European Union hurt by Nigeria’s dairy import restriction, Okonjo-Iweala says

• Emefiele justifies import policy, seeks WTO’s support

Onome Amuge 

Ngozi Okonjo-Iweala, the director general, World Trade Organisation (WTO), during her first official visit to Nigeria divulged that the European Union had written to the intergovernmental organisation to complain about Nigeria’s milk and dairy restriction policy. The EU, she said, accused Nigeria of violating  the Balance of Payment (BOP) agreement with respect to trying to protect the dairy industry, a policy they feel is not the right instrument.

Iweala, who made the disclosure in a meeting with Godwin Emefiele, the CBN governor, noted that the WTO is looking into the complaint to foster a resolution that will be beneficial to both parties. She however, encouraged Nigeria to exploit global trade opportunities put in place by the WTO and also, strengthen trade relationships with the EU and other trade partners in the global market. She also pledged to extend WTO’s remedies rule as protectionist policy to protect local industries against dumping.

On his part, Emefiele recalled that the CBN and some companies in the milk and dairy industry organised a meeting in February 2020 where it was  agreed that only six companies would be granted permission to import milk and its derivatives. The six companies included; FrieslandCampina WAMCO Nigeria; Chi Ltd; TG Arla Dairy products Limited; Promasidor Nigeria Limited; Nestle Nigeria PLC  (MSK only) and Integrated Dairies Limited.

Emefiele noted that the process to place an importation restriction on milk and its derivatives had been on for six years and the CBN had emphasised on Nigeria’s dairy potential by its cattle which could be exploited, but many of the producers had treated the matter with levity.

Making a case for the CBN’s importation restriction policy, the CBN governor said the  foreign companies were well informed about the FX restrictions on those who want to import dairy into the country and a meeting to that effect was held where it was agreed that the the companies not embracing backward integration programme in the dairy industry should be restricted.

Nigeria, he said, has the potential to produce milk and its derivatives locally and the importation restriction policy became imperative to boost local production, conserve scarce foreign exchange and create job opportunities for the growing populace.

 “This is why the monetary and fiscal authority must put everybody’s feet on fire so that the right things are done for the good of Nigeria and Nigerians,” he stated.

The CBN governor pleaded for the WTO’s assistance in helping to grow its local industries to facilitate job creation. He also pledged the country’s commitment to work with the director general in accordance with the WTO’s objectives and also, improve Nigeria’s trade relations with other countries

It would be recalled that the CBN had in July 2019, announced its plan to restrict access to foreign exchange for milk importation into the country. The decision, according to the apex bank, was aimed at boosting local milk production and job creation.

The move hindered commercial banks and other authorised dealers from accepting Form M – a mandatory document to monitor goods that are imported into the country for milk and dairy products, forcing milk importers to resort to the unfavourable parallel market to obtain foreign exchange, making importation not only more expensive but financially draining.

In a statement presented by Isaac Okorafor, the CBN’s director of communications, the central bank stressed that it was not banning milk importation but that the FX restrictions were necessary to channel energy and funds into improving and increasing local production while also reducing Nigeria’s milk import expenditure which was estimated  between $1.2 billion and $1.5 billion annually.

In order to actualise increased local production, the  CBN urged foreign milk manufacturers to source produce in the country. This led to some partnerships and engagements between  milk manufacturers including FrieslandCampina WAMCO Nigeria; Chi, and TG Arla Dairy Products, state governments and local cattle farmers to to source milk locally for production.

In September 2019, the Kaduna state government signed a Memorandum of Understanding (MoU) with Arla Foods International, a Denmark-based milk production company, to source milk locally from its cattle farmers. The partnership was projected to create 50,000 jobs and also help  increase production among nomadic herdsmen.

The following month, the Niger State government signed an MOU with FrieslandCampina WAMCO Nigeria to provide 10,000 hectares of land at the Bobi Grazing Reserve for milk production.

However, the aforementioned deals and partnerships among others, were unable to meet the desired goals amid challenges encountered by local farmers who to a large extent, lack the equipment and expertise of industrial-scale foreign producers.

Ben Langat, managing director of dairy producer, FrieslandCampina WAMCO noted that the unorthodox fresh milk collection by local cattle breeders, lack of infrastructure to operate modern dairy farming, and absence of enabling policies are contributory factors to the unpleasant challenges in the dairy sector.

Sahel Consulting Agriculture and Nutrition Limited, a leading African agriculture platform in its assertion on the Nigerian dairy industry pointed that low milk yields of local cattle, animal health challenges, low levels of cattle nutrition, poor management, crude husbandry practices, and low utilization of improved livestock technologies still poses a long term-challenge to local production.

The reluctance of milk manufacturers to source milk from local production led to the lifting of restrictions for some companies by the CBN in February 2020. The apex bank however noted that despite failing to stimulate the local production of milk as expected, efforts to increase local production persists.