Swiftlet nests farming – Part 1

A male swiftlet in the midst of constructing it's nest with it's interwoven strands of saliva.

My family ventured into the swiftlet farming business about 3 to 4 years ago as sort of an experiment. We started off by constructing a purpose-built 2-storey building specially to house the swiftlet nests in our fruit orchard. During that period there were not many people who were willing to take the risk of constructing the swiftlet farm on agriculture land because most swiftlet were found around town and cities like Johor Baru, Muar, Tangkak, Melaka, Ipoh, Penang, etc.

It is easier to convert existing buildings like empty shop houses, abandoned cinemas or low rental-yield buildings in city center for the purpose of swiftlet farming. However with the mushrooming of these swiftlet house came the issues of environmental cleanliness, bird related diseases and noise pollution. In the long run there is a possibility that the government might clamp down or introduce legislation to regulate these potential lucrative business, especially in city center and in area designated for heritage preservation and tourist promotion.

Therefore, we believe that swiftlet farming in agriculture land away from town and cities and in rural area are the new direction that we should consider for the future of this business. However swiftlet farming on agricultural land has it’s own intricacies and problems too. First and foremost, the potential investors need to consider the location of the land, the suitability of the surroundings (e.g. type of crops, influence of river/lake, etc.), direction of entrance and the expertise of the contractors and consultants.

Now let’s be realistic and consider what we can expect from swiftlet farming venture:

1. Realistic payback period: 3 to 4 years for swiftlet farming on agriculture land (2-3 years for city and suburban area). The average growth rate for this industry (swiftlet farming) in Malaysia is estimated to be around 35% for the last 5 years. Currently there are probably around 30,000 swiftlet farms in Malaysia with many more coming up every day. (Please note that realistic payback period is when you could expect the venture to start producing sustainable income to offset your cost of investment. It is not a measure when you can expect to get your payback of investment. Payback of investment period will depend on a combination of expertise, location, upfront investment/loan and a little bit of luck.)
2. For a 2-storey average size building, usually the operators could realistically expect to harvest about 1 to 3 kilogram of bird’s nest per month. Some bigger premises could harvest in access of 10kg a month. Assuming unprocessed premium white bird’s nest could fetch RM5,000 per kg, an average size venture could possible expect about RM5,000 to RM15,000 per month in gross revenue after 2 to 3 years. Large and established premises regularly raked in more than RM50,000 per month. But as expected not many people will tell you their actual income. With the current craze in this sector, any fool can see that this is a lucrative business as world wide demand currently outstrip the supply and hence the high price.
3. Processed white edible bird’s nests could fetch around RM20,000 per kg. Bigger outfit could consider the labor intensive work of cleaning, processing and drying the raw nests for a bigger return.
4. For every successful swiftlet farm, there are at least 2 that are not giving any return that is profitable or viable. Therefore it is crucial that the investors select the right locations and the right consultant when undertaking this type of project. If failure is not an option, it’s best to put your money in FD instead.
5. High Property appreciation return from successful swiftlet farm could be expected after the 2nd or 3rd year of business. It is not uncommon for swiftlet farm operators to cash out when they attain 200% to 300% payback from their actual property investments. We have friends/customers who invested RM500,000 on startup cost and were duly offered more than RM1 million even before the first anniversary of the venture. Now that’s is a profitable business! But you have to remember, with every success there are 2 failures.
6. Benefits of self consumption. If you are one of those well off family that spend a substantial amount of money on bird’s nests every month, than by having a farm that supply for your own consumption does make sense and could save you a boatload of money.
7. Sale by piece meal. Some farmers regularly sell their unprocessed/raw bird’s nest direct to the end users. The usual market price is RM50 for a perfect c-shape piece and RM40 for the corner piece. This is another way to improve on your profitability as it is much more profitable than selling by weight. End users who buy raw usually believe that its cleaner and healthier to self-processed their own bird’s nests as some commercial processors use special industrial chemical and bleach to whiten their end products.

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