Dairy Industry In Nigeria

Strategic moves by dairy industry players in the country show promise of a better future

With a population of nearly 200 million, a livestock population of more than 20 million, milk deficit 1.2 million metric tonnes per annum that forces the country to spend US$1.5 billion a year to meet rising demand for milk and milk products, Nigeria stands out in Africa as the country with the most under-exploited dairy potential in the Continent.

However, recent moves by the Central Bank of Nigeria (CBN) to restrict access to foreign exchange for importers of milk and milk products could begin a change in how the country towards a future where milk production could be one of the main economic activities, and dairy processing could rely on locally produced milk in the country.

In a press release in July 2019, CBN reiterated its stance about the restriction of access to forex by milk importers, adding that its main focus remains ‘ensuring forex savings, job creation and investments in the local production of milk.’

“For over 60 years, Nigerian children and indeed adults have been made to be heavily dependent on milk imports. The national food security implications of this can easily be imagined, particularly, when it is technically and commercially possible to breed the cows that produce milk in Nigeria,’ the Bank states.

FrieslandCampina WAMCO sets the boll rolling

After nearly 5 years of doubt from industry stakeholders, it is evident that the CBN’s plan to partner with dairy companies to initiate backward integration with major milk importers, which the government states it has done successfully with rice, tomato and starch value chain players through the provision of low-interest, among other incentives, in partnership with a number of states – is beginning to bear fruit, albeit with a long way to cover to get near the Bank’s ambition to finally stop milk imports into the country.

Some of the biggest multinationals have operations in Nigeria’s milk value chain including Friesland Campina WAMCO, Chi Limited (subsidiary of Coca-Cola), TG Arla Dairy Products (Arla subsidiary), Promasidor and Nestle Nigeria PLC. A local player, Integrated Dairies Limited, rears more than 500 Holstein cattle and has been producing milk from its 550-acre farm in Plateau State since 2003.

The Bank states that its partnership with States and private investors in the livestock and dairy value chain is beginning to yield fruits. In Niger state the Government has allocated land to four dairy companies at the 31,000 hectares Bobi Grazing Reserve in the Mariga local government area of Niger State.

“FRIESLANDCAMPINA WAMCO with the federal government is determined to transform the sector from its current subsistence phase to a commercial quality-focused model."

Ben Langat, Managing Director, Frieslandcampina Wamco Tweet

Dutch dairy giant subsidiary, FrieslandCampina WAMCO, which is leading the quest to transform the dairy sector in Nigeria, activated its Dairy Development Programme (DDP) at the Bobi Grazing Reserve, the company reported at the unveiling of its financial report for the year 2019, where it announced a turnover of N161.8 billion (about US$ 424.7 million) and profit before tax of N18.8 billion (US$ 49.3 million), an 8.5% and 15% increase, respectively.

The dairy’s Managing Director, Ben Langat reiterated the company’s commitment to contribute to the growth of the local dairy sector in the country and for the firm to continue playing a leading role in the country’s backward integration initiative led by the CBN.

 During the year, the Company also commissioned a state-of-the-art factory for the production of yoghurt drink and introduced a new Peak Yoghurt Drink in three flavors of plain sweetened, strawberry and orange into the local market.

 Officially launch virtually in October 2020, FrieslandCampina WAMCO has taken the next step of opening Nigeria’s first expertise Centre for Nigerian Dutch Dairy Development (CNDDD), which will help facilitate and accelerate the development in the dairy sector and build a sustainable value chain in Nigeria, focusing on both the upstream and downstream sides of the chain.

The high profile event was attended by the Honorable Minister of Industry, Trade and Investment, who represented the Vice President of the Federal Republic of Nigeria; Executive Governors of Niger, Kebbi, Kwara, Ogun and Oyo states; Honorable Minister of Agriculture & Rural Development, Alhaji Muhammad Sabo Nanono; Governor of CBN, Godwin Emefiele; and the Ambassador of the Kingdom of the Netherlands to Nigeria, Harry van Dijk, among many other dignitaries.

According to the Managing Director, the Centre is aimed to drive productivity and sustainability in the industry, based on best practices that have helped the Dutch dairy industry stand out as one of the best in the world for decades. It will also foster cooperation among dairy stakeholders as it will engage and promote cooperation among the government, private sector, academics, students and dairy farmers.

