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Nigeria needs to fix the issues in its dairy value chain

Kelvin Ayebaefie Emmanuel
By Kelvin Ayebaefie Emmanuel

Kelvin Ayebaefie Emmanuel has worked for several European firms building retail brokerages around Africa over the last 13 years. He has also done public sector consulting for the Federal Ministry of Communications (National rebranding campaign), and the Office of the Senate President during the review of the medium-term economic framework in 2016. He’s been featured on CNBC Africa, Channels TV as a market analyst. In 2020, he Co-Founded Dairy Hills Limited, a company building a vertically integrated model for animal feeds, and developing a fully mechanized and integrated cattle ranch for beef and dairy milk.

Posted on Thursday, 27 May 2021 20:40

Nigeria's central bank wants to promote local dairy projects, like this milk collecting centre in Dangwala Karfi village on the outskirts of Kano. REUTERS/Akintunde Akinleye

Nigeria spends $2.5bn importing dairy milk annually, to cover for the nearly 60% shortfall in primary production.

While the issues derive their root from a historically outdated model for the breeding and raising of cattle, they are also a result of willful ignorance and lack of technical knowledge on the value chain for this sector, which has a ripple effect across the board.

Milk is the third most consumed food item in Nigeria, however, in 2020 alone, the country imported $534m worth of refined sugar from Spain, Brazil, France and India, and $2.5bn worth of dairy milk from the Netherlands, UK, US, Australia, and others, to power its value chain for everything from evaporated milk, pasteurised milk, to yoghurt, cheese, chocolate, and more.

What is the problem with the dairy sector in Nigeria?

Why are we unable to solve the problem of milk and all its attendant derivatives, which to a large extent contributed to the $10bn the Netherlands earned exporting milk around the world in 2020?

Nigeria has 13 major breeds of cattle, and of them, the White Fulani breed has the most dairy of them all. What has happened is a situation where, because of the outdated mode of handling these cows, there has been no effort to adopt modern global best practices for cross-breeding and calving of these cows through artificial insemination (a process where semen is used from a cattle with a higher production output to fertilise the eggs of a lower producing cow, for the purpose of producing a new line that’s disease resistant, adjusted to the weather, and feeds available in that region of rearing).

What does the country need?

Nigeria requires a comprehensive ranching development plan that focuses the task of primary production on two levers:

  • Cooperatives who are properly trained in improved methods and global best practices;
  • Commercial companies that are able to invest in the kind of capital required for building a ranch that addresses all the issues in the supply value chain.

There is also a need for quality veterinary care from professional doctors familiar with cattle specifically, a properly designed irrigation model built into the metal fabrication compartments of the ranch pen, a weaning hose used for automatic extraction of milk from the udder of the dairy cattle, a storage tank that can store the milk at a particular temperature that prevents fermentation and building of bacteria in the liquid before it’s taken by reefer vans to the milk collection centres, and radio frequency identification (RfID) tags built into the monitor braces to track everything from distance covered to amount of feed consumed.

What we have had has always been the lazy man’s approach of importing primary products for processing to meeting the food demands of Nigeria.

Most importantly, there is a need for a vertically integrated model for developing a feed lot for maize, which remains the best and most nutritious source of feed for cattle globally.

Why are we not addressing these issues?

Until 2018, government policy did now allow for backward integration through import substitution. In doing so, it would have made the subsidies the EU pays to its farmers, and the tariff it pays to Nigeria under the WTO tariff rules for importing dairy milk, unsustainable compared to developing this full vertical in Nigeria. What we have had has always been the lazy man’s approach of importing primary products for processing to meeting the food demands of Nigeria.

Bottom line

I see a stream of opportunities for African entrepreneurs who are bold enough to invest between $500,000 and $1m in the development of key areas of the value chain, and this is because dairy milk can be processed into a variety of things.

One of the curses that have collapsed our food security in Africa is the fallacy that you have to be involved only in primary production for you to take advantage of the supply chain.

And even at this level that holds only 25% of the whole value, we have failed to do the needful. The introduction of tractors, boom sprayers, harvesters and the like will improve turnaround time and enable to better practise precision agriculture.

I’m hoping we pay attention in Africa and I’m hoping we understand that development is not being able to afford imports. It’s more about the ability to substitute local demand and price exports for more value than the imports.

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