• Saturday, December 09, 2023
businessday logo


How Nigeria can bridge $1.3bn annual dairy import

dairy import

Nigeria can only bridge its estimated annual $1.3 billion dairy import when the Federal Government provides the needed infrastructure to drive investment and help reduce cost of production, experts say.

Nigeria has failed to grow its dairy industry in recent years despite efforts by the government to boost local production owing to the lack of competitiveness of manufacturers which is stalling the hope of ever having a flourishing dairy sector.

The farmers’ 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 inability of local manufacturers to compete could 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 N300 to produce a litre of milk in Nigeria as against imported powdered milk which is about N150 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 N300?” Abubakar asked.

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.

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.

“The problem we have in the sector is not just production but the harnessing of the milk and getting it at a right quality to the processing centres is also a problem,” IIan Bones, manager, Milky-Way Farms said.

“There are little dairy infrastructures for farmers in the country and all this factors make it difficult for Nigerian farmers to compete and this as well is hindering the growth of the industry,” Bones said.

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.

An August 2014 report by Agusto & Co. notes that the dairy sector has emerged the second largest segment in the food and beverage industry (behind poultry) in the country, with estimated revenue of N347 billion in 2013, and compounded annual growth rate (CAGR) of 8 percent over the last three years. The sector leads the food, beverage and tobacco sector, say experts.


Josephine Okojie