The Managing Director, FrieslandCampina WAMCO Nigeria PLC, Ben Langat, in this interview, speaks on the firm’s dairy activities empowering thousands of Nigerians, enhancing local content through sourcing raw materials and challenges facing manufacturers!
Having existed for the past 50 years as a corporate entity in Nigeria, how would you describe FrieslandCampina WAMCO as an indigenous company?
FrieslandCampina WAMCO is truly a Nigerian business. First of all, WAMCO, which is an acronym for West African Milk Company was registered in 1973 as a corporate entity. Then it became Friesland Foods WAMCO Nigeria PLC in 2005 and FrieslandCampina WAMCO Nigeria PLC in 2009. Today, we are Nigeria’s favourite dairy nutrition company.
Our flagship brand, Peak Milk, has been in the Nigerian market, nourishing our teeming consumers since 1954. It first came into Nigeria through an import model and I think so far, almost every Nigerian I have interacted with has been nourished by Peak Milk at some stage of their lives. So FrieslandCampina WAMCO is Nigeria’s foremost dairy company and Peak is Nigeria’s foremost milk brand.
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Next is Three Crowns Milk, another iconic brand that has been here for more than 30 years; also nourishing Nigerians all through this period and we are very proud of that heritage.
What is the extent of local content in your products?
From a milk production point of view, Nigeria has a hot, humid environment which typically is very good for beef cattle and that is why you see a lot of the Fulani cows doing very well. To grow high milk-yielding cows, you have to put in extra effort and this is what we have been doing for many years.
For over 12 years, FrieslandCampina WAMCO has continued to invest in the Nigerian dairy sector as it has been sourcing raw milk locally for manufacturing. We are also the highest off-taker of fresh milk produced locally from five states in Nigeria. Right now we are running several factories – the Evaporated milk factory, Powder factory, Yoghurt factory and the mobile Yoghurt factory. The Yoghurt factories are running on local milk, so we can say we have brands that are 100% Nigerian in our portfolio.
However, to be able to meet the total dairy nutrition demands in a country as large as Nigeria, the local milk currently available is still very much inadequate. So in my opinion, the model that the country will run will still have a reasonable mix of importation of some of the raw materials, while local content is developed over a period of time.
What impact do your dairy activities have on employment in your host communities?
We are doing all the right things if you look at it from the employment perspective. Among the 12,000 farmers we work with, there are about 1,500 Fulani women, who basically have been at home not fully engaged.
Today, they are productive and have an occupation for which they are being paid regularly and their families are much more prosperous than before – the farmers, their wives and children. In some cases, their mud huts have been rebuilt into brick houses and their children now go to school, which they could not afford before.
Of the challenges that beset your industry, which poses the greatest threat to your operations and how are you dealing with it?
We have two very big challenges from a manufacturing point of view. The first is the Forex shortage. Any manufacturer in Nigeria, even with the best backward integration strategies, will need substantial foreign exchange. We don’t produce the required machinery locally nor do we produce all raw materials locally; so there will always be something that needs to be imported.
The low amount of Forex available in the market is enough to shut down many businesses as we are already seeing. When a country is having such a huge Forex shortage, the price would be paid somewhere along the line. Eventually, businesses shut down, impacting employment. Forex supply is extremely important.
Actually, you can only develop local industries if you have enough Forex to bring in technology and equipment and then generate the profitability to be able to run your own training schools and build technical capabilities until you have the industry.
For us specifically, the second threat is insecurity within our dairy development host communities. In 2021, we had a big issue when there was insecurity around the South West and some of our milk collection centres were vandalized as a result of clashes between the pastoralists and local people. We had to shut down some of our milk collection centres.
So, how do you deal with the paucity of Forex and threats of insecurity?
We have had to restrict our Forex needs as much as we can and also source it by any means legal. We sometimes source from commercial banks in addition to whatever the Central Bank is able to make available. Also, some of our service providers are able to source Forex and supply us products in naira. This invariably means that the cost of raw materials will go up and ultimately affect the retail prices of our products.
What type of cattle breeding that is best for Nigeria?
Again, the definition of ranching in this country is a bit misunderstood. Ranching involves using huge portions of farmlands to rear many cows typically for beef. Smallholder or large-scale dairy farms are normally also large farms but you find that the cows are in a confined location. In ranches, the cows roam. In dairy production, the cows however are in large numbers similar to what you see in the Middle East, for example, the Almarai farms.
In Pakistan, we have a farm that has about 7,000 cows in one location, in very long dormitory-like structures. That is a large-scale dairy farm.
To answer your question, we believe that it will be a combination of all of them but the most effective in changing the country’s dairy development will be settled smallholder dairy farms. We have some such farms that we have worked with for many years.
What kind of fiscal policy would you recommend?
The ease of doing business in Nigeria can be better. There are lots of difficulties and it is not improving, to be brutally honest. I already talked about the challenges we face in sourcing Forex. Forex is not about exporting jobs and importing products. It is about building capability locally so that you are able to produce and create local jobs and also create wealth to be able to produce.
In addition, every now and then, we have new policies, taxes and duties that we have to deal with. For example, our basic packaging materials are food grade. If you classify them otherwise and charge high excise duties on them, it increases the cost of food packaging. A good example is the lacquered Tinplate that we use for Peak Milk; if it is classified the same as Tinplate used for other purposes, the cost of nutrition would go up. These are the kinds of taxes that we face in the country. So I will say the entire fiscal policy needs to be reviewed to ensure anything that truly affects food and nutrition is given the right tax break.
The efficiency of tax administration is another issue. I think the interpretation of the taxes as it is laid down is sometimes subjective. So you can have two people interpreting the same thing differently, assigning different Customs HS codes to the same item. This sometimes ends up stalling business purely as a result of poor coordination.