Nigeria consumes an estimated 1.7 million tonnes of milk yearly, but produces only 34 per cent to meet demand. The over 1 million tonnes deficit is imported, and this costs $480.3 million (N173.3 billion). Although a private sector-led initiative, through backward integration, to raise the level of local milk production and create jobs is on-going, the consensus is that Nigeria must learn from global dairy giants which owe their growth to government support and a conducive environment. Assistant Editor CHIKODI OKEREOCHA reports.
For Nigeria, the road to self sufficiency in dairy products is still long and tortuous. Even with the significant reduction in export earnings from crude oil, which compelled a strategic rethink around the critical role of agriculture in diversifying the economy, efforts at leveraging the dairy industry’s huge potential to give impetus to the diversification have yet to yield the desired result.
Although, the dairy sector represents an important component of the agric sector, and is also the second largest in the country’s food and beverage industry, the belief is that government has failed to match words with action in positioning it as a viable alternative means of national livelihood after the disastrous experience with crude oil.
For instance, the industry is credited with the capacity to provide means of livelihood for a significant proportion of rural pastoral families in the country. Apart from its huge nutritional impact, particularly in the fight against malnutrition amongst children, its capacity to contribute to national revenue and create jobs for various players along the dairy value chain has never been in doubt.
However, most, if not all of these benefits, have yet to come the way of Nigerians and the economy because of perceived lack of government’s active support for the sector via a conducive policy environment. The thinking, and rightly so, is that if government had shown enough commitment, Nigeria would have by now started obtaining the highest possible yields per hectare and kilogramme of milk per cow per year.
Currently, Nigeria’s output of milk per cow per day is about 1 litre, compared to other African countries like Kenya and Uganda with between 30 to 40 litres of milk per cow per day. Compared to Africa and Asia’s average of 0.9 million tonnes and 6.6 million tonnes, respectively, Nigeria’s 0.6 million tonnes of milk production is the lowest in the world, according to PricewaterhouseCoopers (PwC) Nigeria.
The multi-national professional services firm in its latest analysis titled: “Transforming Nigeria’s Agricultural Value Chain: A Case Study of the Cocoa and Dairy Industries”, said Nigeria consumes an estimated 1.7 million tonnes of milk annually, but her production output only meets about 34 per cent of demand.
The report, which was authored by PwC’s team of seven experts, added that Nigeria’s annual production deficit of over 1 million tonnes of milk is being met by importation, which costs an average of $480.3 million, about N173.3 billion, annually. It attributed the country’s low milk production output to low yield.
PwC identified production as a key upgrade segment in the dairy value chain, suggested breed improvement as a strategy to increase dairy production. “The establishment of suitable grazing reserves, provision of extension services, and setting up milk collection centres, improved access to pasture and water will also enhance dairy production,” it added.
The report, which was made available to The Nation, was emphatic that “to promote import substitution in the dairy industry, a stronger integration between the pastoralists and processors should be encouraged”.
Even before the report was made public, a private sector-led push, through backward integration, to raise Nigeria’s level of local milk production and create jobs had reached advanced stage, riding vigorously on the back of integration between pastoralists and processors.
Already, the inward-looking strategy, pioneered by dairy giant FrieslandCampina WAMCO Plc, has seen milk production capacity increasing from between 1-2 litres per cow per day to between 10-12 litres, at least, for dairy farmers in the programme’s pilot Oyo State, south west Nigeria.
The ‘Farmer 2 Farmer Programme’, which is an important component of FrieslandCampina WAMCO Plc’s Dairy Development Programme (DDP), is a unique engagement where certified dairy farmers from The Netherlands train and advise their Nigerian counterparts on best dairy farming practices.
The initiative, which was launched in November 2011, in Oyo State, has been engaging Dutch farmers to train local pastoralists on dairy farming practices like animal health and welfare, farm record keeping, feeding and watering, calf-rearing, milking hygiene, cow fertility, hoof care, housing and barn design.
The initiative’s overall goal was to sustainably develop the local dairy value chain by improving milk quality and increasing milk production on dairy farms, while also supporting government’s Backward Integration Policy (BPP) aimed at building capacity in local manufacturing to reduce imports, create jobs and drive industrialisation.
However, despite sinking several billions of naira into the initiative, FrieslandCampina WAMCO Plc’s intervention is still considered a drop in the ocean. This is because for now, it is the only dairy manufacturer/processor sourcing part of its raw milk locally through the DDP. Besides, the programme is at moment concentrated in Oyo State, requiring other manufacturers to come on board while government, on its part, work on creating a friendly policy environment for investors to help take dairy development to the next level.
FrieslandCampina Wamco Plc Managing Director, Mr. Ben Langat, hinted at some of the factors responsible for Nigeria’s low dairy yields. He pointed out, for instance, that the nomadic nature of the pastoralists, who are mainly the cattle owners, coupled with lack of good quality grazing reserves and pastures result in poor nutrition for lactating cows and poor productivity of indigenous cattle breeds.
