‘Consumers contending with economic pressures, shifting to affordable offerings’
Ben Langat is the Managing Director of FrieslandCampina WAMCO Nigeria Plc. Recently, he spoke with some journalists on issues bordering on the dairy business in Nigeria and efforts of the firm to increase local sourcing. FEMI ADEKOYA was there.
What is your assessment of Nigeria’s dairy sector?
The dairy sector continues to feel the impact of a slowly recovering economy like other FMCG sectors. This has given rise to change in shopper behaviour with smaller portion packs being bought with an increased frequency in proximity shops. Availability and affordability therefore remain major determining factors, given low disposable income among the population.
Having said this, affordability must be matched with quality to ensure adequate nutrition. This is the balance FrieslandCampina WAMCO offers consumers. With increasing figures of malnutrition across the country, we consistently ensure consumers have access to quality dairy nutrition in various portion packs to reach everyone at the right price. It is important for the consumer to be educated on different dairy product offering and align to their nutritional needs. Dairy is offered in full cream, filled, ready to drink, among others. We have a mission to nourish Nigerians with quality dairy nutrition, hence our commitment to providing affordable dairy for families, and offering informed knowledge on the goodness of milk to consumers across all life stages.
Your firm pioneered the Dairy Development Programme (DDP) in Nigeria to improve local sourcing and healthy dairy practices. How far have you gone with these plans to replicate this success in other states across Nigeria?
We have made very good progress with the DDP. We started with a milk collection centre in 2011, now we have five milk collection centres and a bulking centre, which is where we pool all the milk into a truck and move it to the factory.
The main challenge is low productivity per cow. When cows roam for long distance to gather pasture and drink water, it impacts productivity, which currently stands at one litre per cow average. To raise that to commercial quantities, we should be aiming for say ten litres per cow. Iseyin land in Oyo State, where we currently operate the DDP with growing success, is not too far from our factory in Lagos, so we move milk daily. Other challenges include feed, poor infrastructure, among others. Secondly, there is a good concentration of farmers that have lived there for many years who have traditional knowledge of herding. There is still a lot of work to be done. To scale up milk volume per cow, you need the right kind of breeds. We must acknowledge that other states have approached us to support them with similar programmes.
Could you be more specific, please?
We were humbled by the visit of the Governor of Kebbi State to seek support for his efforts in improving dairy in his state. We have sent our people to give technical support to the state. It is very difficult to move fresh milk from Kebbi to Lagos by road in time for processing. However, whenever sustainable fresh milk volumes are substantial enough in a location, FrieslandCampina WAMCO will be more than ready to start processing there.
Why do you think other big players in the dairy sector are yet to follow your example?
This is a costly exercise that need financial and other resources investment and takes time to make money from it. We do it as a responsibility in line with our purpose of providing better nutrition now and for generations to come. FrieslandCampina WAMCO is here for the long run. We are committed to our mission of providing quality dairy nutrition for Nigerians, and improving the living standards for our farmers now and for generations to come. Our shareholders have invested in the DDP because we are looking at the bigger picture and there is a point where the two cross, that become both sustainable and profitable. We are continuously investing in the DDP and we believe in the future of the programme.
Considering the climate and Nigerian business environment, which dairy model do you think will work best for Nigeria?
We need to get some definitions clear. There are different levels of how dairy farming or cattle-rearing is done globally. It starts with the smallest and very traditional one by pastoralists who graze their cows on any space or land that is available, migrating from place to place in search of pasture and water. Their cows produce very little milk because they rear them as part of their socio-cultural practices, and for meat and milk. Smallholder dairy farmers form the second level. They are usually a family with some acres of land and they can keep cows within that location and are able to feed them with pasture generated within that land or its surrounding. The cows are confined and easier to control and manage disease as well as collect their milk. The third level is commercial farming, which is now hugely industrialised. In countries like Saudi Arabia you would find a farm with thousands of cows in air-conditioned dairies, fully mechanised using robots. Ranching is the fourth level, which is typically driven by the size of land available and typically focused on beef rearing. Ranches are large farms that are well secluded for thousands of cows to move in there.
