Profitability and long-term viability of table egg production in Ibadan metropolis in Nigeria

Abstract

The poultry sector in Nigeria, particularly table egg production, plays a crucial role in ensuring food security, generating employment, and supporting household income. This study investigated the profitability and long-term viability of table egg production in Ibadan, Nigeria, with specific attention to the role of feed costs and changing business conditions. Primary data were collected from 120 poultry farmers using structured questionnaires. Profitability was assessed using the gross margin technique. At the same time, a Markov chain model was employed to evaluate the long-term viability of table egg production by analysing the stochastic transitions between distinct economic states over time. Results showed that egg sales accounted for 86.5% of total revenue, while feed costs consumed over 81% of total variable costs—exceeding the conventional 60–70% threshold and placing significant pressure on profit margins. Although the average gross margin was positive USD 735.66, the gross margin ratio was low (4.43%), indicating marginal profitability. The Markov analysis further revealed a deteriorating business outlook, with increasing probabilities that farmers would transition from favourable to marginal or financially distressed states. In the long run, only 1.84% of producers are expected to remain in a favourable state, suggesting a high risk of business exit under current conditions. The study concludes that while table egg production remains profitable, its long-term viability is threatened without strategic intervention. Collaborative efforts between the government, private sector, and research institutions are recommended to reduce feed costs, introduce pricing policies, and promote technological innovations to safeguard the sector's future sustainability.