NIGERIA – The Central Bank of Nigeria (CBN) is said to be undertaking reforms that will restrict foreign exchange availability for dairy imports in a bid to boost local production and investment in ranches.
Against the estimated annual milk demand of about 1,300m metric tonnes, Nigeria local dairy production currently stands at 700,000 metric tonnes, leaving a supply gap of 600,000 metric tonnes.
According to the former Minister of Agriculture and Urban Development, Audu Ogbe, Nigeria imports US$1.2bn worth of milk every year.
A Beverage Industry News report notes that CBN will soon not avail foreign exchange to milk producers at both the official exchange and parallel markets if they do not invest in ranches.
The CBN Governor, Godwin Emefiele and dairy producers have been engaging in deliberations to address challenges in dairy industry and explore the backward integration model in the sector as well as investments in ranches.
The move is part of the government’s efforts to reduce the ongoing farmers and herders conflict in the country.
However, the operators noted that adopting ranching across the nation would be disruptive to their business strategy.
According to them a better model would be to convert pastoralist community breeds to better yielders through cross-breeding, milk collection, and the introduction of smallholder farming model.
They also urged the CBN to maintain the current 5% import duty on milk raw material and access to foreign exchange should be made available to all dairy companies who have implemented backward integration with proof of on-ground facilities, milk collection and usage.
The operators added that milk powder should remain a raw material or intermediate product as it is used locally to produce several products in the country, noting that the capacity to produce milk powder in the country is not available.
The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir says;
“We need to consider that the manufacturers have always supported the decision to backwardly integrate, and that is why our members are exploring local sourcing of raw materials.
However, stakeholders have to agree on the right step to take. The effects of such a decision need to be considered to ensure that artificial scarcity does not occur due to the inability to meet local demands.”