Nigeria: Reducing Milk Imports Is Timely

2 August 2019

The recent inclusion of milk on the forex restriction list by the Central Bank of Nigeria (CBN)has brought the apex bank into a dispute with major importers in the country's dairy products sector.Many of the operators saw the CBN initiative as a tacit banning of the importation of milk while CBN debunked any insinuation that it has executed such a ban.

Speaking after the Monetary Policy Committee (MPC) meeting last week, CBN Governor Godwin Emefiele said the bank placed the importation of milk on the forex prohibition list. He justified the action and identified milk imports as one area in which the country needs to restrict access to forex, since it can produce milk domestically. According to Emefiele, Nigeria spends between $1.2 - $1.5 billion annually to import milk, which the country can easily replace with local production.

His remarks did not however go down well with several interested parties who see CBN's position as bad business for them. Leading the charge is the organized private sector.Manufacturing Association of Nigeria's[MAN] Director General Segun Ajayi Kadir warned that the CBN action could restrict the industry and lead to possible downsizing of its workforce. The MAN DG also complained that CBN did not consult its members before embarking on the new policy. CBN however debunked such accusation and said it held several meetings with various stakeholders before unrolling the new measures.

Also faulting CBN's move was the Miyetti Allah Cattle Breeders Association of Nigeria, MACBAN. Its grouse is that CBN'sinitiative did not take into account the provisions of the National Livestock Transformation Plan, NLTP. MACBAN's National Secretary Baba Ngelzarma dismissed CBN's inclusion of milk in the forex restriction list as "a non-starter" whichhe said is doomed to fail for not providing support for the development of "high quantity and quality beef and dairy products."

However, CBNshould be undeterred in its resolve to maintain its position on the non-allocation of forex to milk importation given the circumstances which justify the promotion of local production of the country's milk and dairy products. The bank cited its apolitical stand on national issues, stating that its concerns are limited to ensuring the saving of forex resources, job creation and local production of milk. Ideally, milk should not be transported over long distances because it is highly susceptible to contamination. It also becomes much cheaper when locally produced since the cost of its packaging is very high.

Nigeria consumes an average 1.7 million tonnes of milk annually, out of which it produces 600,000 tonnes locally and imports the balance of1.1 million tonnes. Meanwhile as at 2017 the country had a cattle population of 14 million out of which about 900,000 were capable of producing milk at an average rate of 0.7 - 1.5 litres daily. This production rate diminishes in the dry season to about 0.5 litre per cow, especially when the animals have to travel long distances in search of fodder and water. However, with improved husbandry, the cows are capable of producing as much as 4 litres of milk on average daily. This calculation validates the potential for increasing local production of milk and dairy productsand it justifies CBN's position on the matter.

However, a meeting ground between the polar positions of the interests is the NLTP which so far provides the most acceptable path adopted by the National Economic Council [NEC] towards the end of 2018. The unique selling point of NLTP is its provision for willing states of the federation to partner with the federal government in providing land for development of ranches and related facilities for the improvement of the country's cattle farming. This should lead to an increase in both beef and milk production.

Since NLTP has ample provision for private sector participation, opponents of CBN's forex conservation measures should exploit the NLTP for ways and means of meeting their business expectations.As for milk importation, the sooner it ends, the better.

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