity of the out-growers (farmers) in terms of poultry rearing, hygiene, vaccination and accessing to high-yield markets has been improved, as well as the technical capacity building of the Balkh Poultry Production Company and the reporting officer (from BCCI) in business and value chain development. The BPPC has indeed adopted the scheme as part of its operations, showing initial positive signs of systemic change. For their new plans, the company is interested in attracting a higher number of outgrowers of up to 150. There is a huge demand from people at the community level to participate in such a scheme. However, when the companies and poor farmers know about the advantages of this system, hundreds (500 estimated) may wish to start broiler farms.

As previously mentioned, this will, however, put a strain on the finances of BPPC to be able to afford the inputs and necessary equipment that farmers need. As a response, BPPC has started facilitating information and linkages between participating outgrowers and a Microfinance Institution (MFI).