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High production cost hurts local dairy makers

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Nigeria’s ambition to boost its dairy production may not crystallise if the cost of production for local makers remains higher than imported brands.

The situation is further worsened by the low productivity of local cattle breeds and increasing tension and conflicts between herders and farmers.

Experts say that the high cost of production is a disincentive for processors to off-take from local dairy farmers.

They noted that the inability of local manufacturers to compete has halt investments in the sector and progress made by the government in boosting local milk production to meet domestic demand.

“We are not globally competitive in dairy production. It cost about N200 to produce a litre of in Nigeria as against imported powdered milk which is about N180 per litre,” Muhammadu Abubakar, managing director, L &Z Integrated Farms Limited told BusinessDay.

“This is coupled with the fact that the Federal Government had lowered the tariff on imported milk last year and with the difficult operating environment, then how can local dairy farmers compete with producing a litre of milk at N200?” Abubakar asked.

The Nigeria’s dairy industry is divided into the upstream where the breeding and production of milk takes place, mid-stream which is the cold chain infrastructure and the downstream where the processors operate.

“The livestock sector is the most neglected subsector under the agricultural sector. We need to increase tariffs and make processors competitive to grow our industry,”Udeme Etuk, managing director, Chanan Eloá Integrated Farm Ltd said at a meeting with the Food and Agricultural Writers Organisation of Nigeria (FAWON).

“Nigeria is yet to tap from the enormous opportunities in our dairy industry. The spin off effect from the sector is large and yet the government has continued to neglect it.

“We do not have any beef based business in Nigeria. This is because of the huge challenges players in the industry experience,” Etuk said.

Livestock productivity in Africa’s most populous country is among the lowest globally. Holstein Friesian, a breed of dairy cattle from Netherlands average milk yield is 35-40 litres per day while Nigeria’s most popular cattle breed Bunaji (white Fulani) has an average milk yield of 1-2 litres per day.

This underscores the need for the government to prioritise breed improvement for farmers to increase their yields per litre.

To address this, the government has recently initiated a National Livestock Development Plan to address the issues of low yield per litre.

Africa’s most populous country dairy industry comprises milk, cheese, yoghurt, ice-cream, butter and infant formula.

A report by Agusto & Co. says that the milk segment remains the largest in the industry, accounting for an estimated 61 percent of the industry’s turnover.

Nigeria imports over 95 percent of finished and raw milk. The country spends an average of $481 million (N173bn) on milk importation yearly, accounting for six percent of total food import in 2016, according to the country’s livestock policy document.

Nigeria’s national dairy output per annum is 700, 000 metric tons while the national demand is put at 1.3 million metric ton annually, leaving a gap of 600,000MT, according to the Federal Ministry of Agriculture.

To ensure that Nigeria’s dairy farmers become competitive as their global counter parts, Industry experts called on the government to support the industry by bridging the huge infrastructural gaps to reduce local production costs for farmers.

“Infrastructure in the dairy industry currently is zero and we cannot grow the industry without it. This is what the government is supposed to focus on and not cutting down tariffs,” Abubakar who was earlier quoted said.

“We can only compete with the imported milk producers when the enabling environment to drive down production cost is provided. All we ask is a playing level field,” he added.

 

Josephine Okojie

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