Experts told our investigative team that 'it is cheaper to import milk than it is to buy from local farmers'.
CHEAP SUBSTITUTE 'MILK' exported from Europe into West Africa is hurting the region's local dairy industry.
A collaborative investigation by Noteworthy and Nigerian news outlet Premium Times into Irish dairy in Nigeria has found that large volumes of cheap European exports into West Africa have outcompeted local milk on price.
This, according to NGOs and traders, has pushed many Nigerian dairy farmers out of business.
Daniyan Abimbola, a commercial dairy farmer from Ondo State in the southwest of the country, said this competition is the reason "some dairy farms are forced to shut down less than five years after they are established."
Our investigation examined the export of fat-filled milk powder (FFMP). Though butter and cheese exports are more valuable, FFMP is Ireland's largest dairy export in terms of volume.
But, according to European Commission regulations, were it to be sold within the EU, it could not be labelled a milk product.
The European Commission told Noteworthy that this product "can not bear the term 'milk' in their denomination" as according to EU regulations "milk products have to derive exclusively from milk".
Consumers in Nigeria seem unaware of that fact, according to market research Noteworthy has seen that was commissioned by An Bord Bia.
The Department of Agriculture, Food and Marine (DAFM) told Noteworthy that "Ireland is committed to global rules-based international trade and is subject to EU agreements such as the Economic Partnership Agreement (EPA) with West Africa".
The spokesperson said that Irish initiatives support small farmers and food producers in Africa.
They added that State agencies including Teagasc, Bord Bia, Enterprise Ireland and the Food Safety Authority of Ireland "offer access to Ireland's capabilities and expertise in agri-food to our international partners on a government-to-government basis".
EU Direct creates 'unequal system'
While the cost of production for dairy is high in Europe, the Common Agricultural Policy (CAP) supports farmers in the EU by providing direct aid to supplement their income and ensure a sufficient earning.
These direct aids also enable large companies to export dairy products for cheaper than the cost of production without incurring a loss, said Adrien Trouvadis. He is a researcher from Group For Research and Technology Exchanges (GRET), an NGO working in the West African region. He told us:
Milk exports coming from the EU [are] really cheap, because of the kind of dumping organised in the European Union, especially by the CAP.
"That is why the price on the [global] market is lower than what is needed for European farmers," Trouvadis continued.
He called this an "unequal system" where the products are 'dumped' on the African market at an "artificially low price".
However, Olof Gill, agriculture and trade spokesperson for the European Commission, said that CAP support to EU farmers is "non-trade distorting". He added:
"Over the past 25 years, the CAP's trade and market distorting features have been removed, ensuring that its impact on the growth of agricultural sectors in developing countries is marginal and, wherever possible, even beneficial."
Farmers in the region told our investigative team that they are facing a different reality.
"Unlike what is applicable in EU countries, dairy farming is not subsidised and it is cheaper to import milk than it is to buy from local farmers. For instance, it costs €0.09 to import a litre of milk and €0.21 to buy the same quantity from local producers," Abimbola said on the importation of milk in West Africa.
As reported by Politico in 2020 when it exposed devastation of West Africa's dairy sector by such products, countries do use high tariffs due to these EU subsidies to protect local fresh milk and cheese.
But FFMP and other bulk powders, considered by governments there as a necessity for people on low incomes, have a customs duty of just 5% in countries who are members of the Economic Community of West African States (ECOWAS).
A joint report by NGOs including GRET and Oxfam Belgium earlier this year also found that "competition from imported milk powders and, to an even greater extent, from imported fat-filled milk powder is tending to increase the region's food dependency".
It stated that this "increases the vulnerability of consumers" who can be impacted by price surges.
Millions worth of cheap Irish products exported
Nigeria spends close to $1.3 billion USD (€1.2 billion) on dairy imports annually.
Documents released to Noteworthy from Bord Bia via the Freedom of Information Act show that over 60% of dairy consumed in Nigeria is imported.
