The dairy industry plays a key role in the country’s quest for food security and a robust private sector contribution is critical in driving the sector’s sustainable growth.
The private sector provides investment finance, delivers useful infrastructure, and offers extensive technical input to stimulate vital actions that engender productivity across the value chains.
Private sector participation in the sector is, therefore, key to any economy aiming to achieve speedy development and improved gross domestic product.
The private sector’s participation in the agriculture sector can help the smallholder farmers operating in the production segment of the value chain have access to a ready market for their produce.
Providing the right incentives for the investors in the agricultural sector to pivot to backward integration programmes will help the country reduce its reliance on food imports and FX pressure on the economy.
Also, it will increase the benefit from institutional training, support, and mobilisation of finance, where necessary, through innovative support solutions.
Activating these levels of contribution for the local agriculture value chain would serve as a timely game-changer.
Africa’s most populous country’s dairy industry has a strong potential to contribute extensively to national economic growth considering that around 1.3 billion tons of milk are consumed in the country annually.
The country’s 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.
It is reported that Nigeria has the fourth largest cattle population in Africa.
Precisely, there are about 20 million cattle in the country; yet, the country has not been able to tap this huge cattle population advantage to raise its milk production level.
Presently, local milk production output is 0.01 percent of the overall global output. Considering the potential of the sector, this meagre output level is not acceptable.
The challenges hampering productivity in the local dairy sector are; the lack of competitiveness of manufacturers which is stalling the hope of ever having a flourishing dairy sector, low productivity of local cattle breeds and poor storage facilities.
Highlighting these challenges, Musa Suleiman, a dairy consultant who has worked on World Bank-assisted agriculture development projects, said, “When you look at the dairy industry in Nigeria there are about three to four key challenges confronting local dairy farmers.”
“One is low milk yield associated with lack of access to affordable quality feed all year round and poor cow breeds.”
“Two is poor pricing of fresh milk. Three is the perishable nature of the fresh milk due to lack of cold chain and transportation services.”
However, in line with the federal government’s dairy industry development agenda, one private firm which has taken the lead in addressing the challenges undermining the productivity of the industry in the past few years is Outspan Nigeria Limited, a subsidiary of OFI (Olam Food Ingredients).
The business continues to demonstrate its support for the government’s economic growth aspirations, as the government focuses on building the non-oil sector’s contribution to the GDP.
Through a partnership with the Kano Dairy and Livestock Husbandry Cooperative Union(KADALCU), Outspan has been able to establish four milk collection centres (MCCs) close to the smallholder dairy farmers in Kano State to address the challenges of milk collection locally.
The centres are equipped with adequate cooling systems powered by off-grid equipment to preserve the milk quality for off-takers.
It has provided quality animal feed and carried out artificial insemination, and vaccination exercises to improve the health of cows and their productivity level.
The business has also trained several smallholder dairy farmers and donated transportation and cooling systems to further optimize the milk quality for industrial use.
These intervention efforts are impacting the local economy and livelihoods of farmers positively.
According to Usman Abdullahi Usman, chairman of the Kano Dairy and Livestock Husbandry Cooperative Union, the main goal of the union is to create direct and indirect employment opportunities for the youths.
“With the intervention of Outspan Nigeria, we have been able to achieve this aim by securing motorcycles and tricycles, which have been issued out to the youth vendors to go to the Fulani clusters and collect the milk for processing at the milk collection centres,” Usman said.
Presently, the firm is extending its impact in the dairy sector. In December 2022, it renewed the Memorandum of Understanding with KADALCU to deepen the scale and impact of its backward integration programme in the sector.
This renewed partnership will help develop the local dairy sector.
Speaking on the significance of the partnership framework, Praveen Paulsamy, vice president of ofi Dairy in Nigeria, said, “We are glad to have come this far in our local dairy value chain development journey.”
“The Kano Dairy Union has proven to be an invaluable partner in this journey. It is only fitting to extend our partnership actions to keep scaling the development of the sector in line with the FG’s agriculture development and food security aspirations.”
Paulsamy explained that the renewed MoU would help Outspan sustain its investment in the dairy sector as well as move to the next phase of its multi-year sectoral development plan to help address the challenges around improving milk production in the country.
In addition to other efforts undertaken by various industry players, it is believed that the overall backward integration programmes embarked upon by Outspan will have a positive impact on the agricultural and economic development master plan of the government.
Hopefully, smallholder dairy farmers will be able to increase their daily milk production level as more investments are likely to be channeled into the value chain.