Through its backward integration plan, the leading dairy processor has made huge strides in the dairy industry, recording an increase in fresh milk collection from farmers to hit an all-time high record of 40,000 litres of milk per day, it reported mid this year.

And to add further impetus to its strategy, the company recently finalized the acquisition of Nutricima’s dairy business from PZ Cussons Nigeria Plc for an undisclosed sum. The acquisition underlines with the firm’s continued commitment to contribute to the development of the Nigerian dairy sector and will provide it with additional production capacity to meet the growing demand for locally produced evaporated milk and powder milk. The dairy also acquired the company’s production facility in Ikorodu, Lagos State and the brands Olympic, Coast and Nunu – a range of powdered, evaporated and ready to drink milk products, as part of the deal.

To lay the ground work to its strategy, the company in 2019 teamed up with the International Fertilizer Development Center (IFDC), where the IFDC will leverage on its agribusiness incubator programme – 2Scale – to expand on FrieslandCampina WAMCO’s Dairy Development Programme (DPP) and eventually to sustainably transform and lead the local dairy sector in the country by supporting the transition of local dairy farming into modern dairy farming and developing key structures required for a sustainable value chain.

Other players chart the way forward

Friesland Campina WAMCO is not alone in the quest to develop the dairy sector in Nigeria. Fan Milk Plc, the Nigerian subsidiary of multinational Danone, has partnered with the government of Ogun state to undertake a backward integration project to enhance local dairy production in the state.

Under the project Fan Milk intends to develop a world-class dairy farm and technical institute at the Odeda Farm Institute to bring the expertise of its parent company to the fore. The technical institute developed will train local dairy farmers and improve their skills while the dairy farm will also incorporate pasture development.

“Our objective is to ensure that we partner with local dairy farmers in communities within Ogun State to accelerate the development and expansion of the local dairy market while also creating the social and economic impact of improving the livelihood of the ecosystem within which we operate,” said Fan Milk Managing Director, Ferdinand Mouko. Fan Milk is confident that the plan will create positive social impact as it leverages the government’s support and the relevant experience Danone has developed along its journey in Africa.

Another multinational Promasidor, through its Nigerian subsidiary has invested US$5m to boost the dairy industry in Ekiti State aimed at reactivating the Moribund Ikun Dairy Farm, as a catalyst that will turn around the economic fortune of the state.

Established in the early 1980s as an integrated agro-allied farm, Ikun Dairy Farm covers 1,000 hectares of land. The reactivation of the ailing industry, done in partnership with the Central Bank of Nigeria, would ensure a daily production of about 10,000 litres of milk, but according to Ekiti State Governor, Dr. Kayode Fayemi, production has been delayed by the lockdown imposed to curb the spread of COVID-19.

“Promasidor has made an initial investment of US$5m in the farm which will be invested to procure cattle, equip the dairy farm, establish a farm to produce feed and renovate existing buildings,” said Fayemi.

The CEO of Promasidor Nigeria, Anders Einarsson, said that the project with the state enables his company to utilise the facilities at Ikun Dairy Farm to improve local sourcing of raw materials for production of its dairy products, which include Cowbell and Loya.

CHI Limited, a subsidiary of Coca-Cola has also joined the CBN’s backward integration program and has announced to undertake massive infrastructural developments of facilities at the Bobi Grazing Reserve in Niger State that will involve the upgrade of the existing facilities and construction of new ones in a bid to boost milk output.

In a statement Chi Limited stated, “With the acquisition of over 4,000 hectares in the reserve, the Company is partnering with existing pastoralists to provide 2,000 hectares to allow for settlement and grazing for their cows. It has made available 1,200 hectares to subsistence farmers for grain production and another 300 hectares for growing some of the best breed of pasture.”

Managing Director of CHI Limited, Mr. Deepanjan Roy noted that the final stretch of 800 hectares has been set aside for development of support facilities, specifically a milk collection and processing center where all the milk produced from the cows will be collected and processed in a hygienic manner, adding that the company is proud of its strategic partnerships and investments in the backward integration project of the Central Bank of Nigeria

This feature appeared in the September/October 2020 issue of Food Business Africa. You can read the magazine HERE

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