Rising investments in Swiftlet Farming Boost Malaysia's bird nest exports

http://biz.thestar.com.my/news/story.asp?file=/2008/12/13/business/2770244&sec=business
From The Star Newspaper

Stories By ERROL OH
ALL businesses are built on blood, sweat and tears, at least in the figurative sense. But one industry thrives on another bodily fluid – saliva. Bird saliva, that is. And not just any bird. It has to be the swiftlet, whose nests of hardened spit have been a delicacy treasured by the Chinese for centuries.

Depending on the quality, marketplace and timing, a kilogramme of unprocessed edible bird nest can fetch a few thousand ringgit.
The processing, a tedious and labour-intensive affair, typically doubles the value of the nests. Quoting a senior Sabah government official, a news report early last month says bird nest is sold at RM4,000 to RM18,000 per kg.

The global market is said to be worth billions of ringgit. Thanks to its head start of 20 years or so in swiftlet farming on a commercial scale, Indonesia supplies 70% to 80% of the bird nests consumed worldwide, mainly in Hong Kong, Taiwan, China, Macau, Singapore and North America.

Heng believes swiftlet farming is a great investment opportunity
However, swiftlet farming is an increasingly visible business in Malaysia. Given the high rate of innovation and adoption here, there is a good chance of Malaysia growing its current market share of about 10%.
(Some people use the words ranching or breeding instead of farming. Actually, none is accurate because the operators merely provide a nesting environment for the birds, which come and go freely. Perhaps a more appropriate term is swiftlet hosting.)

Dr Christopher Lim, a nephrologist who has succeeded as a part-time swiftlet farmer and has authored a how-to book on the subject, says there are about 22,000 swiftlet farms (also known as swiftlet hotels, swiftlet houses or birdhouses) in Malaysia. He estimates that there are 200 new ones every month.
This explains the increasing frequency of complaints from residents and business owners about birdhouses in their neighbourhoods.
If you happen to be near swiftlet farms, it will not take you long to notice them. You will hear loud, piercing chirps filling the sky. This comes from CDs that are played to attract the birds. And if you look around, you are likely to spot windowless buildings (usually shophouses) that have been renovated or built to host feathered occupants.

Birdhouse boom
The list of towns that have become known for this activity is lengthening. There are such places in just about every state. What these towns usually have in common are proximity to agricultural and forest land, and relatively low levels of industrial activity.
The first element is important because farms, plantations and jungles support the swiftlets’ diet of flying insects. The lack of factories in the vicinity matters because air pollution is anathema to the birds.
You can find many swiftlet farms in Perak (in Sitiawan, Ipoh, Teluk Intan and Taiping, for example), Pahang (Kuantan, Rompin, Pekan), Kelantan (Kota Baru, Tumpat), Terengganu (Kuala Terengganu, Kuala Besut) and Kedah (Sungai Petani).

Even the more developed states, such as Selangor, Johor and Penang have their share of areas that have attracted investments in swiftlet farming.
Mohammad says guidelines on acceptable practices in swiftlet farming are available
Until recently, the industry in Malaysia had maintained a low profile. The operators that were doing well were unwilling to share information and knowledge. The secrets to profitable swiftlet farming stayed within a tight circle and this was a major barrier to entry.

Still, there is no holding back the desire to make money. Despite the lack of transparency, the trickle of newcomers had eventually led to a critical mass that kicked the doors wide open some five years ago.
The key attraction here is the lure of lucrative returns from a passive investment. The idea is simple – put up a well-designed and well-equipped swiftlet farm at the right spot, and the rest will fall in place. The birds will come and soon, you can keep harvesting their nests for many years.
“It’s a gold mine,” says Mohammad Azimullah, manager of Swiftlets Venture International (SVI), a consultancy outfit.
“You put in RM500,000 and if your location is good, you can net RM1mil a year within four years. Where else in the world can you find such a business?”

Kelvin Heng of Pearlnest, which does trading and consulting work, is convinced that swiftlet farming is currently the best investment opportunity in Malaysia.
He explains: “You invest only once. You don’t have to come out with money every month to pay maintenance and workers’ salaries. If the farm is successful, you can collect thousands of ringgit every month.”

On a wing and a prayer

There are, of course, a lot of ifs and buts to deal within this fledgeling industry. A lot of people have rushed into it and many of them have crashed and burned.
Lim reckons that about 80% of the birdhouses in Malaysia are failed projects.
Mohammad of SVI has a slightly different take. He says the failure rate is 60%, but adds that of the rest, half are considered only marginally successful.
The concept of swiftlet farming is uncomplicated, but the execution is technically challenging if the farmers do not understand what makes the birds tick.

Many parameters determine the suitability of a farm’s location, and these include food availability, weather and geographical conditions, and nearby industrial activities.
The design of the birdhouse can be equally tricky. In the wild, swiftlets nest in caves. So, the idea is to simulate a cave environment, which means temperature, lighting, humidity, smell and space are often make-or-break features.
In addition, well-designed birdhouses make it easy for the swiftlets to fly in and out and to nest. They should also be built in such a way so as to protect the birds from predators and to minimise antagonising the neighbours.

The last objective is crucial because many times, the local authorities have shut down swiftlet farming operations following objections from other rate-payers.
A common problem is the noise from the birdcall recordings. Lim blames this on the farmers’ ignorance.
“If you know how to properly design and run the farms, the neighbours won’t be bothered by the sounds. You want to attract birds, not humans,” he argues.
Heng of Pearlnest agrees: “The farmers turn up the volume like it’s karaoke. You have to be considerate. And you don’t have to play the sound the whole day. There’s no point in that anyway.”
SVI’s Mohammad points out that the Veterinary Services Department and some local authorities have already come up with guidelines on acceptable practices in swiftlet farming. Therefore, the best way for swiftlet farmers to safeguard their investments is to just stick to the rules.
He says: “People should go for purpose-built birdhouses. We never recommend building birdhouses in shophouses.” He foresees that in 10 years, the practice of converting shophouses into bird farms will be outlawed.