Poultry Hatchery
Poultry Hatchery
Business Model Description
Put up a poultry hatchery plant, including installation of incubators for production of day old chicks for supply to local farmers and expansion into the regional market, integrating disposal of more than one-year old parent stock to provide affordable meat nutrient for the local market, which also constitutes a component of the business revenue stream.
Expected Impact
Reduce poverty, hunger and stunting, with positive impact on sustainable human development.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Lesotho: Maseru District
- Lesotho: Leribe District
- Lesotho: Mafeteng Dstrict
- Lesotho: Mokhotlong District
Sector Classification
Food and Beverage
Development need
Lesotho has high poverty levels recorded at 49.7% in 2018. It also has low food production, together with perpetual shortages of cereals (largely staple food), which adversely affect food security, particularly for the rural population whose livelihoods depend on subsistence farming (21).
Policy priority
The National Strategic Development Plan II and the Comprehensive National Agriculture Policy (2022 - 2026) aim to improve food security through production of staple foods, high value crops and livestock, targeting long term market opportunities, including export markets, and adopting climate-smart cultivation (1, 2).
Gender inequalities and marginalization issues
NSDP II notes that another key challenge in agriculture sector is access to land for agricultural production as it is constrained by unequal gender and generational exclusion due to cultural constraints (1).
Investment opportunities introduction
Low national food production and high food imports provide an investment opportunity for local food production.
Key bottlenecks introduction
Investment opportunities in agriculture are undermined by, among others, soil erosion, fragmented and under-developed value chains, lack of harvesting and post-harvest technology and infrastructure, limited access to agriculture finance and insurance for risk-sharing (1).
Food and Agriculture
Development need
Lesotho’s poultry industry depends on imports of one-day chicks and parent stock from South Africa, including feed, which occasionally do not meet demand and consequently restricts local meat and egg production and negatively impacts food and nutrition security (22).
Policy priority
Through the National Agricultural Investment Plan (2022 - 2026), the Ministry of Agriculture plans to improve extension services; access to improved and resilient livestock breeds; affordable and high quality feeds; value addition of livestock products; improvement of livestock infrastructure, such as, abattoirs, slaughterhouses, and sale yards and access to finance (3).
Gender inequalities and marginalization issues
There is evidence of gender disparity in livestock ownership in Lesotho. Of the eight most common stocks (cattle, sheep, goat, donkey, horse, mule, pig and poultry), six are largely owned by men, while women mostly own just two stocks, pigs and poultry (23).
Investment opportunities introduction
Import restriction of eggs provides an opportunity for local egg production, which still runs short of demand.
Key bottlenecks introduction
Poultry production is challenged by lack of critical poultry value chains, like parent stock chickens, affordable feeds, including inaccessible investment financing (22).
Meat, Poultry and Dairy
Pipeline Opportunity
Poultry Hatchery
Put up a poultry hatchery plant, including installation of incubators for production of day old chicks for supply to local farmers and expansion into the regional market, integrating disposal of more than one-year old parent stock to provide affordable meat nutrient for the local market, which also constitutes a component of the business revenue stream.
Business Case
Market Size and Environment
< USD 50 million
Day-old chick annual imports from South Africa are estimated at M 240 million (USD 13.3 million) and increase of smallholder broiler and layer farmers provide additional market for the chicks (24).
Indicative Return
> 25%
Mothoebe Hatcheries project proposal, which seeks to produce day old chicks to supply farmers across the country, reflects IRR of > 25% over the 7-year project period for producing day-old chicks for the local market (22).
The high demand for day-old chicks by broiler and layer farmers makes this a secure investment as there will always be a need for food (7, 24).
Investment Timeframe
Medium Term (5–10 years)
Mothoebe Hatcheries Project projections show a breakeven in year 3 and IRR of > 25% over the 7-year project period (22).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Capital - CapEx Intensive
Market - High Level of Competition
Impact Case
Sustainable Development Need
Poultry is the major protein source and can improve food security in Lesotho, but relatively under-developed, with only one hatchery producing day old chicks and not meeting the market demand. The gap is met by imports from South Africa, creating need for an integrated local poultry industry (5).
