Nigeria to earn over $1.5bn dollars from investment in diary industry — ED, CODRAN

The Executive Director Commercial Dairy Rancher Association of Nigeria (CODRAN), Mr Dianabasi Akpainyang speaks exclusively with Nigerian NewsDirect Newspaper on plethora of challenges facing the Diary Industry including insecurity, however made case for the massive investment in the industry to upscale local production

What is the impact of the industry on Nigeria economy today and the impact of  your organization in the sector?

Thanks so much! CODRAN stands for Commercial Dairy Ranchers Association of Nigeria, we act as umbrella association for players and operators in the diary industry. We play a measure role of ensuring the industry develops as it should. One of our major roles is policy advocacy. We act as the operators voice in that sector. We communicate issues in the sector to stakeholders in government and in the public sector to see how we could create policies, enabling environment for that sector to thrive.

The second reason is for the promotion of members’ business interest, that’s why we have conferences, seminars training and exchange/trade Mission, business mentoring, business advisory services, Business status reports from time to time. One of the things we also do, is to build a hub for data in the industries. We engage in data collection and management, so that you’re able to provide information about what is going on in the sector. And also one of the things we also do is research and development. Recall I said that we exist to promote the business interest in promoting the business interest of our members we ensure that they abide by international best practices. And we get them to know about international research, which we share with our conferences or seminars.

So talking about the impacts that we have as an organization in the industry, one could see how we were able to get stakeholders on the first of June for the conference. We serve as that mobilization center. On March 30 and 31st, we had a wider conference where the dairy policy was reviewed, for the first time we are working on having that policy to be fully operational. Our main goal is to have the right environment and that can be done if we have the right policies formulated and implemented.

How was the dairy industry affected by COVID-19 and what is the progress so far?

The COVID-19 pandemic threw up many challenges for Dairy Industry operators. As a result of lockdowns in several parts of the country, business activities were grounded to a halt in many instances. This hit hard on the revenue of dairy companies. For processors who depend on import of raw materials for production, there was a huge decline in milk importation during the first six months of year 2020. It picked up again around June 2020 when countries began the gradual easing of lockdowns and production recommenced, albeit slowly. It declined again towards the end of that year when the second wave of the pandemic struck. Activities have commenced again but at a slow and gradual pace.

Insecurity remains a major threat to food security. Explain how much it has affected dairy business?

Insecurity has been a major issue for the dairy sector. You would agree with me that the higher rate of milk production activities take place in the northern part of the Country. This is the part of the country that has been hit the hardest by terrorism, banditry and cattle rustling. These security threats have affected dairy businesses which depend on collecting milk in rural communities, as movement in and out of these communities have become risky. Kidnappings and armed robbery on the highways across the country have also made transporting milk products from farm to factory very challenging. We have had to engage the services of the Nigerian Security and Civil Defence Corps in some states to provide escort services for personnel in transit.

How would you quantify the sector’s contribution to Nigeria’s GDP?

In terms of our contribution to the GDP(Gross Domestic Product), the Agric sector contributes about 22.4% but the diary sub-sector of the agriculture sector contributes 8% this implies that the sector is prospering. The diary sector has contributed immensely to the country’s economy. The sector encompasses the production, midstream, packaging and marketing. As at last year Nigeria spent $1.5 billion importing milk into the country but If our dairy sector had been well developed, that huge amount would have been made by indigenous practitioners. And also that also tells you something, the local dairy production only meets 40 percent of Nigeria’s demands while 60 percent of local consumption is met by importation, hence the need for the policy.

The policy document which is still at the drafting stage and awaiting validation by the Federal Executive Council (FEC) in October will deal with all aspects of Nigeria’s dairy industry; from production, animal breeding, importation of equipment, trade aspect, tariff, duties, financing options on the side of government and the private sector. With this policy, we will have less importation. The goal of the policy is to catalyse production and activities in the local sector. We believe if that happens the local dairy sector will improve in terms of capability and we will have less importation. For us in CODRAN, we are looking at achieving self-sufficiency in terms of local production of dairy products and minimize importation

You said that about 40% per cent of dairy products consumed are locally produced, how many indegineous company are involved in this production and would effective policy address this gap?

Currently 95% per cent of local production in the dairy industry is handled by smallholder farmers while the other five percent is handled by commercial producers who are mainly indigenous but the processing is 95% dominated by multinational companies while the locals handle 5%. There is need for investment in the sector. The midstream, for instance, consists of small farmers who extract milk from their cows aggregate them before sending them for processing. Evacuation of the milk from the farm is challenging because logistics and transportation issues are involved, most farmers have no storage facilities and the extracted milk after 30 minutes loses its value. Our milk production is not sufficient and cannot meet demand that’s why the multinationals depend on imported milk for processing.  We need more local players to come play in the midstream.

Worthy of note is that one of the provisions of the policy is that a dairy development fund will be created in Nigeria so that a 50 percent tariff received from importation of dairy products is channelled into the funds for the development of the dairy industry. The policy talks about setting up a dairy board that would help manage the fund to develop the midstream sector of the dairy industry so that more Nigerians can have access to milk production and processing as well.

According to World Health Organization(WHO), Nigeria in few years will be short of availability of milk, considering the current situation,what’s CODARAN doing to guard against this predictions?

The World Health Organization(WHO) recommends an average intake of 210 litters of milk per person but Nigerian takes 8liters per person in a year obviously this falls short of the recommendations and the gap is really wide. What we are doing now is pushing the government to ensure the National Dairy Policy is implemented before the end of the year. The policy will handle challenges being faced in the sector

What other challenges do we face in the sector and what intervention do you need?

There are many other challenges in the sector, such as; animal health management, the dearth of veterinary services across the states, especially in rural communities; Low productivity of local cattle breeds and the need for effective breed improvement programmes; High cost of artificial insemination; Low investment in milk aggregation, bulking and evacuation;  Inadequate storage (cold chain) facilities; Poor state of road infrastructure; Inadequate healthy water sources; Lack of stable electricity; inflation; High foreign exchange rate, among others.

Aside security issues, we need more veterinary medicine, we need more extension officers to access the rural communities to help this farmers who resort to self-medication. Some of them use antibiotics on the animals and this affects the quality of milk especially for those processing companies producing yoghurt, such milk would not ferment. We also have the issue of infrastructure, especially road infrastructure that would help in transportation of these products from the farms to centre of production. Also there is need for storage/cold room facilities and electricity. These facilities are essential and we need investors to ensure steady power supply.  Looking from the macro aspect inflation, currency evaluation are issues also affecting the sector due to the cost of importation of machineries.

Dairy Products are still being imported to meet local demand, how can the dairy policy address this to scale up local production?

The National Dairy Policy is still at formulation stage, under the direction of the Federal Ministry of Agriculture and Rural Development. The draft policy has many provisions that will enable inclusive and sustainable development of the sector and facilitate self-sufficiency in milk and other dairy products when it becomes operational. For instance, the draft policy gives bite to the backward integration programme in the sector and, disincentivizes importation through the gradual increase of tariffs on imported dairy products. Apart from the policy, dairy initiatives like the Advancing Local Dairy Development in Nigeria (ALDDN) Programme, funded by the Bill and Melinda Gates Foundation (BMGF) and implemented by Sahel Consulting Agriculture and Nutrition Limited, provide ecosystem solutions to some of the challenges of dairy operations in Nigeria. With more initiatives like this, more targeted investments by investors in the sector, and a more conducive operating environment facilitated by the right policies, the Nigerian dairy sector will transform to a major contributor to the economy.