In 2023, Ireland's dairy exports to West Africa were valued at €327.8 million, according to Bord Bia, while CSO data showed that Irish fat-filled milk powder (FFMP) exports to the region were valued at €293.5 million and to Nigeria alone amounted to €88.4 million.
Nigeria's annual import bill for milk and other dairy products is currently estimated at US$1.3 billion. This is mainly powdered milk from Denmark, Netherlands, US, South Africa, New Zealand and the EU.
Despite this large import figure, Nigerians aren't big milk drinkers (5 kg per person in 2022 compared to Irish people who used 310 kg per person that year), though it is expected that milk consumption there will grow with increasing urbanisation.
Nigeria top destination for Irish FFMP exports
FFMP is a mix of vegetable fat and skimmed milk in powdered form. The skimmed milk is usually a byproduct of the production of butter and other products which contain the valuable milk fat.
Worldwide, FFMP has varied uses. In Africa and some other parts of the Global South, it is used as a milk substitute, while in most regions, FFMP is used as an ingredient in products like ice-creams, snacks, soups and sauces.
The Food Safety Authority of Ireland (FSAI) told Noteworthy that in Ireland "fat-filled milk powder is not sold directly to consumers, but is sold business to business for use in the production of multiple food items".
Often fortified with vitamins, more shelf stable than regular liquid milk and cheaper than whole milk powder, FFMP is sold as a milk substitute in Nigeria, whose local milk industry is still largely unregulated.
With a historic, almost three-decade high inflation rate of 34.19%, affordability has become a key issue for consumers in the country who are looking for cheaper milk options.
In research commissioned by Bord Bia last year, obtained via FOI, most Nigerian wholesalers surveyed found "price rises were negatively impacting their sales of milk powder".
One wholesaler in Kano, a city in the north, said: "Customers are telling us they don't have enough cash to buy milk powder at the new [increased] prices."
Irish consumers are feeling the hit of rising costs, yet our inflation rate was just 1.5% last month.
But, fat-filled milk powder is not milk.
Both EU regulations and the National Agency for Food and Drug Administration and Control (NAFDAC) in Nigeria specify that FFMP is not milk.
"FFMP products are not categorised as milk in the same way as whole milk powder or skimmed milk powder," the NAFDAC told Premium Times, our investigative partners.
A European Commission spokesperson told us that instead of FFMP, in the EU, they are referred to as "FFP (Fat Filled Powders), without including the 'M' in the middle (or the word 'milk')".
But many consumers in Nigeria are unaware of this fact.
In government documents from both Ireland and Nigeria, in branding and advertising, and colloquially, FFP is referred to as FFMP (fat-filled milk powder).
According to a market research report by Bord Bia, released to Noteworthy via FOI:
Consumers don't necessarily understand the difference between FFMP or full cream [milk powder] - they are brand loyal above all.
Premium Times spoke to consumers and traders in Abuja, Nigeria's administrative and political capital, where consumers echoed Bord Bia's findings.
One consumer said: "I don't know what the difference[s] between fat-filled milk and whole milk are. I don't really read the labels, what I focus on is the design."
Food scientist, Abiola Olaniyan, told our investigative team that "most Nigerians have little or no knowledge about the different kinds of powdered milk. They just assume all kinds of milk are the same and the difference if there's any is in the brand."
Marketed as milk in West Africa
Ireland has a considerable market hold in Nigeria. A quarter of all milk powders found in the country's largest city, Lagos, are Irish, according to FOI reports released to Noteworthy by Bord Bia. Lagos is an African megacity with current population estimates between 16 and 25 million.
Kerrygold Avantage is a popular Irish fat-filled milk powder in the city. It is made by Irish company Ornua, who also make Kerrygold butter.
Kerrygold Avantage is advertised as: "Produced with the finest fresh full-fat milk, our premium milk powder mixes effortlessly into a delicious creamy milk, providing the essential nutrients for a healthy body." Kerrygold Full Cream Milk Powder has similar advertising.
