Projecting Profitability Thresholds for Smallholder Poultry Production in Osun State, Nigeria under Inflationary and Cost Pressure Scenarios

Livestock production, particularly poultry farming, plays a crucial role in the agricultural sector of Nigeria, contributing to income generation, food security, and socioeconomic development. However, fluctuating input prices and inflationary pressures have hindered the potential for higher production levels for many smallholders farming enterprise. This study examines the economic potential of poultry production in Osun State, Nigeria, with a focus on its profitability and the factors affecting profitability. The study adopts a mixed-methods approach, combining enterprise budgeting, multiple regression analysis and inflation-linked scenario forecasting. One hundred and eighty (180) smallholder poultry farmers were interviewed using a multistage sampling procedure and a structured questionnaire. Key economic indicators such as gross margin are employed to evaluate the financial viability of poultry production. Regression analysis was conducted to identify the factors that influence the profitability and productivity of poultry production. The enterprise budget showed an average gross margin of $308.98 per year, but the wide dispersion in gross margin is driven largely by feed costs. The results from a multiple linear regression identified feed cost, chick cost and mortality rate as the significant profit determinants, while variables describing socio-economic characteristics of the farmers were not significant. Inflation-linked scenario forecasting combined an ARIMA model of the consumer price index (2008–2023) with the regression coefficients to project profits under rising inflation and input prices. Results show that a 10 percent real increase in inflation halves average profit, and enterprises turn unprofitable once inflation-adjusted feed prices are about $400 (≈ 38 percent above 2023 levels). These findings reveal small economic buffers for smallholders and highlight the need for efficient feed and feeding interventions, targeted credit for input purchases, and policies to stabilize key economic indicators such inflation and interest rates. The modelling framework also offers practitioners a transparent tool for stress-testing poultry enterprises against future cost-push shocks.