Mountains

Furore over proposed CBN’s forex restriction for dairy importation

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The Central Bank of Nigeria (CBN) last week disclosed that it will include milk and other dairy products in its list for forex restriction going forward.

This will be the third item after textile and fertilizer to have been included on the forex restriction list with the sole aim of encouraging local production.

The report seems to have generated uproar following some media reportage, which described the move as an outright ban on the importation of milk. The Apex bank has since clarified that it has no such mandate.

The CBN Governor, Godwin Emefiele, who made the disclosure while addressing reporters at the end of the bi-monthly Monetary Policy Committee (MPC) meeting in Abuja penultimate Tuesday, said that between $1.2bn and $1.5bn is spent yearly to import milk into the country. That translates to over N500bn.

Emefiele went on to say the CBN has held several meetings with milk importers, the first being about three years ago, after the introduction of forex restrictions on over 40 items.

He said “About three and a half years ago, when the policy on restriction of forex started, we considered including milk on the list of items under restriction from forex, but we conjectured that based on sentiment some people are bound to express, that we should be very careful.

“We called on the management of the oldest milk importer in Nigeria – WAMCO. We held at least three meetings with them and told them this would have happened but we decided not to allow it to happen, that we are trying to use the opportunity to appeal to them to do backward integration. Integrate backward and begin the process of development and produce your milk in Nigeria.”

“Importers could also support the pastoralists; get them concentrated in one place instead of moving around, provide them facilities like water, hospitals, schools.

”If you are in a community and you want to enjoy the proceeds of that community, there is nothing wrong in providing certain things for the communities to blossom. The proceeds of what you get in return will be your milk to recoup your investments. Those are the kind of things we expect companies that are importing to do.”

As hinted in his remarks about the fears that prevented the inclusion 3 years ago, the pronouncement has come with the much expected backlash.

Reacting through her Twitter handle, a former Minister of Education, Oby Ezekwesili, described the CBN’s decision as a policy borne out of vindictiveness.

She said: “It appears from what the CBN said on the MilkBanPolicy that it is a case of “You folks rejected RUGA, here is your punishment. What a big shame that would be.”

She said: “When MilkBanPolicy happens, to avoid scarcity which prices milk up and out of the reach of the poor, Nigeria needs to immediately triple current production of milk.

“Nigeria has the highest number of children less than 5 years with chronic malnutrition (stunting or low height-for-age) in sub-Saharan Africa at more than 11.7 million, according to the most recent Demographic and Health Survey (DHS) (National Population Commission).”

The Lagos Chamber of Commerce and Industry (LCCI) said at the weekend that Nigeria is not ripe for restriction of foreign exchange to milk importation, saying that such policy would amount to a ban on importation of milk in whatever form as most banks would not process Form M for any product on the CBN forex exclusion list.

LCCI, however, urged the CBN to put on hold its proposal to exclude the dairy industry investors from the Foreign Exchange Market in order to save the economy of the consequential shocks, business disruptions, investment dislocations, and job losses.

CBN had last week announced a restriction on the sale of FOREX for the importation of milk from the Nigerian foreign exchange market, insisting that importation of milk into the country was not banned.

But, the Director General LCCI, Muda Yusuf, noted that though the commitment of the CBN to the backward integration agenda of the Federal Government is laudable, restriction of foreign exchange to milk importation would do more harm than good, both to investors and the citizens.

Yusuf stressed that since there are no dairy cows in the country. The dominant milk producing system in Nigeria is the Fulani Nomadic System whose cows have a milk yield of less than two litres a day.

John Ekpeyong, a facility manager, also said: “The infrastructure to provide a replacement of what is being banned is not there. Even when we have cows with high milk production, where is the power to store? Where is transportation/infrastructure system to sustain the various parts of the value chain?”

Abdul Imam, who also spoke with our reporter in Lagos, said: “If you run a business, and are struggling to break even, and someone just directly beside you keeps flooding the same thing you produce with cheap and inferior products from Cotonou, you will understand and appreciate this move. Where are all the factories in Ikeja today?” he quizzed.

Abel Ubadia, a political and economic analyst, in his argument said: “We cannot compete with these importers; as long as milk comes in easily, our industries cannot produce at profit. In the short run, it’s obvious milk price will hike, but in the long run it will stabilize at a fair price. Too much import kills economy.”

Dr Guendouzi, an Agriculture analyst, said: “Obasanjo out-rightly banned the importation of poultry products even when we couldn’t meet 20% of our daily consumption; he banned cement importation, banned vegetable oil importation, banned packed fruit juice, banned noodles and pasta.”

The Nigerian poultry industry today comprises about 180 million birds. Nigeria has the second largest chicken population in Africa after South Africa (SAHEL, 2015) – producing 650 000 tonnes of eggs and 300 000 tonnes of poultry meat in 2013 (FAOSTAT, 2017).

Following the ban on oil, a research by Daily Trust shows that the market currently has more than 10 brands (local and foreign) battling for market share.

The effort at increasing dairy production has seen Africa’s richest man, who is already into rice, sugar and tomato farming, planning to develop dairy plants and develop home-grown milk production.

Dangote said he plans to invest massively in dairy production for the next three years by breeding 50,000 cows in 2018 and producing 500 million litres of milk a year, starting from 2019.

There is also the Dairy Development Programme (DPP) aimed at cutting the nation’s huge import bill for dairy products and also creating jobs. The programme supports local sourcing of raw milk rather than imports by engaging and training Fulani milk producers and potential smallholder dairy farmers.

The Research & Development (R&D)/Dairy Development Manager, FrieslandCampina Wamco Nigeria Plc, Mr. Lawrence Inegbenoise, is upbeat that the company’s cooperation talks with academic institutions in The Netherland in knowledge-sharing and exchange programme with Nigerian dairy farmers would boost the transfer of technology know-how on milk production and expand its on-going Dairy Development Programme (DDP).

At the behest of FrieslandCampina Wamco Nigeria Plc, dairy producer, two dons from The Netherlands, Imke de Boer, a Professor of Animal Science, Wageningen University, and Managing Director, Wageningen Academy, Janine Luten, were in Nigeria recently to explore the possibility of transferring skills to assist local dairy farmers on best practices for improved yield.

“Fulani cows are local breeds so, we have brought in experts to train them on how to cross-breed with the local cows, which can produce 500 litres of raw milk, while cross-breeds can produce 1,200 litres,” Inegbenoise explained.

He spoke while conducting reporters and experts from The Netherland round the company’s dairy development facilities in Oyo State.

The company is the only dairy manufacturer sourcing part of its raw milk requirement locally. The scheme draws its strength partly from the Federal Government’s backward integration policy, which encourages building capacity in local manufacturing to significantly reduce imports and create jobs.

FrieslandCampinaWamco Nigeria PLC Corporate Affairs Director, Mrs. Ore Famurewa, explained that although the company started by buying raw milk from Zimbabwean farmers in Shonga, Kwara State, and bringing it to its factory in Lagos for production, it soon realised that this was not enough; that it was better to get Nigerians – the local Fulani farmers to milk cows for it.

At the last count, over 1, 600 (920 women and 726 men) Fulani milk producers and potential smallholder dairy farmers have been engaged and trained.