Dairy Death by COVID-19: Averting the Demise of Nigeria’s Nascent Indigenous Dairy Industry

01 May 2020 / By codaran
dairy death by COVID-19

The Coronavirus (COVID-19) pandemic is the biggest challenge facing humanity today. More than 3,320,613 cases have been confirmed in  212 countries and territories, with over 234,393 deaths recorded. Beyond its health impact, the spread of the virus is hurting the global economy. The impact is already visible in the countries most affected such as China, United States of America and parts of Europe, where restrictions on movement and association have had severe consequences on business activities and livelihoods of households, resulting in decline in consumer demand and general reduction in economic activity. An economic depression looms!

Sadly, Nigeria has not escaped this doomsday. As the number of infected persons increases daily, the measures put in place by the Federal and State Governments have gradually increased in severity and scope. Unfortunately, the failing economy is fast becoming the collateral damage. Many Nigerian businesses are adversely impacted by the measures imposed to curb the spread of the virus. Many States, such Lagos, Kaduna, Rivers, and the Federal Capital Territory, which are the hub of commerce in the country are locked down and people are told to stay home. The dairy industry is arguably the worst hit in the Agriculture sector as most dairy products are not high on the list of consumer’s essential commodities to stock up on. Consumer spending has crashed because people are either too fearful or unable to go out and spend. Those who want to buy find it difficult to do so as hawkers, retail outlets, and other shops where people go to buy dairy products are closed.

Consequently, many dairy businesses, especially indigenous companies, are now in jeopardy as their revenue is drying up faster than they can cut costs. Sadly, many will go bankrupt if the situation worsens and they do not receive help from the government. As Yuwa Hedrick-Wong a Contributor to Forbes Asia puts it, there is a clear and present danger of “mass business closures leading to rising unemployment, creating a self-reinforcing feedback loop that locks revenue-starved companies and salary-starved households into a downward spiral.”

Indigenous dairy processing companies who have backward integrated their milk supply chain lament about the ordeal being faced during this health crisis. They rely on smallholder dairy farmers from various pastoral communities to supply the raw milk used in producing dairy products. However, the restriction of movement has disrupted this supply chain, negatively impacting their operations. Also affected are the pastoralists whose cows produce the milk being sold to dairy companies as they no longer receive the sorely needed daily revenue from the milk sales. With the livelihood of their households at stake, if remedial initiatives are not put in place in the short-term, many of these pastoralists may resort to unlawful measures to meet their needs. This situation is a powder keg that can blow up with severe ramifications if not urgently addressed.

COVID-19 and its attendant impact on livelihoods and business must serve as a shot of adrenaline to the Government. Now is the time to act to protect Nigeria’s immediate and long-term future. The Nigerian government should take a cue from the responses of some governments to aid farmers/the agriculture sector in the wake of this pandemic. For example, the Governments of the United States, Canada, New Zealand and Denmark, have designated agriculture as an as essential service industry, enabling all businesses in the food and agriculture production, which includes the dairy sector, to continue operating as usual amid current and potential restrictions created to stem the spread of the virus. Additionally, to ensure the safety of dairy workers, Dairy Australia, the national services body of the Australian dairy industry is working with Australian dairy farmers, Australian Dairy Products Federation and the entire supply chain to minimize the negative impact of COVID-19 on Australian dairy businesses. Some resources provided by the Dairy Australia include guidance on responsibilities and obligations for dairy farmers who employ staff; technical advice for when dairy farms need to adjust their operations to cope with reduced labor; and milk pick-up protocols for tanker operators. Similarly, the U.S State Departments of Agriculture released specific guidelines for dairy workers to follow in the wake of COVID-19.

The dairy sector is critical to Nigeria’s nutritious foods system. To ensure that Nigerian have access to affordable nutritious dairy products, especially in view of the continued disruption of the global supply chain and devaluation of the Naira, the Nigerian Government must prioritize the continuity of the local dairy industry. Like its foreign counterparts, the Nigerian government’s immediate priorities, apart from curbing the spread of COVID 19, must be to institute reforms that enhance the resilience of vulnerable households and businesses beyond this crisis. The Federal and State Governments must officially designate Agriculture as an essential service to ensure that the measures taken to control the spread of COVID-19 do not inadvertently obstruct food production and supply. It is critical to ensure that Nigerians, especially vulnerable groups, do not suffer from food shortages and price hikes which can lead to under-nutrition, mass starvation and death in near future. Of equal importance is the need to ensure the safety of our heroes who must conduct this essential service of providing us with nutritious food during this critical period.

