Forex restriction threatens over 50,000 jobs in dairy sector


Worried over the recent inclusion of milk and other dairy products on the forex prohibition list of the Central Bank of Nigeria (CBN), stakeholders in the sector have cried out that over 50,000 direct and indirect jobs could be at risk.

The Food and Agricultural Organisation (FAO), says an estimated 2.5 million rural households, especially across the north eke out their livelihood vending local milk.

Besides, pastoral farmers account for an estimated 95% of the total dairy output, but only a small percentage of these small farm producers’ milk (around 15%) is collected by formal processors, limiting the amount of milk available for processing.

This, in turn, results in high powder imports.

With about 20,000 dairy product manufacturers across the country with an estimated 60, 000 staff population, there are fears in some quarters that the new policy regime will be counterproductive.

Firing the first salvo in an interview with our correspondent at the weekend one of the major players in sector asked not to be named because of the sensitivity nature of the issue, said the development could spike off smuggling.

Raising some posers, he queried, “How on earth can the CBN governor think that cows can be raised overnight to provide the kind of milk that the Nigerian dairy sector require? So, these are the threats about our sector right now?”

The source, who said his firm, had in the past nine years got involved in the local sourcing of milk, noted that it has paid off.

Specifically, he said, “We started with five communities in Isehin land in Oyo State to about 90 communities between Oyo and Osun States in a nine years period. We have moved from just few milk farmers to about 1000 female farmers and also over 1000 male farmers who are involved in dairy farming and they are all succeeding. We have moved from one milk collection point to having five milk collection centres between these 90 communities.

“Now the quantities of milk we get from these 90 communities have moved from about 5000 litres of milk to over 43,000 litres of milk daily. This as it is today does not account for up to 25 percent of the raw milk that we use daily as many products as we have in the market. This means that we have a shortfall of about 75 percent.

“So, if it is taking us 10 years to get to where we are, which about 20 percent of what we need, you can tell that anything less than 10 years is totally unreasonable for the federal government to clamp down on the sector. This will lead smaller players in the sector that do not have the kind of capacity we have to shut down, which will further lead to massive loss of jobs. All the value chain would be affected.”

Echoing similar sentiments, the Director General, Lagos Chambers of Commerce and Industry (LCCI), Muda Yusuf, while noting that the commitment of the CBN to the backward integration agenda of the Federal Government is laudable, however said, “it is important that in seeking to achieve this objective, as such care should be taken to avoid undue disruptions and dislocations in the investment environment.”

Among other things, the LCCI boss said, “There will be loss of revenue to the government as smugglers naturally move to fill the supply gaps in the market. There is a major risk of closure/drastic scaling down of operations of existing investments in the dairy industry. There will be a major negative effect on the meeting of the nutritional requirements of citizens, especially children and the low-income earners. There will be a high risk of loss of jobs in the dairy sector because of the adverse impact of the policy on existing investments in the dairy industry.”

While advising the government on the way forward, he said, “Sufficient timeline be given for a sustainable transition from the current state of affairs to the desired level of backward integration. There should be robust incentive for investors that will like to key into the supply chain in the dairy industry in line with the backward integration aspiration. There should be generous support from government to facilitate the importation of the right kind of cattle breed suitable for milk production. On account of the foregoing, the CBN is advised to put on hold its proposal to exclude the dairy industry investors from the foreign exchange market on hold in order to avoid likely disruption and dislocations in the dairy industry.”


Please enter your comment!
Please enter your name here