Gender & Marginalisation
Women in Lesotho mostly own pigs and poultry (6, 23), but with little access to inputs, land, education, financial services and opportunities than men, particularly in the rural areas (25). Shortages of day-old chicks and parent stock inputs do not empower them and instead worsen the situation.
Expected Development Outcome
Poultry hatchery will help alleviate demand gap of day-old chicks, which is critical for sustainable local production of layers and broilers resulting in improvement of food security, job creation, household incomes and preservation of forex (5).
Gender & Marginalisation
Poultry hatchery will provide critical value chain inputs, in the form of day old chicks and parent stock, which will support and strengthen the participation and household responsibility of women and youth in the poultry industry (6).
Primary SDGs addressed
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
2.1.1 Prevalence of undernourishment
Prevalence of stunting in children under 5 years of age 31.8% in Lesotho as of 2022 (9).
Prevalence of undernourishment 34.7% at 2020 (9).
By 2030, end hunger and ensure access by all people, including infants, to safe and nutritious food (19).
By 2030, end all forms of malnutrition (27).
8.6.1 Proportion of youth (aged 15–24 years) not in education, employment or training
Youth (15-35 years) Not in Education, Employment or Training (NEET) is 11.9% (26).
NSDP II projects creation of 9,900 additional jobs annually (1).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Poultry farms pose health hazards to workers and individuals living nearby. Workers in poultry farming face health risks, including exposure to chemicals and agricultural dust (10).
Dead animals can carry highly-infectious pathogens that can spread throughout the brood (10).
Impact Risks
Lack or shortages in veterinary services may undermine the impact of poultry hatcheries and restrict growth (22).
Sustained impact of the investment may be affected by supply shortages in animal feed and lack of access to credit for expansion.
The prevailing unemployment levels, if sustained, may restrict the buying power of the end-consumer and stagnate the investment.
Impact Classification
What
With pork, poultry is one of the two most widely-eaten types of meat globally, and providing cheap nutritional food containing high-quality protein accompanied by a low proportion of fat (11).
Who
Farmers of layers and broilers will get a sustainable supply of day old chicks and parent stock, and consumers will ultimately benefit from a sustainable and cheaper food supply.
Risk
Shortages in veterinary services and animal feed, lack of access to credit and unemployment may undermine the impact and growth of the investment.
Contribution
Poultry hatcheries will contribute to the input supply of broiler and layer production, including to economic growth, job creation and household incomes.
How Much
The broader population will be impacted by the investment, spanning from economic growth, job creation, household incomes and poverty alleviation.
Impact Thesis
Reduce poverty, hunger and stunting, with positive impact on sustainable human development.
Enabling Environment
Policy Environment
The National Strategic Development Plan 2018/19 – 2022/23 identifies agriculture as a priority sector, including poultry, for food security and employment creation, and proposes several policy actions to strengthen the sector, including the participation of the private sector (1).
Comprehensive National Agricultural Policy (CNAP 2022-2026) has been developed to improve the agricultural sector, facilitate and promote commercialization and diversification of the sector, and areas of public-private partnerships (2).
Lesotho Instrument Based National Agriculture Investment Plan (L-IB-NAIP) 2022-2026, seeks to support and ensure sustainable agriculture sector growth, decent jobs, and food and nutrition security for the Basotho people, including establishing public-private partnerships (3).
Lesotho Food and Nutrition Policy (LFNP) 2016 - 2025 seeks to shape and guide planning and implementation of nutrition interventions in the country, particularly for human capital and development and effective workforce (4).
Financial Environment
Financial incentives: Smallholder Agricultural Development Project (SADP) provides technical and startup financial support to smallholder farmers to help improve agricultural productivity, as well as transform and diversify agriculture into a market oriented sector (15).
Fiscal incentives: Corporate Agriculture Income Tax rate is 10% compared to 25% standard rate. Subsidy of up to 60 percent for both fertilizer and seeds, which can contribute to in-house production and availability of animal feed, consequently lowering production costs (16).
Regulatory Environment
Basotho Poultry Farmers' Association acts as regulatory body in the poultry subsector in promoting and providing training and technical skills among the poultry farmers to achieve set standards in the subsector, which is important for consolidation and competitiveness of the industry (14)
NSDP II commits to fostering agriculture production and its commercialisation, by developing regulatory framework for range management, water sheds, environment protection and biodiversity, and reverse environmental degradation that has aggravated the food insecurity situation (1).
