Local actors in the dairy sector are expressing discomfort with some aspects of the proposed Dairy Industrial Policy currently being put together by the Federal Ministry of Industry, Trade and Investment.
They are concerned that the draft policy tended to give undue advantage to importers at the expense of local operators.
Our Agric Editor, who has been monitoring the sector, which some describe as a juicy one for importers, reports that the draft targets systematic phasing out of milk importation and 100 per cent adoption of local content.
The policy seeks a 10-year import substitution policy to encourage players to invest in the local industry via local content addition and set a target of 100% local content.
But the local operators believe the policy seemed to promote and encourage importation in the meantime by focusing on only a 10% increase in local production annually.
They also believe that retaining only the existing 5% import duty on powdered milk will not incentivise local investments but flood the country with products that will further worsen the already precarious situation of the local dairy farmers.
Dr Celestine Ayok, owner of Spring Dairies and Yoghurt with over two decades of dairy production, processing and marketing experience, told Daily Trust that the federal government should drive a policy that would stop the importation of fat-based milk (fat-filled milk) into Nigeria, “even if we want to give them that window of 10 years.”
According to him, that will make import of ‘full cream milk’ very expensive and people will begin to look inwards, which will rapidly lead to the development of the local industry.
Dr Ayok said: “In good dairy from an animal, the fat is very rich and is healthy….so what most countries do is remove that fat and use it to make a lot of other products for their usage because the animal fat is quite good and healthy. Then they now fill the milk with vegetable fat, especially palm oil. That is what we call ‘fat-filled powder milk’.
“Government should not allow the importation of fat-based milk into Nigeria. Importers should either bring whole cream milk or skimmed cream milk.
“If you implement these, it is going to be a challenge to them because it is very expensive to import full cream milk. Even with that, the expert wants to see more duty in place so that even if they import, the cost will be very high and thereby challenge people to develop our dairy industry.”
The expert noted that the mid-stream of the dairy sector is very weak. “You need to get a bridge between the upstream and the downstream: between the producers and the processors,” he stated.
Dr Ayok stressed that Nigeria needs to build strong system in the midstream, bearing in mind the basic infrastructure for collection of milk from the producers and supply (sell) to the processors, adding that “If you can harness that midstream, the milk production that we say is not enough will increase by 20%.”
Although there was no immediate response from the National President of Commercial Dairy Ranches Association of Nigeria (CODARAN), Alhaji Muhammadu Damakka Abubakar, on the proposed draft, he had in an earlier interview with Daily Trust, frowned at the activities of multinational companies, “which are trying to muzzle the local operators and take over the country’s dairy sector”.
Alhaji Muhammadu, who is also the Executive Director of L&Z Integrated Farms Limited, in the said interview, dismissed the insinuation in some quarters that the local farmers cannot meet the dairy demand of the country, the claim upon which the authority tends to favour importation of dairy materials.
You see, I have said this several times with media organisations including Daily Trust that in the 1999 livestock census, we had about 20 million cows in this country. And if you take half of those to be producing, even if it is one litre, you are talking about 10 million litres a day.
“The consumption of milk in Nigeria per day is 5 million litres. So, what do we need again? This is to tell you that we have enough. What is lacking is the linkage between the production and the markets, which is controlled by the multinationals,’’ he said during the interview.
On the problem facing the dairy sector, Alhaji Muhammad, said it had many challenges, but that the main challenge has to do with issues at the downstream sector of the value chain, which is the market.
He said, “We are operating in a market where multinationals dominate and largely import; they bring milk from a clime where whatever is a challenge to us here is taken for granted by the farmers in those societies or environments.
“So by the time they produce the milk, it’s very cheap because they enjoy some incentive as they are exporting to us. And then when they come to our borders, they enjoy very low tariffs. So, their product at the end of the day in our own market is cheaper.
“So, our inability to compete with super imports is a major challenge but it is one that if fixed, every other thing will fall in place,’’ he said.
However, Alhaji Fatai Ajala, a dairy farmer, cautioned against rejecting the draft policy in its entirety, saying there are some aspects that favour local operators.
He cited as example the three-year tax holiday granted local dairy producers using up to 50% raw milk to enable adjustment and reflow of profits to investment in production growth.
He listed other plans in the draft that will be helpful to the local farmers to include the integration of locally produced milk and milk products into the Schools Feeding Programme and increasing breeding size of stock for sustainable dairy production through genetic improvement.
Why dairy importation cannot be stopped immediately – Ministry
The Deputy Director, Agro Allied Department of the Ministry of Industry, Trade and Investment, Mrs Chioma Achilam, said the Dairy Industrial Policy, which is still in the works, was developed to ensure that Nigeria attains self-sufficiency in dairy production.
Mrs Achilam said the policy targets Backward Integration Plan (BIP), in which players in the dairy value chain would invest in Nigeria and bring equipment into the country for dairy production.
She said the policy was similar to the National Sugar Development Plan, which also uses BIP to develop the sugar value chain in Nigeria to phase out sugar import.
The deputy director said BIP was adopted because Nigeria does not have sufficient local capacity to abruptly stop the importation of dairy products, but that could be achieved over time.
She said the Diary Industrial Policy has been unveiled to stakeholders for their inputs and that would be harmonised before a copy would be forwarded to the Federal Executive Council for approval.
“It is not true that the policy encourages the importation of dairy. The policy is looking towards backward integration. It will empower our people economically. It will provide jobs,” she said.