Sylvester Tugume tasting chicken profits

Thomas Henry Huxley an ancient British Philosopher once said; “Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not.”

He added, “ It is the first lesson that ought to be learned and however early a man’s training begins, it is probably the last lesson that he learns thoroughly,” a saying which aptly fits the story behind Sylvester Tugume’s illustrious chicken cuts business.

With his Master’s degree in Economics, Accounting and ACCA, it is unimaginable that Tugume abandoned the white collar audit and banking jobs any one with such qualifications would eternally wish to associate with, to settle for a blue collar job in a poultry farm.

Tugume’s story starts to add up only when he narrates how he discovered that chicken are perishable goods whose marketing is a big challenge. He says when he harvested is first batch of 4,000 birds, he only realised that business is tough when he slaughtered 2,000 of them at once and started looking for market which was not available.

“Without an order from a client, I slaughtered 2,000 birds and started looking for the market. The prospective client I went to, said he could not take the chicken unless I cut the price,” he says revealing that this transaction alone cost him Shs 20million of the Shs70 million investments he had injected into the project.

The lesson learnt
Feeling dejected, the loss motivated him to find better ways to dispose the remaining 2,000 birds without another a loss. When he talked to a friend, he informed him that the Uganda Industrial Research Institute had refrigerators which could store such numbers of birds and he recommended that he talks to the team in charge of projects.

When he approached the team, he was given the guidelines to follow and within four days, all the necessary approvals and paperwork was done.
Incubating Chicken World Ltd.

Tugume says within the next few days, the team in charge of projects enabled him register his company, secure all the necessary company stationary from receipts to headed paper with a capital of Shs.2.5 million and today the company has assets worth Shs. 180 million and a total value of Shs. 700 million including cash.

He says proceeds from the investment have enabled the company to acquire a lease with National Forestry Authority to diversify business into tree planting as well as opening up a fuel refilling station. Given the diversifiaction, he no longer rears chicken. He now depends on peri-urban farmers who supply him between three to five tonnes of chicken per bird which he buys at an average price of Shs. 8,000 per bird.

Chicken Value addition business
With the 500 birds he buys per week, Mr Tugume picks the birds, grades them in terms of their sizes and texture of the meat. He says there are clients who prefer certain texture of chicken citing the Indians as an example whose Cuisine prefer large and tender chicken parts which have to be followed right from the farm.

“We take only broilers. We have to take special consideration of the age, size and texture. The main challenge we face comes from the supply side because many of our farmers are still rudimentary and tell many lies about their chicken,” he says.

He says sometimes the farmers under or over declare the age of the birds, they do not have facilitites to slaughter the chicken properly, they deliver the birds poorly and there is no skilled labour to handle the industry.

“We keep training labour but as soon as they get the skills, they move on. They mainly go to supermarkets and other meat processing industries or start their own businesses,” he says. He points out Shoprite, Mega Standard Supermarket and Sausage King as the major snatchers of the people they have trained because they cannot match their pay.

Addressing the skills gap
Mr Tugume says in order to address staffing challenges; he has embarked on internship programmes with students studying Food Science and Technology at Makerere University to help him with bulk processing. He regrets that although many people claim to look for jobs, few want to work.

He has no kind words especially for graduates who think their academic qualifications are more superior than the skills that produce the meat advising them that customers are not bothered about the academic qualifications of the hands which process the meat papers but all they care about is the quality of the final product out there noting that on the contrary, the less schooled guys who accept to dirty their hands, are the ones who are gaining the skills very fast and because of their low self-esteem, they tend to pick up very fast to catch up with the graduates and eventually return to school to upgrade with the education.

“University graduates do not want to get dirty and they assume they know a lot. The less schooled ones tend to get more value because of their inferiority complex which makes them to try and match the graduates,” he notes.

The market and future plans
Mr Tugume says hotels are his best clients because all-year-round, there are no returns. He is now looking at pre-cooking the food especially for armed forces like Police and military who often provide their menus of what they want you to cook and we do the mixing and the shelf life is six months.

The company has managed to secure loyal clients it has maintained for five years and he is sure they will not buy any product other than theirs.’ These include; Equator Catering, Quality Supermarket Uchumi Supermarket, Mega Standard Supermarket, Golf Course Hotel and the Protea Hotels.

“There is nothing like part time of anything. When you venture into this business, look at it as if your life depends on it. You must create a dedicated team which is permanently dedicated to the business. Keep your records because they help with tracking the clients. Do your costing properly and keep track of your records,” he advises.

The brand Chicken World
Mr Tugume says most of the processed chicken is sold frozen to different markets within Kampala. The farmers bring the chicken dressed and it is subjected to more cleaning before chopping it into parts for different markets. Off cuts such as necks are sold to the city suburbs, while bones are sold to hotels to make chicken soup.

The high value parts like fillets, drum sticks and winglets are sold to hotels and supermarkets, while orders for smoking are prepared on customer request and specifications. They also manufacture chicken sausages.
The factory produces five tonnes of chicken parts a week and 80 percent of the market is hotels and while 20 percent is supermarkets.

The market is price sensitive we have many specialised in the high market. He says to manage the deliveries; the chicken is packaged according to customer needs. Those who want it fresh, the chicken is kept in chillers and delivered them the following day and in order to ensure that they maintain quality, they have set nine months as the shelf life for the chicken in supermarkets, they have made sure that their stocks are not kept for more than two weeks in the market and they do this by sending marketing trips to the outlets once a week and where they find disfigured products, they replace them immediately.

The Challenges
The major challenge the business faces is that of being cyclical. There is no money to finance it and there is lack of proper regulation to guide the industry such that whoever deals in the meat business is grouped with those who do not care about quality.

He adds that storage is also another problem especially during irregular power supply because they cannot afford to have the fridges idle for twelve hours a day yet when they use the generators they have at the institute, they spend Shs.50, 000 per hour to run the generators which eats into their profits if they are to run them, for say, three days.

“This has hindered us from jumping into the mass market and we have now resorted to smaller outlets. We have established chains with the farmers so that we do not have to keep stocks for long but those enough to cater for the market,” he says. He says with this arrangement, it has enabled them to manage the stock levels and determine when to order because the bulk orders tend to come towards the weekend.

“On Tuesdays, Wednesday and Thursday, we are packing and on Friday, Saturday, Sunday, we are delivering them to the market. On the funding side, we have established an overdraft system with some banks so that when I do not have cash I have a bank draft,” he says.

Who is Sylvester Tugume
He graduated from Makerere University with a Bachelor’s degree in Economics 21 years ago. He did accounting, ACCA and has previously worked with large audit firms. His last full time job was in banking which he did for nine years before retiring into Chicken World. The motivation to start the business was his young family when he and his wife failed to find prudence to continue with that kind of employment. He saw an opportunity in farming which he pursued and today he estimates his annual turnover to be in the region of Shs700 million. He has not fallen below Shs.400 million for the last three years.

Watching the till
Many people do not take the meat industry seriously. The moment you call it part time, you devote part time-time which is usually the beginning of the down fall because the market for meat is everywhere. Because of the cash rich nature of the industry, he says pilferage is a very common vice among the workers because they can pick a piece valued at Shs. 20, 000 and sell it off for as low as Shs. 3,000.

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