The recent ban on foreign exchange (forex) for importation of milk announced by the Central Bank of Nigeria (CBN) at the last Monetary Policy Committee (MPC) meeting in Abuja, has been generating mixed reactions from different quarters across the country.
With a national yearly dairy output of 700,000 metric tonnes and the national annual dairy demand of 1.3 million metric tonnes, Nigeria is estimated to expend between $1.2 billion and $1.5 billion on milk importation annually to make up for the shortfall of 600,000 metric tonnes, according to the Federal Ministry of Agriculture and Rural Development.
The CBN, therefore, explained that the country could no longer sustain such expenditure for an item it can produce locally.
The apex bank, which gave reasons for its decision to restrict access of manufacturers, who use milk as part of their raw materials, to forex through the official window, said it is aiming at getting the milk importers to invest in ranching or to partner local pastoralists in establishing facilities that can allow them to produce and process milk in the country.
The CBN stated that it had approached one of the major dairy and milk importing companies in the country, FrieslandCampina WAMCO Nigeria, and other milk importers, on the need to “integrate backward and begin the process of development and produce your milk in Nigeria.”
CBN said the milk importers “could also support the pastoralists, get them concentrated in one place instead of moving around. Provide them facilities like water, hospitals, schools. Those are the kinds of things we expect companies that are importing milk into Nigeria to do. Unfortunately, after three years, nothing has happened.”
But dairy companies have often argued that they have off-take agreement with local pastoralists for milk supplies and that they have operational models they abide by. They explained that, “adopting ranching in other locations would disrupt their business strategies, and that the successful model for Nigeria would be driven by the conversion of pastoralist community breeds to better yielders through cross-breeding, milk collection, and the introduction of smallholder farming model.”
Despite the stand of milk importers, CBN insists that it is “technically and commercially possible to breed the cows that produce milk in Nigeria.”
Some stakeholders who spoke with Daily Sun on the issue are of the opinion that CBN means well in its decision to deny milk importers access to forex. They submit that the motive behind the decision is well placed, as continued official support to milk importation will hamper the development and growth of the sector as well as the nation’s economy.
The Vice President of Nigeria Agribusiness Group (NABG) and Chief Executive Officer (CEO) of Naija Pride Agribusiness Ltd., Mr. Emmanuel Ijewere, informed Daily Sun that it is a step in the right direction as “Nigerians cannot ensure food security unless they produce most of the food they eat.”
Ijewere stated that, “in the case of milk, we are importing about 90 per cent of the milk we use in this country. That creates a very serious issue and even the milk we are importing, over 70 or 80 per cent of it is powdered milk, which has very low nutritional value. So we are importing things we can do without.
“We can produce it and if we are going to produce it, you must encourage local people to produce but by allowing the dumping of foreign ones into Nigeria, you will never get up there. The world report has said that Nigeria’s population is going to explode. How are you going to feed them? By relying on Europe? Of course not.”
The NABG vice president said, “I fully support what CBN is doing and it makes a lot of sense that we start doing things for ourselves. Our local pastoralists have done the best they can to sustain this country but they didn’t have proper education because until recently, poverty and agriculture were twin brothers. Now we are changing that.
“If you develop something, you must get investors. Investors will not come as long as you as a nation continue to encourage people to dump goods in Nigeria and make it impossible for them to sell what they are producing. With this now, it will encourage younger and more modern people to come in; the millennials will take pasturage and dairy business more serious.”
Ijewere, who stressed that the CBN forex policy on milk import is not meant to punish the importers but to help Nigeria survive the food security challenges, noted that, “any multinational that has come to Nigeria has come to make money. If the laws of Nigeria make it easy for them to import and make money, they will import and make money. If the laws of Nigeria make it difficult for them to keep importing and prefer that local production be encouraged, they will go in for local production.”
He pointed out the need for government to tackle infrastructure challenges confronting the the milk value chain, including the lack of cooling system for harvested milk and unavailability of ranches for rearing healthy well-cared-for cattle, among others.
According to Ijewere, “to get proper milk, you must have ranching, you must have places where the cows stay, are fed and are looked after. And we need artificial insemination to improve our local breed.”
In the same vein, another stakeholder, the National President of All Farmers Association of Nigeria (AFAN), Ibrahim Kabiru, said CBN’s refusal to continue giving milk importers forex is aimed at motivating local producers to meet demand.
Kabiru said, “as far as I’m concerned, CBN is doing something to make us produce sufficient milk for domestic use. This is to discourage people from importing and also encourage more people to produce more so that people will buy from them and the country will prosper. We support it.
“The country can decide to incentivise the local production of any commodity it produces to achieve sufficiency and it can use all manner of strategies to attain that goal. Milk is one area we’ve not done well in terms of national productivity. Several billions of dollars are expended annually to meet demand.”
He explained that there are several proposals in the works aimed at enhancing milk production in the country, adding that, “if we hold unto the transformation plan and implement all those suggestions, we might be able to improve the volume of production locally.”