Ornua is Ireland's largest exporter of dairy products, according to its latest annual report. Last year, it recorded €3.4 billion in sales and an operating profit of €116.8 million.
While other Irish dairy producers also export FFMP to West Africa, Premium Times found Kerrygold Avantage in numerous markets and stores in Abuja when searching for Irish products as part of this investigation.
At the product's launch in 2019, Olatunde Afolabi, general manager of Ornua in Nigeria said "focus is on the poor segment, people at the bottom of the pyramid". He added: "We show love to them by sharing in the quality that Kerrygold offers."
In launching the product, Ornua said that "the company's social responsibility practice remains core in achieving an efficient production chain", and it is dedicated to bringing the best dairy products to the Nigerian market without compromising its quality.
The post says: Fun Fact - A single glass of milk contains almost 30% of your daily recommended calcium, with a photo of Kerrygold Avantage. The caption says - That's so cool because calcium is essential for the formation of strong bones and teeth! Cheers to quality nutrition. With the hashtags - Drink Kerrygold Milk, Kerrygold Avantage and Milk.Kerrygold Nigeria's Instagram post from 10 May 2024 promoting Kerrygold Avantage. Screenshot of @kerrygoldnigeria on Instagram
Kerrygold Nigeria's social media often features images of Kerrygold Avantage where it is called "Kerrygold milk" either in the captions or in the ad itself.
Kerrygold Avantage's packaging depicts milk being poured into a glass with a scenic Irish-looking landscape in the background. Under the Kerrygold logo and 'Avantage' branding, "instant milk powder with vegetable fat" is written in four languages.
The packaging also states that it contains skimmed milk, soy, sugar and vegetable oil.
Other popular FFMP brands in Nigeria include Dano Cool Cow, Peak and Wamco, but none of those are Irish.
Food scientist Olaniyan told Premium Times that the way FFMP is marketed is the issue. She said that brands may not want consumers to differentiate between FFMP and milk.
"The issue is particularly from packaging and advertising." She added that many producers may not want "citizens to know the difference".
Ornua and Bord Bia conducted a two-day event at the start of June in Lagos for 'World Milk Day'.
At the event, Ornua's fat-filled milk powder brand Kerrygold Avantage was heavily featured and advertised alongside its full-cream milk powder which is made of full-fat milk, with samples being handed out to consumers.
GRET's Trouvadis told Noteworthy that the advertising around fat-filled milk powders, while not false, is "not transparent enough".
Given the stance of the EU and Nigeria on not using the term 'milk' to describe these products, we asked Ornua and Bord Bia about their advertising of FFP as 'fat-filled milk powder' on social media and at the 'World Milk Day' event but neither answered our queries.
'Not a legal requirement' to disclose palm oil
On average, fat-filled milk powders found in Nigeria have a fat content of between 28 to 30%, but it is unclear how much of the added fat content is from vegetable oil.
The addition of vegetable oil makes the product around 30% cheaper than whole milk powder, according to Trouvadis. FFMP prices also change depending on global palm oil prices.
"Most of the time it's palm oil - they don't really mention that,", Trouvadis said about FFMP packaging in Nigeria and brand transparency around labelling.
However, it's not a legal requirement to disclose these details, he explained.
Barry Newman, the then regional head for Ornua North & Central Africa, addressed sustainability at the launch of Kerrygold Avantage FFMP in Nigeria in 2019.
He said that Kerrygold Avantage was "always going to be sourced on the island of Ireland which has a long long history of milk production", and added that the company was proud that "the palm oil that is used in Kerrygold will be from responsibly sourced palm oil producers which constitutes 20% of the world's palm oil production".
Higher emissions when palm oil added
Palm oil has been historically linked to massive deforestation and biodiversity loss, particularly in Southeast Asia.