Marketplace Participants
Private Sector
Lesotho National Farmers Union, Standard Lesotho Bank, NedBank Lesotho, FNB Bank, Pick'n'Pay Supermarket, Shoprite Supermarkets, Enrcich Supermarket, Lesotho Flour Mills, Itau Animal Feeds.
Government
Ministry of Agriculture & Food Security, Ministry of Trade & Industry, Ministry of Finance & Development Planning, Ministry of Education and Training, Basotho Enterprises Development Corporation, Lesotho Post Bank, Revenue Services Lesotho.
Multilaterals
World Food Programme, Food and Agriculture Organisation, United Nations Development Programme, World Bank, International Food and Agricultural Development, African Development Bank.
Non-Profit
Rural Self-Help Development Association, Joining Hands Against Hunger Network, Development Peace Education, World Vision, Mineworkers Development Agency.
Public-Private Partnership
Ministry of Agriculture & Food Security has a partnership with private sector in the distribution of subsidized agricultural inputs across the country (4).
Target Locations
Lesotho: Maseru District
Lesotho: Leribe District
Lesotho: Mafeteng Dstrict
Lesotho: Mokhotlong District
References
- (1) Government of Lesotho, National Strategic Development Plan (2018 - 2023)
- (2) Government of Lesotho, Comprehensive National Agricultural Policy, 2022-2026
- (3) Government of Lesotho, Lesotho Instrument Based National Agriculture Investment Plan, 2022-2026
- (4) Government of Lesotho, Lesotho Food and Nutrition Policy, 2016 - 2025
- (5) International Trade Administration, Lesotho - Country Commercial Guide, 2021. https://www.trade.gov/country-commercial-guides/lesotho-agricultural-sector
- (6) Molabo Montpellier Panel, Five women leading the livestock revolution in Africa, September 2020. https://www.mamopanel.org/news/blog/2020/sep/6/five-women-leading-livestock-revolution-africa/
- (7) Sure Hatch Egg Incubators and Hatchers, Benefits to Starting a Chick Hatchery, Ocotber 2018. www.surehatch.co.za/blogs/start-your-own-poultry-business/benefits-to-starting-a-chick-hatchery
- (8) Sure Hatch Egg Incubators and Hatchers, Benefits to Starting a Chick Hatchery, Ocotber 2018.
- (9) United Nations, Sustainable Development Report 2023
- (10) Occupational Safety and Health Administration, Risks of Poultry Hatchery, 2020.
- (11) Wikepedia Encyclopedia -en.wikipedia.org/wiki/Poultry
- (12) Science of the Total Environment Intensive poultry farming: A review of the impact on the environment and human health, 2023.
- (13) Karen Shwean-Lardner, The effects of hatchery practices on the welfare of poultry, 2018.
- (14) Lesotho National Farmers Union Consultations, January 2023
- (15) Government of Lesotho, Smallholder Agricultural Development Project Report 2022
- (16) Revenue Services Lesotho. https://www.rsl.org.ls/tax-rates
- (17) SDG Investor Map - Stakeholder Validation Workshop, Septembe 2023
- (18) Government of Lesotho, Bureau of Statistics Business Register 2016
- (19) United Nations, Sustainable Development Goals Atlas 2023
- (20) Mothoebe Hatcheries Project Proposal, 2020
- (21) Bureau of Statistics and World Bank, Lesotho Poverty Assessment: Progress and Challenges in Addressing Poverty 2019
- (22) SDG Investor Map Mothoebe Hatcheries Stakeholder Consultations, May 2023
- (23) Government of Lesotho, Livestock Statistics, 2019/20
- (24) SDG Investor Map Letsibolo Hatcheries Stakeholder Consultations, September 2023
- (25) Joseph Tsoeu Washi Mokati, et al, Is It Really Feminization of Agriculture? The Issue of Household Food Security in Lesotho’s Southern Lowland District, 2022. https://journals.sagepub.com/doi/full/10.1177/00219096221111359
- (26) Government of Lesotho, Labour Force Survey, 2019
- (27) United Nations Development Programme, Sustainable Development Goals, 2023. https://www.undp.org/sustainable-development-goals/zero-hunger
- (28) Government of Lesotho, Mapping Subnational Poverty, 2021