Hastom Blog

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August 1, 2019




There is high possibility that the Central Bank Of Nigeria{CBN} might have finalized plans to include all dairy products including milk to foreign exchange restriction list. This will call for increase in home production and more investment in ranches. It was reported that CBN governor Godwin Emefiele said these dairy products would hit a limitation from access to foreign exchange at parallel and official markets especially when citizens are reluctant to invest in ranches; in a bid to quench the ongoing farmers-herders crisis.

Operators might tag CBN a foister of such policy on them without a resort to an existing business model and the socio-ethnic concerns that meat and milk might cause. The decision might force an increase in the struggle for land between herders and farmers due to the fact that ranching has become a controversial issue majorly after the Federal Government’s proposed RUGA program.

Recently, two meetings held between dairy products’ manufacturers’ and the Central Bank of Nigeria. The need for backward integration and more investment in ranches was discussed as well as the complaints that the bank uses monetary policies to address fiscal issues. Operators noted that extending ranches to other locations would be disruptive to the strategy of their business whereas a successful model that will work for Nigeria would best be practised when pastoral communities are turned better yielders through milk collection, cross-breeding and smallholder farming model.
5% import duties on raw milk products and access to forex remains should be extended to all dairy companies that agreed to backward integration with evidence of milk collection, usage and production facilities, the operators urged the CBN.

The former Minister of Agriculture and Rural Development, Audu Ogbeh said the estimate of the cost of milk importation equals $1.2B annually while national dairy output per year 700,000 metric tonnes and demand is 1,300,000metric tonnes totals a supply of 600,000 metric tonnes needed.

He further said that an average cow in Nigeria could barely produce a litre of milk per day, this is very low compared to other countries where a cow could produce up to 100 litres as transportation of our cows from one place to another leaves their milk production unstable.

The operators further stated that it may have cost implications on the consumers, encourage smuggling as the demand and supply gap is not yet met. Investments might be at stake and the struggle for land between farmers and herders will be on the increase. Only Three Crowns Milk and WAMCO (producer of peak milk) are local producers that have been able to make use of DDP(Dairy Development Programme) across 90 communities in Oyo, Osun and Ogun states.
To be specific, farmers under this programme were able to contribute only 27,045litres in one day.
The general director of manufacturers stated that the organization has been at the main forefront to cause the implementation of the decisions.

Despite that Nigeria is incapable to produce powdered milk at the moment as milk is produced by drying in a tower with high energy use amidst other utilities, it is still used as intermediary or raw material for the local production of several produce consumed in the country.



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