Introduction

Agriculture has long been a significant part of the Nigerian economy. It was the backbone of the economy before oil took center stage. As oil prices falter, Nigeria is returning to its roots. Again, agriculture has become an integral part of the economy. Dairy farming has been a key to boosting this new economy. It is now becoming one of the main driving forces of the agriculture sector.

Nigeria has a population of over 200 million. With this huge population comes a massive demand for food and nutrition. The annual demand for milk in the country is well over one billion tons. But the country produces a little over 500 thousand tons every year. This means that Nigeria has to import over 95 percent of the milk consumed.

The dairy sector processes raw milk to produce two types of milk-based products. They are traditional milk products and commercial milk products. Some traditional ones are nunu, Kindirmo, Manshanu, Fulani, and Yoruba cheese. The few commercial processors produce mass-scale commercial milk-based products. They include pasteurized milk, UHT, evaporated milk, yogurt, and ice cream. Some big companies include WAMCO Nigeria PLC, Nutricima Pz, and Sosaco Nigeria.

The dairy sector has struggled with several issues that affect the value chain. One issue affects it more than the others. Production challenges account for almost 80 percent of the sector’s challenges [PWC]. The other major issue in the dairy industry is the processing of milk to produce dairy products.

Over 75 percent of the milk processing inputs are from imported milk. Most of the milk processing firms operate with substandard technology. The government and other organizations have tried to address these issues. Efforts to capitalize on the sector’s potential continued.

This case study discusses the transformation in Nigeria’s dairy value chain. It talks about
the industry’s challenges and central issues. It analyzes the solutions and their implementations. Finally, the discussion moves towards the results and their impact.

The Challenge

Nigeria’s dairy sector has faced several significant challenges. These challenges have hindered the sector’s development. The country has depended on imported dairy products for a long time. This dependency keeps draining valuable foreign currency reserves, impacting economic stability.

Nigeria imports over 60% of the dairy products consumed. Almost 95% of the raw milk in the country is also imported. This shows a clear gap between local production capabilities and consumer demand​​.

Local dairy production has many problems and inefficiencies. Some of the issues include traditional practices and limited access to modern technology. The inadequate infrastructure worsens the situation, contributing to low productivity. The need for more public and private investment in the sector is also a contributing factor. Due to this, the farmers lack the necessary tools to optimize production.

The continuing of these issues affected the economic stability of the dairy industry. This instability also affects Nigerians’ nutritional access. The demand for dairy goods in the country is increasing. To keep up with this growing demand, the production needed to improve. Producing higher quantities required more resources than available. This meant that the country was dependent on costly imported goods. The imported dairy goods amount to well over a billion dollars every year.

The Solution

Nigeria launched a comprehensive strategy to reinvigorate the dairy sector. A crucial part of this strategy was the implementation of a National Dairy Policy. The policy started in 2023 and will continue until 2028. The primary goal of this policy is to reduce the dependency on dairy imports.

The government aims to do so by increasing domestic production. They aim to do so by collaborating with both private and public investors. The secondary goal of the NDP is to reach the international markets. They hope to export dairy products under the African Continental Free Trade Agreement.

Additionally, the government has supported initiatives that enrich the supply line. The goal is to help the farmers reach national and international markets. Significant investments from both local and international companies have also helped the cause. For example, multinational corporations like Arla Foods have invested in the sector. They have established state-of-the-art dairy farms in Nigeria. These farms increased local milk production and introduced modern farming technologies. They have also changed practices across the region​​.

The government has played an important role. They are offering incentives for fresh new investments in the sector. These incentives can ease smallholder farmers’ access to finance. They aim to enhance the value chain from milk production to distribution. This ensures sustainable and beneficial improvements.

Implementation

The implementation of the NDP contained various strategic steps. Some of those keys are discussed below:

• Establishment of Modern Dairy Farms:
  Various multinational companies like Arla Foods have begun constructing modern farms. This has started the construction of advanced dairy farms in regions such as Kaduna. These farms contain modern technologies for milking, animal health, and feed management​.

• Government Incentives:
  The government has announced various incentives, such as tax credits for new investors. These incentives encourage investors to invest in Nigeria’s dairy value chain​.
• Support for Smallholder Farmers:
  The next step was to ensure accessible financing options for smallholder farmers. This implementation happened through initiatives like reduced-interest loans and grants. Various training and capacity-building programs were also carried out. The goal of these programs was to improve farming techniques and increase productivity.​
• Infrastructure Development: A vital aspect of the implementation was developing infrastructure. Establishing milk collection centers was a step forward in that direction. In these centers, the milk is tested for quality using a lactometer. Then, it is pasteurized and sent to the processing centers. Transportation networks ensured the movement of fresh milk from farms to processing facilities.
• Partnerships and Collaborations:
  The other tool for transforming the value chain is the formation of partnerships. Some of the critical partnerships are between the government and various NGOs. Government projects like NLDP and NAPRI have helped reshape the dairy value chain. These projects contribute to the value chain through their Milk Collection Centers. These partnerships aim to drive the development and boost Nigeria’s dairy sector​.

Results

The strategic interventions in Nigeria’s dairy sector have led to significant improvements. The milk production has increased to over 531,587 tons in 2021. The projection for the sector’s annual growth rate in the coming years exceeds 10 percent. This upward trend can propel the market to a projected volume of $27 billion by 2028.

The sector also experienced a reduction in dairy imports. This shift of policies aimed to bolster local production capacities. This transition towards self-sufficiency has solved the issue of high imports. This also helps enhance the livelihoods of local farmers and generate employment opportunities.

These outcomes highlight the positive effects of the strategic interventions. The implementation of the National Dairy Policy can reshape the sector. It can help address the country’s economic and nutritional challenges. It also sets the foundation for future growth and development in the dairy industry.

Final Remarks

The transformation of Nigeria’s dairy value chain is a shift towards economic diversification. It empowers the farmers and helps the country reach agricultural self-sufficiency. Despite significant progress, the sector needs ongoing support. It also requires contributions to sustain this growth. It is crucial to maximize the sector’s contributions to Nigeria’s GDP.

Continued innovation and commitment are key to overcoming the remaining challenges. Overcoming these barriers can unlock the full potential of Nigeria’s dairy industry. This case study highlights the challenges and achievements of the dairy sector. It also serves as the base for similar interventions for reforms in other sectors.