Nigeria's efforts to increase local milk production takes a hit

A consistent consumer of milk for over 60 years, Nigeria spends between USD 1.2 billion and USD 1.5 billion on milk imports per annum.

The Central Bank of Nigeria (CBN) has been forced to roll back its attempts to boost domestic production of milk by restricting access to foreign exchange, even as efforts to reduce the country's dependence on imports continue, according to a report by African Business. 

CBN added dairy products including milk in the category of non-eligible items for foreign exchange (FX) back in 2019.

According to the report, the commercial banks and authorized dealers were not allowed to accept Form M, a document to monitor the import of milk and dairy products. This meant that the country will stick to the domestic market for the production of milk even if the charges are higher compared to imported milk. 

Talking about the flattening curve of milk production in his recent statement, Isaac Okorafor, the CBN's director of communications, underlined the motive of banning foreign exchange on milk and dairy products. He said that the restriction on foreign exchange was important to encourage local milk production. He also added that being a consistent consumer of milk for over 60 years, Nigeria spends between USD 1.2 billion and USD 1.5 billion on milk imports per annum. He noted that there was a need to improve funds into the nation's production. 

Shortage of milk 

The formulation of the decision by CBN caused a hike in milk prices in the market, due to low production, affecting the market equilibrium of demand, supply, and price. In Lagos, milk sellers complained of milk scarcity and an increase in prices. 

The milk market is facing a drastic gap in demand and supply, despite Nigeria's potential in producing milk in large quantities. The local demand for milk stands for 1.7 million tonnes whereas domestic production is estimated at 500,000 tonnes. 

Failing policies

Okorafor, in his statement, said that the bank has approached milk importers to take advantage of CBN's low-interest loans to start the production. He also said that the efforts have been termed "imperial contempt" when it is a "national aspiration". 

He added that authorities are “ready and able to provide the needed finance to enable investors who genuinely want to engage in milk production”.

The failing aspirations are also amplified by numerous challenges in the cattle rearing sector, noting a lack of fodder, updated rearing techniques, and water shortage. 

The CBN's aim of cutting currency outflow is not acceptable by the domestic market yet. The market lacks the capability to produce the required quantity and quality by the domestic market, according to the report.

To improve the instability in the market's production and consumer demand, CBN governor Godwin Emiefele took to his Twitter saying, “we are determined to make milk production in Nigeria a viable economic proposition. If you need a loan to acquire land, do artificial insemination, grow grass, or even provide water, we will give to you,”.