At least $1.5 billion (about N570 billion) is spent annually on the importation of dairy products into the country. This was made known by Alhaji Sabo Nanono, the Minister of Agriculture and Rural Development, on 28 March 2021, at the National Diary Policy Stakeholders Engagement in Abuja. According to him, 60 per cent of dairy products consumed in the country are imported, while the remaining 40 per cent are produced locally:
“The consumption of aggregated and bulked milk is less than 20 per cent of the local potential. Nigeria’s milk production accounts for only 13 per cent of West African production and 0.01per cent of global dairy output.
“The gap between supply and demand for dairy products is widening as a result of increase in population and urbanisation.
“About $5billion worth of food is imported yearly into the country out of which milk and dairy products account for $1.2-1.5 billion—according to the Central Bank of Nigerian. Hence, the annual dairy consumption is met by 60 per cent imports and 40 per cent local production.”
Nigeria has over a hundred and fifty million consumers of about 1.3 billion tons of milk annually. This is a huge market for locally produced milk and dairy products. The $1.2 billion to $1.5 billion import bill adds to the challenges of food security in the country.
Even so, domestic milk consumption levels are low. The average annual per capita consumption in Nigeria is between 10 and 20 liters compared to the U.S. dietary guidelines of 267 liters per year. Low consumption is a precursor to the low purchasing power of the average Nigerian household that prioritises staple foods such as rice, beans, and yam over nutritional food like milk.
In spite of the low per capita consumption volume, the Nigerian dairy production system is still unable to meet current demand. Nigeria’s milk production estimated at 600,000 MT accounts for only 13% of West African production. Currently, domestic production dwarfs local demand (estimated at 1.3MMT), leading to a shortfall that has often been met by imports.
The Nigerian Dairy Industry is characterised by low productivity largely because of the processes involved following its subsistence-oriented nature. Nigeria has the fourth-largest cattle population in Africa after Ethiopia, Sudan and Tanzania. Of the country’s total herd, 11.5% is used for diary, while 88.5% is consumed as meat. Most of the cattle in Nigeria are found in the North.
Unlike countries like Kenya where cattle is managed in stable units such as ranches, Nigerian cattle are reared under nomadic systems, where cattle are moved across states in search of food and water. The open grazing system affects the nutrition and management of the animals, which in turn impacts their weight and milk production.
One cannot compare milk output of cattle managed in specially built units where feeding is controlled to that of nomadic herds. Some other constraints that contribute to low production volumes of milk include genetic composition of the cattle, inadequate supply of feed and water, poor production practices by dairy farmers, many of whom are women. The little income which the women receive is equally not encouraging for the diary business.
The absence of a fodder production value chain is another setback. The fodder production value chain is one that provides farmers with year-round access to quality feed for their cattle. Pastoralists usually migrate to the more arable South during dry season when pasture is scarce in the North. In most cases, these herdsmen encroach on land used for crop farming, leading to conflict with landowners, farmers and, in some instances, entire communities. This has upshot the farmers/herders crisis in the country.
An enabling environment encourages the private sector and organisations to invest in farmer-led and/or private sector-led dairy development models. Several multinationals, including Promasidor and FrieslandCampina, are making major investments to support local milk production. In June 2019, FrieslandCampina announced an investment of about $33 million towards local milk production, initiating a Dairy Development Programme. A month later, Promasidor signed an agreement with Ekiti State to increase backward integration through the state’s Ikun Dairy Farm.
These two firms are among six that the central bank exempted from forex restrictions imposed in the first quarter of 2020, citing their backwards integration efforts as the reason to enable their continued access to foreign exchange.
Successive administrations had made efforts to close the gap through programmes such as National Livestock Breed Improvement Programme and Dairy Development Programme. It is hoped that the recent launch of a National Dairy Policy by the Federal Government will help promote and develop the dairy industry and consumption.
The policy requires the buy-in of national and multinational stakeholders. To facilitate this growth, the Ministry is presently collaborating with the Federal Ministry of Industry Trade and Investment (FMITI), Raw Material Research Development Council (RMRDC), CBN, Federal Ministry of Finance, Budget and National Planning, as well as the private sector to promote and develop the local dairy industry. As the minister of agriculture puts it, the policy will give defined direction for the country’s dairy industry where all players at whatever scale will be able to contribute their own quota in terms of production, processing and marketing of dairy products in Nigeria.
Analysts have equally maintained that a thriving dairy sector in Nigeria will boost the Nigerian economy, empower local milk producers, and ease herdsmen-related communal conflict. Self-sufficiency in dairy will equally reduce the country’s import bill, thereby reducing the pressure on the Naira as demand for foreign currencies drops.
In addition, more jobs – for skilled and unskilled workers – will be created across the value chain. More importantly, the livelihoods of pastoral households will be improved.
An effective fodder production system is a key aspect for any developed dairy sector. This will create room for settled pastoralists who necessarily do not need to migrate in search of pasture. This would contribute to reducing the levels and severity of farmer-herder conflict, thereby improving national security.
In sum, the increased sourcing of local, raw milk, as dairy companies crowd in, will create economies of scale which will gradually lower the cost of production, leading to lower prices for milk and other dairy products. This would make it more affordable and accessible to Nigerians. Nigeria’s Dairy Industry has a lot of potential. Filling some of these gaps is as essential as considering other viable options.