Upload
ngothuy
View
258
Download
8
Embed Size (px)
Citation preview
DAIRY SECTOR IN NIGERIA- AN OVER VIEWDR. AYOK CELESTINE
Nigerian Dairy farming – mainly subsistence
Commercial dairy farm in Northern Nigeria
Young stock
LACTATING COWS
Dairy farm established by Dr. Ayok in 2014
Pivot system in a Dairy farm in Nigeria
Nigerian Dairy farming• Nigerian dairy industry which is largely subsistence, consists of milk production
and or importation, processing, marketing and consumption• 95% of total herd size of about 20 million belongs to pastoralist• Only a few imported cattle breeds such as Friesians, Jerseys and Brown Swiss,
and their crosses are kept by few private commercial dairy farms. • Zebu breeds(Bunaji, Rahaji, & Gudalis) are mostly dual-purpose reared by
pastoralists for both milk and meat .• Traditional milk products include nono (sour milk), Kindirmo ( sour yoghurt)
maishanu ( local butter), cuku (Fulani cheese) and wara (Yoruba cheese).• Feeding systems :Free range, Zero grazing using TMR, Rotational Pasture –based
grazing systems and Mixed systems• Urbanization, improving household incomes and general population growth is
pushing demand for dairy products with growth estimated at 3.2% to 3.5%
MARKET CONTEXT
Nigerian Demographics
• Population: 170 million which is expected to grow to about 1 billion by 2100
• Agriculture contributes 28% of GDP
• Projected that by 2050 population will grow to > 433 million
• Fast economic growth but Wealth concentrated in few hands
• National poverty average around 69% which indicated that 112.5 million Nigerians earn below $1 a day
• Growing food demand usually met by imports
Nigerian Dairy production Statistics
Total Nigerian Production a) 2.37 million cattle produces about 570,000 tones of milk/yr about 0.01% of global production and 13% of West African production.
1. Estimated 12 million small-scale pastoral producers distributed throughout Northern Nigeria.
2. Supply gap of over 1.2 million tonnes met through imports valued at $521 million or 7.4% of the value of all agricultural importsin 2012
Average litres/day under pastoral system
Commercial Dairy Producers
0.7 litre
8 litres
Global average for Pastoralist is 6.6 litres/day
World Average for commercial dairy producers is 30 litres
• Herd size: About 20 million in the country, of which 2.3 million are used for milk production
• Low, milk yields: Average yield remained at ~0.8 litres/cow/day over the past decade
• Large role of imports in meeting national demand but the new trend is towards increasing local sourcing: Domestic milk production was 570,000 tonnes in 2013 while national demand was about 1.7 million tonnes. However, the recent oil shock to Nigeria’s economy and the consequent rationing of forex away from goods and services will likely lead industries players to focus more urgently on import substitution.
• Growing domestic milk production and dairy industry: Dairy is the 2nd largest segment in the F&B industry in Nigeria, growing at a CAGR(Compounded annual growth rate) of 8% since 2010. Domestic milk production grew slower than the overall industry growth, at a CAGR of 3% between 2000 and 2013.
• Strong growth opportunities for high and low end dairy products:
(1) substantial opportunity for increased per capita consumption given our low per capita
consumption of about 10 litres/head vs. 40 litres/head globally and 28 litres/head in Africa);
(2) increasing urbanisation and rising per capita income is driving increased demand for value-
added and/or premium dairy products in Nigeria
Key market statistics and trends
Dairy Production in Nigeria (2000-2013)
-
100,000
200,000
300,000
400,000
500,000
600,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ton
nes
Nigeria Dairy Sectorial review• According to a 2014 industry report, the entire dairy industry is the second
largest segment in the food and beverage industry in Nigeria, generating an estimated revenue of over (2 billion dollars) ₦345 billion in 2013 and growing at a CAGR of 8% since 2010.
• Among the various segments which make up the dairy industry i.e. (milk, yoghurt, ice cream, butter, infant formula), milk has the largest share and accounts for 61% of the turnover in the industry. Nigeria’s ice cream market alone is estimated at 10 million litres, with a value of approximately $40 million per year.
• For the forecast period of 2014 to 2019, drinking milk products (which includes fresh milk) are expected to increase by a value CAGR of 3% and yoghurt and sour milk based drinks (which includes the sour milk that is traditionally available in unpackaged forms) are forecasted to increase by a value CAGR of 2% .
• Premium products such as non-fat, low-fat milk, milk cubes, and milk-based energy drinks are becoming increasingly popular among high and medium income consumer segments in Nigeria.
MARKET STRUCTURE & PERFORMANCE
M4P Donut
SUPPORTING FUNCTIONS
Pastoralists Producers
Inputs
Commercial Farmers
Wholesalers/Retailers
Urban and Rural Consumers
Financial Services
Veterinary Services
Transport Services/Cold Chain
Training and Extension
Research
Quality Standards (FLD, NAFDAC & SON)
Informal Traditions and Norms
Gender Relations
Land Tenure Practices
Security and Conflicts
Policy Institutions (MDAs, SMANR, etc)
RULES
Factory Processing
Imports
Local Processing
Water & Feed Supply
Pastoralist herders ~12 million pastoralists
Distributors / Wholesalers
Consumers of traditional dairy products(mainly rural or semi-urban consumers)
TRADITIONAL DAIRY PROCESSING & MARKETING (INFORMAL SECTOR)
MODERN DAIRY PROCESSING & MARKETING(FORMAL SECTOR)
Consumers of modern dairy products such as fresh milk, UHT milk, milk powder, yoghurt, icecream, etc. (mainly urban consumers)
Traditional Processing
Retail
Consumption
Production
Collection & Aggregation
Retail/Wholesale
Consumption
Production
Processing
Cooperatives
Commercial Farms(~28 farms including Zaidi, Garko,
Inter-City, Joda, etc.)
