The Central Bank of Nigeria’s backward integration policy for dairy companies is not working adequately as it is telling on prices of dairy products as well resulting in quantity sabotaged, according to people familiar with the issue.
The CBN had in a circular released on February 11, 2020, limited the access to Form ‘M’ for the importation of milk and its derivatives to six companies.
They are Friesland Company WAMCO Nigeria, Chi Limited, TD Arla Dairy products Limited, Nestle Nigeria (MSK only) and Integrated Dairies Ltd.
The bank had also entered into partnership with Niger State to allocate land to four dairy companies in the 31,000 hectares Bobi Grazing Reserve inhibited by over 700 pastoral farmers with over 300,000 heads of cattle.
But despite the press for an increased local production of dairy products through the backward integration policy, prices of milk have been on the rise and the quantity reduced against what was obtainable in their various packs and sachets, according to vendors.
For instance Frieslandcampina makers of Peak milk and of one the beneficiaries that have been allowed access to Form ‘M’ for the importation of dairy products have seen prices of their brands increase and quantity sabotaged, according to a dealer .
Peak Filled Milk of 12g which has N45.49 as price now sells for N60 in stores, up from the usual N50 per 12g sachet.
“Ideally, the Peak Milk Full Cream sachet of 16gram which we sold for N60 is now N70 and our customers are complaining,” the proprietor of Divine Grace Stores in Abuja said in an interview.
The case is not just peculiar with Peak brands, Miksi a Promasidor brand of 16g which sold for N50 is selling for N60 and the quantity has reduced slightly according to another vendor, Iliya Aliyu, in Gwarinpa Estate in Abuja.
He said, “I have noticed that the quantity is no longer the same,” he said, adding that “customers rushed the product because the quantity used to be much.”
CBN had in 2020 estimated the annual production of milk at 500,000 Metric Tonnes, and hoped that by 2021 January the number would climb to 550,000MT.
This showed that the apex bank backward integration policy is not going the right way it should, the Director General of the Lagos Chamber of Commerce and Industry, Muda Yusuf, said in a telephone interview.
Nigeria needs at least 1.2m MT and the shortfalls have been met through import by many companies.
The importation of milk gulps about $1,2bn annually, this is irrespective of the over 13.9 million herds of cows in the country according to United Nations Food and Agriculture Organization data.
Yusuf said, “I don’t think it is going the way it should, because if you are asking people to go into backward integration, you need to create the environment for that to happen.
“First, there are specific cattle or cows that are meant for milk production. All these cows you have in the country that have trekked several kilometres are not the kind of cows. There are specific dairy cows that are meant for milk and they are confined in locations.
“I know that some of these companies have tried particularly Frieslandcampina, that has something around Saki, Oyo and all those areas. The experience has been harrowing.”
Yusuf said poor road networks and the problem of preservation are serious setbacks to diary companies.
“The challenges are enormous he said,” adding that the “environment needs to be right for some of these policies to work.”
Yusuf added, “There is hardly any product that its prices have not doubled in the last one or two years.
“Even the companies they gave Form M, are they getting the forex? Practically all the manufacturers are not even getting the foreign exchange.
“A lot of them are going to source it from all sorts of windows including the black market for them to be able to do their business.”
According to the DG, Nigeria’s foreign exchange needs to be fixed, adding that monetary policy should strictly face monetary issues.
“It is not CBN’s responsibility to determine what can come in and what cannot come in,” he added.