Langat, who spoke at the maiden edition of the ‘Dairy Farmers’ Day’ in Iseyin, Oyo State, recently, listed other challenges to include unorthodox fresh milk collection, processing and marketing channels; lack of infrastructure (access roads, potable water, electricity, and modern dairy farming technologies) and absence of enabling policies regarding dairy farming.
Langat, however, said despite the challenges, private firms and individuals, in some cases, in collaboration with state and Federal Government, are making efforts to ensure improvement in the dairy sector. Some of the interventions are focused on strengthening of milk marketing, collection and payment by private firms.
Others are focused on improving extension and productivity services, animal health and cross breeding schemes, aggregation of farmers for easier access to credit facilities and markets as well as facilitation of inputs and infrastructure in dairy zones, among others.
A sector and its huge potential
Nigeria’s dairy sector’s huge, but largely untapped potential has never been in doubt. Langat noted, for instance, that the annual demand/supply gap for milk in was “clearly an opportunity for us as a leading dairy nutrition company and for Nigerian dairy farmers to benefit”.
The PwC report earlier cited admitted this much when it said that: “Nigeria’s per capita consumption is low at 10 litres/person, relative to 28 litres/person in Africa, and 40 litres/person globally. This suggests that there is scope to increase milk consumption supported largely by a large and growing population.”
Experts estimated that Nigeria’s population will rise between 207 to 210 million by 2020. This was why billionaire businessman Alhaji Aliko Dangote planned to develop dairy plants and develop home-grown milk production to reduce importation.
The pan-African investor, who addressed some students of the Lagos Business School, who visited his petro-chemical refinery in Lagos, recently, lamented that 98 per cent of the dairy products consumed in the country were imported.
The implications of the poor output of Nigeria’s dairy farms, which results in the 98 per cent dependence on imports, is not lost on Minister of Agriculture and Rural Development Chief Audu Ogbeh.
Chief Ogbeh, who spoke in Abuja while signing a Memorandum of Understanding (MoU) with Arla Foods, one of the dairy companies, Arla Foods, for the boosting of dairy production, said Nigerian cows are not properly taken care of, so the quality and quantity of milk and beef that they produce is low.
The Minister is right. Nigeria’s dairy sector is still largely characterised by cattle ownership belonging to Fulani pastoralists, who are nomadic. They account for an estimated 95 per cent of the local dairy output. They also go for days on long distances to graze their cattle and look for pasture and water for them, and this affects the quality and quantity of their milk.
To change this narrative, the consensus is that government must go beyond occasional collaboration with the private sector and play a more active role in creating a conducive policy environment that will bridge the sizeable gap and open the floodgate of investments in the sector.
“The dairy market requires high investment, but returns are not fast paced. The dairy industry could take 20 -30 years to develop,” PwC pointed out, recommending various strategies for upgrade from the milk production, processing, marketing/trade sides.
The firm said, for instance, that from the production side, there is need for breed improvement via natural or artificial insemination; scale up of dairy extension services, including training on animal health and hygiene to improve milk quality and improved organisation of producer groups.
“The formation of producer groups/cooperatives will improve accessibility to the pastoralists as processors can work directly with the cooperatives towards increasing the processing of domestic milk. Also, extension services can be facilitated via the cooperatives to increase the quality of pastoralist’s milk output,” it recommended.
From the processing side, the report said there is need to encourage backward integration, working closely with pastoralists, which, incidentally, FrieslandCampina WAMCO Plc is currently doing. It also recommended improved processing tools, noting that “usage of improved tools by local processors could reduce milk spoilage and increase commercial production”.
To boost the industry from the marketing/trade side, the report recommended investment in cold chain technology, pointing out that agric infrastructure should be developed to accommodate the dairy industry’s storage needs.
“Specifically, the instalment of cold chain technology in the planned rail construction linking Northern and Southern Nigeria will ease the transportation and distribution of dairy products across the country,” it stated.
Interestingly, a common thread that runs through these sound recommendations is the need for active government support. From investment in cold chain technology to unfettered access to credit for farmers, rigorous disease control programmes and effective breeding policies, among others, the clamour for increased government support has never been this compelling.
The Netherlands, Turkey example
Nigeria may not have declared her intension to give some of the global dairy giants a run for their investments, at least, at the level of policy pronouncement. It has never hidden her fascination with their phenomenal growth either.
This was why perhaps, experts and analysts say for Nigeria to make any significant improvement in dairy farming and perhaps, achieve her self-sufficiency target in milk, her dairy development programme must follow the model of The Netherlands and Turkey, for instance, which enjoys tremendous government support.
For instance, in 2010, the Turkish Agricultural Bank provided long term loans at zero interest rate for cattle breeding. The government through the Ministry of Agriculture and Rural Affairs (MARA) also provided subsidies for the purchase of cattle and cross breeding equipment.