So, smallholder farms have been the most successful dairy model so far and that is the model we are focusing on for FrieslandCampina WAMCO DDP. Every household that has some land can build a business on it with five to 10 cross breed cows. It makes it easier for us to collect milk. If you go to countries like Kenya, Zimbabwe, South Africa and Uganda, smallholder farmers are thriving. So, in Oyo, our DDP is progressing from pastoralists to smallholder farms. With cross breed cows, you can get up to 10 to 15 litres of milk per cow instead of just one or two litres. This is where we believe the future of local dairy industry lies- smallholder farmers.
How exactly have you handled technology transfer as part of your ongoing DDP?
We have a programme called Farmer2Farmer, where farmers from The Netherlands visit Nigeria, spend time with farmers in Oyo State, interact with them to share global best practices with our local farmers. We organised Nigeria’s first ever Dairy Farmer’s Day late last year. Leading to the event, two Dutch farmers spent about two weeks in the DDP communities, training local farmers on best dairy farming practices. This has yielded a lot of benefits and will be continued. Farmer2Farmer language is well understood irrespective of where they are in the world. They got very practical, demonstrated what nutritious pasture is and what it isn’t, what is hygienic for cows and what isn’t.
How will you rate government’s policies especially those relating to the ease of doing business?
I can say that government policies towards the ease of doing business in Nigeria are commendable, especially for new investors and this should help boost new investors into Nigeria. What also needs to be done is to strengthen the business climate to support old businesses to compete fairly and sustainably too. New investments should come in to complement existing investments hence incentives should be given in such a manner that both old and new survive and grow together to provide more jobs and build the economy.
Looking at your 2017 financials, what is your outlook for 2018 considering the gradual strengthening of the economy?
We need the economy to grow again and exchange rates to remain stable and forex continue to be available. Consumers need more disposable income. If these happen, we should have a good year.
What is your biggest challenge in Nigeria as a manufacturer?
The consumer’s disposable income is reduced and a lot of pressure on the consumer wallet. In the past, we would experience very strong demand during seasons like Ramadan and Christmas, and manufacturers often were struggling to supply. Now we see these seasons offtake are slower. Outside of such seasons, sales move very slowly because consumers still contend with economic pressures. Consumers buy smaller, some shift to affordable offerings. The biggest thing for me would be to see the economy remain predictable and on a sustainable growth track.
How many jobs do you see the dairy sector creating for Nigerians?
Let me use our DDP pilot to illustrate the endless possibilities of job creation we bring to the sector. At the moment, we have about 3,500 dairy farmers—male and female. Please dwell on the fact that this has brought a very positive lifestyle change to the female farmer who would typically petty trade her “wara” or local cheese. But now she earns much more, her income is steady and growing. So is her husband’s. Among the 3,500 farmers, you will see one farming cluster depositing as much as 500 litres of milk to our collection centre because he and many others bring their cows together, live in one place, milk their cows together and deliver their milk as one. So, one man out of the 3,500 can represent a pool of 200 – 300 others. If you go to the five locations where we have the DDP – Fashola, Maya, Alaga, Saki and Iseyin, all in Oyo State—, you will see a booming adjunct industry that wasn’t there before – suppliers selling dairy feed, minerals, milking cans, and veterinary medicine, among others. What do you think will then happen as we further develop nutritious pasture for the first 50 smallholder farms, which we have already identified? Imagine the multiplier effect.
Beyond Oyo are there plans to take this to other parts of the country?
There are huge infrastructural limitations to contend with, which only government can take care of. But we are ready to expand the DDP to other regions systematically because it is very expensive. When our current pilot becomes even more successful and profitable, it will become easier to replicate. They are so many opportunities. For example, the school feeding programme initiated by government, which we are actively involved in, the possibilities are endless.
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