Research from UCD in 2018 found that the carbon footprint of FFMP is substantially impacted by the source of vegetable oil used as an ingredient.
The study looked at the emissions from butter, skimmed milk powder and fat-filled powder from the farm to processor gate. It found the carbon footprint of products varied between companies but skimmed milk powder and FFMP were significantly higher than butter.
FFMP created with palm oil is a high emissions product, according to Dr Maneesh Mediboyina, a postdoctoral researcher who specialises in such lifecycle assessments at University College Dublin.
The 2018 research stated that "the land transformation due to palm oil plantation was found to be the largest contributor" of the FFMP product's carbon footprint.
Mediboyina said that emissions from these dairy products are likely higher than this research as they do not take into account shipping of the product to consumers in West Africa.
"The actual CO2 footprint and CED [cumulative energy demand] are likely higher than the calculated values".
In West Africa, the climate crisis has manifested in many ways, affecting the country's dairy production.
The largest cattle population in Nigeria is found in the country's north. Deforestation and a reduction in natural habitats, among other reasons, has forced cattle herds to migrate south for better grazing and availability of water, according to Nigeria's National Dairy Policy in June.
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The Commercial Dairy Ranchers Association of Nigeria told Premium Times that climate change "affects the ability of the cattle to produce milk".
Its general secretary Daniyan Abimbola said: "For commercial dairy farmers, climate change is a major factor. The delay in rainfall in the past years often affects farmlands, drying up plants and increasing the difficulty of getting food for the cattle."
Change ahead as new Nigerian dairy policy introduced
Change might be around the corner for Nigeria.
The country's National Dairy Policy introduced in early June hopes to gain "self sufficiency in milk production".
It seeks to crossbreed local breeds for more milk output, establish milk collection centres, facilitate a guaranteed price for raw milk and establish a minimum percentage of locally sourced milk for all milk products.
In a press release on World Milk Day in June, the Federal Government of Nigeria said that it is targeting a 10% annual growth rate for the dairy industry.
Importantly for Irish exporters, one of the policy's objectives is for the Nigerian dairy sector "to produce affordable and accessible milk products that will reduce imports".
Among the interventions planned "to substitute importation" is for all milk products to contain "a progressive minimum percentage of locally sourced milk".
Incorporation of local milk into powders and other options, such as a ban on FFMP imports in West Africa and increasing the product's import tariff from 5% to 35%, were explored in the joint NGO report on sustainable development of West African local dairy earlier this year. It found:
Whichever option is considered, the region's capacity for increases in milk production is one essential condition for success, its collection and processing capacity is more essential still.
Though many NGOs recommend tariff increases, this is not likely in Nigeria for FFMP any time soon, as its new dairy policy states it is "to be imported at the prevailing rate for the next 10 years".
Overall, dairy exports to West Africa from Ireland have already started to decline.
FFMP exports to the region were worth over €430 million in 2022 but under €300 million last year. Bord Bia stated earlier this year that this is "due largely to national changes in policy and attitude to dairy imports, greatly impacting the global dairy sector".
The State agency wrote in the same update, released to Noteworthy via FOI, that "Irish dairy is also priced higher in market than other international imports".
To address this decline, "Bord Bia has been working to diversify Irish exports to the regions with drinks as a promising sector coming into 2024".
Trouvadis said that foreign dairy companies in Nigeria "have a strong control on the value chain."
He added that the new Nigerian policy is pushing foreign multinationals to adapt themselves to changing conditions, with some getting involved in local dairy production.
"It's a huge market, and they don't want to lose it."
People in Nigeria are hopeful that this might improve their situation. Dr Ishaq Bello from Nigerian non-profit, Milk Value Chain Foundation, said:
"We are optimistic. Nigeria wants to actively reduce imports."
Reporter: Suhasini Srinivasaragavan · Editor: Maria Delaney
With reporting by Beloved John, working with managing editor Idris Akinbajo of the Premium Times in Nigeria, our investigative partner for this project.