Other independent associations such as the Cattle Breeders’ Association of Turkey also weighed in by facilitating the importation of semen for artificial insemination. This, it did, working closely with dairy farmers and government authorities.
The Nation learnt that unlike most top milk producing countries, Turkey’s local cattle is deficient in milk yield (0.6– 1 tonnes) and weight 300 kg. High breeds like Anatolian Brown have a milk yield of three tonnes and weigh 500kg in the first 17-18 months.
Realising these deficiencies, the country moved in, utilising crossbreeding (natural and artificial) to improve the cattle’s characteristics. The objective was to combine the early growth ability and higher milk yields of imported breeds with the local breed’s good characteristics – climate adaptation, resistance to disease and parasite, roughage evaluation, high survival rate and reproductive performance abilities.
The interventions literarily worked magic. In the last decade, Turkey has significantly reduced domestic breed by 44 per cent to 1.9 million in 2016, while increasing crossbreed and cultured breed cattle by three per cent to 4.8 million and 137 per cent to 6.6 million, respectively.
This impacted the country’s milk yield and production, which is estimated to have increased by 67 per cent and 92 per cent to 43373hg/ and 20.9 million tonnes respectively within the same period. And with production at over 16 million tonnes annually, Turkey is today one of the top 10 producers of milk in the world.
The phenomenal growth of the Dutch dairy industry is no less inspiring. Until the early 60’s, agriculture in The Netherlands was quite similar to agriculture in many other developing countries today including Nigeria: large numbers of family farms that combine low-input crop production with various species of livestock for milk, meat, and manure.
Milking was done by hand, carts were pulled by horses, and fodder was dried as hay for the winter period when the cattle stayed inside in rope-tied stables. But dairy farming in The Netherlands has changed since the 60’s. Scale growth at the farm level, and especially the possibilities offered by refrigerated transport were major milestones in the development of the Dutch dairy industry.
Today, Dutch dairy industry has emerged as one of the most consolidated in the world. This was made possible by successful technology development aimed at highest milk yields per animal per year. It was enhanced by effective research-extension-farmer interaction and easy access to credit for farmers.
The market was also protected by guaranteeing fixed prices for agricultural products and other measures of active government support to the agricultural sector generally.
To improve and
modernise Nigeria’s
dairy industry
According to experts, there is need to develop a national breeding policy for the dairy sector. Artificial insemination and effective breeding policies increased the potential milk yield of dairy animals in The Netherlands and Turkey, resulting in high production rates and increased export of dairy products.
The Netherlands particularly became famous dairy producers with the high-productive Holstein Friesian cow as their flagship. This must have necessitated the call for Nigeria to eencourage private sector investment participation in artificial insemination.
State governments in cattle producing areas are also encouraged to take more than a passing interest in this potentially immense revenue earner.
This could be done by investing in the needed human capacity through intensive training and agriculture extension services. Private investors can also be encouraged to expand the venture to the point of supplying raw materials to indigenous dairy firms.
Also, because of the need to position milk as a human right, experts have made a case for increased partnership with state governments on advocacy for increased milk consumption – an example is the inclusion of milk and milk products with meals in school feeding programmes.
Indeed, dairy has been an important part of the Netherlands’ traditional diet. Milk, cheese, yogurt and dairy desserts continue to be part of the daily diet of many Dutch people. The Netherlands Nutrition Centre has acknowledged the fact that dairy is healthy by giving it a prominent place in the new Wheel of Five, a tool used to support education about healthy eating.
For years, per capita cheese consumption in The Netherlands has stayed above the European average. On average, the Dutch eat about 20 kg of cheese per year. The share of dairy in Dutch household spending on food and non-alcoholic drinks has been more or less stable at 14 per cent for many years.
In 2015, for instance, this represented about €4.9 billion, or 1.6 per cent of total consumer spending. But the same cannot be said about Nigeria, where milk consumption, particularly among children is still low, despite the fact that milk is a more budget-friendly and more complete food to augment everyone’s diet.
Will Nigeria work on repositioning the dairy sector to play a major role in the ongoing diversification campaign? Will the government demonstrate the needed political will to focus on boosting local capacity in the production and export of dairy products before heeding the call by some local dairy operators to ban or discourage imports?
At moment, imported milk powder accounts for over 75 per cent of Nigeria’s dairy industry, with domestic milk production remaining very low. Most Nigerian dairy processors either import and repackage milk powders or reconstitute imported milk powders into liquid milk and other forms of dairy products. The gap between the production of local milk in Nigeria and demand, which leads to a substantial amount of milk being imported is still very wide.
But there has been a push, supposedly driven by patriotism, to discourage importation of dairy products into the country, which of course, is more expensive. However, the preponderance of opinion is that there is need to first boost local capacity via active public, private sector partnership before an outright ban of importation.
Those who favour this position believe that it is a more natural, economically viable way for Nigeria to go if she must achieve self-sufficiency in milk production and consumption, create jobs along the milk value chain, and also give impetus to the ongoing diversification agenda.