In addition, Nigerian Government agencies such as Ministries of Agriculture and Health should provide specific operational guidelines to farmers, processors, and service providers to help them continue their operations safely. These guidelines should be updated as additional information about the virus becomes available. Also, the Federal Competition and Consumer Protection Commission (FCCPC) should redouble it efforts to protect consumers from the exploitative tendencies of capitalist who may be tempted to indiscriminately hike prices of dairy products.

There is thus an urgent need to address this situation to save dairy companies and their integrated smallholder farmers. Laudably, like many other countries, the Nigerian Government on March 16, 2020, through the Central Bank of Nigeria (CBN) introduced the N50bn Targeted Credit Facility as a stimulus package to support households and Micro, Small and Medium Enterprises affected by the COVID-19 pandemic. Based on the guidelines released by the CBN, those that can benefit from the fund are households with verifiable evidence of livelihood adversely impacted by COVID-19; existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic and enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic. It must be stated that indigenous dairy companies and their integrated smallholder dairy households qualify for this intervention support.

However, if precedence is considered, getting access to this fund is not a foregone conclusion for indigenous dairy companies and their integrated smallholder dairy households. Unfortunately, the NIRSAL Microfinance Bank, the participating financial institution for the Scheme, does not have a solid record of issue credit to those who it, when they need it. Unless there is a structural realignment of policy to favor indigenous dairy companies, integrated smallholder dairy households, and other local players in the downstream sector, they will continue to find it difficult to access these types of funding.

An additional short-term measure should be the retention and expansion of the use of fresh milk in the School Feeding Programs of the Federal and State Governments. The provision of fresh milk, which is more nutritious than evaporated powdered milk, will not only benefit school children but will also encourage additional investment in backward integration by dairy companies to meet the increased demand for fresh milk products.

A medium-term policy goal for the Government should be the imposition of a 15% Dairy Development Levy on all imported dairy products. This is akin to the Sugar Development Levy managed by the Nigerian Sugar Council, and the Rice and Textile Import Levies. The proceeds accrued from this levy can be used for long-term financing support to catalyze the development of local dairy sector, reducing the Government’s financial burden.

It is imperative that the CBN and the Government at large pay concerted attention to supporting the growth of local dairy sector championed by viable indigenous companies. A thriving dairy sector in Nigeria will add value to the economy, empower local milk producers, and will ease herdsmen-related communal conflict. In addition, more jobs – for skilled and unskilled workers – will be created across the value chain. More importantly, the livelihoods of pastoral households will be improved. The development of the Nigerian dairy industry should be a priority. The government at all levels must create an enabling environment for this to happen. Beyond limiting access to foreign currencies, the government must develop and enforce coherent policies that encourage investment. There is a need for a comprehensive national dairy policy that must be developed through an inclusive consultative process. Without these initiatives and concerted follow through by the Government and all stakeholders, the growth of the local dairy industry will stall, then gradually reverse to a moribund state. Now is the time to act to save the industry, further delay will be fatal.

Sahel Consulting Agriculture and Nutrition Ltd. is partnering with the Commercial Dairy Ranchers Association of Nigeria (CODARAN) to advocate for an enabling environment for private sector led development of local dairy sector. Through engagements with the Government and other private sector stakeholders under the aegis of the Advancing Local Dairy Development in Nigeria (ALDDN) program, Sahel and CODARAN seek to push for policy reforms that will catalyse the growth of the Nigeria dairy industry.

ALDDN is a 5-year program implemented by Sahel Consulting which aims to catalyse a vibrant local dairy sector in an inclusive way that improves the livelihoods, productivity, nutrition, and empowerment of smallholder women dairy farmers and the communities in which they live. The program is being implemented in partnership with dairy processors in Adamawa, Jigawa, Kaduna, Kano, and Plateau, reaching a total of 15,000 dairy households and 210,000 beneficiaries by 2024.

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