Vertically integrated dairy companies 12 integrated farms: L&Z, Majestik , Farm Fresh, Milky Way, Sebore, Nagari, Jamil, Niyya, Shonga, Mai Zube, Tilde, Lamda
Retailers supermarkets, hotels, restaurants,
& other modern retail outlets
Imported dairy
products
Imported milk
powder
Milk hawkers
fre
shm
ilk
Independentaggregators
Dairy processors8 large processors + medium scale processors + cottage industries
Imported milk
powder
Associated with medium-scale processing
Associated with cottage industries
Minor channel
Two major sources of Dairy Production are Import (60%) and Local production (40%)
Local Production is supplied by
i) Traditional pastoralists accounting for 95% of Nigerian milk production and
ii) Commercial farmers producing 5% of Nigerian milk production
Key inputs required for dairy production are:
• Cows – largely local breeds owned by small-scale pastoralists; cows are mostly gotten from inheritance and other cultural practices such as gifts; few commercial farmers purchase theirs from cattle markets or import exotic breeds and/or semen.
• Feeds (mostly natural grasses and other roughages) gotten from grazing areas, grazing reserves and crop residue. There are also supplementary feeds of various types.
• Veterinary inputs and biological – for prevention and management of animal diseases, mostly obtained from trained and untrained veterinary practitioners.
[Production systems]
• There are very few organised mechanism for collection and aggregation of milk. Most of the fresh milk is locally processed by the pastoralists women into different products.
• There are some pastoral women who purchase fresh milk from other pastoral producers and migratory pastoralists – which is also processed in the local way as described above.
• Other form of aggregators are by commercial farms/firms processing milk – Friesland Campina, L&Z, Niyya, etc that are engaged in commercial dairy processing. Here the collection is done by a number of intermediaries starting with a cart, bicycle or motorbike transporting milk to either a collection centre, where milk is then picked up in a truck and transported to the processor or transported to consumption centres for sale through wholesale and retail.
• There are few milk bulking, collections or buying centres owned by dairy cooperatives, dairy self-help groups, individual bulk buyers and agents of large milk processors – e.g. MILCOPAL (Cooperative set up by National Livestock Projects Division of the Federal Ministry of Agriculture) in Kaduna and few such centres owned by Friesland Campina Plc.
• Presently only one milk collection centre with standard cooling equipment is in operation located in Fashola, Oyo State being managed by Friesland Campina.
[Collection and Aggregation]
Milk collection
Milk Testing
• There are very few large, well equipped dairy processors in the country with throughput of well over 50,000 – 1million per day . There are various small scale processing outlets with capacity of processing 50 litres per day, but there are also plants processing more than 1,000-5,000 litres per day.
• Both the pastoralists and the commercial producers process the milk they produce. While the pastoralists women directly sale their dairy products, the commercial producers sale their products through distributors and retailers.
• In the traditional Fulani family, the women process fresh milk into traditional milk products such as Nono (sour milk), Kindirmo (sour yoghurt), Manshanu (local butter), Cukwi (Fulani cheese) and Wara (Yoruba cheese).
• Under the commercial setting, raw milk is processed into various dairy products such as Pasteurized milk, UHT, evaporated milk, yoghurt, and ice cream.
[Processing ]
•Traditional marketing system is mainly carried out by Fulani women and girls who directly sale to consumers by hawking local dairy products. These milk products are carried on the women’s heads, as they walk to sale points such as rural markets, roadside settlements and semi-urban areas.
•The commercial farmers and the importers engage the services of distributors, wholesalers, depots, bicycle boys, retailers and other market outlets. Their dairy products include packaged liquid milk, yoghurt, butter, ice cream, evaporated milk, powdered milk, baby formula, and cheese. There is increasing applications of milk powder as inputs for processing local foods such as ice cream, pastries, yoghurt, biscuits, confectioneries and beverages.
•There is the emergence of supermarkets/retail chain malls due to increase in the number of urban consumers.
•Re-packaging of dairy products into smaller containers to meet consumers purchasing power are the new measures being adopted by most processing plants.
[Marketing]
•Consumption:– Low income bracket amongst majority of consumers– Poverty level is high – Poor cooling facilities at household level discourage bulk purchase of dairy
products
• Other constraints include:– high costs of local food processing activities and poor infrastructure across
the country. – Many bulk, intermediate and processed inputs utilized by local food
processors are imported. – For high premium commercial processors, there is strong competition from
lower-priced untreated or boiled milk of low quality as well as sub-standard quality raw milk from small-scale farmers.
Market constraints
•Supporting rules in the dairy value chain are:
•Policy institutions - Agricultural policy prescribe the set of laws relating for domestic agriculture and imports of foreign agricultural products. Key institutions involved are Departments and Agencies in the Federal and State Ministries of Agriculture, Finance, and Environment.
•Quality and standards – there are a number of regulatory legislations – the regulating agencies includes NAFDAC, SON and Federal and States Departments of Veterinary Services.
•Land tenure – regulate access to land for both traditional breeders and commercial farmers.
•Security and conflicts – Cattle rustling and conflict between pastoralists and farmers impacting negatively on local productivity.
Formal and Informal Rules
MARKET OPPORTUNITY
• There are enormous opportunities for growth in the dairy value chain. The market has over the last ten years recorded increasing demand for higher quality dairy products such as , evap. milk ,sachet powder milk, UHT, ice-cream, yoghurt and butter.
• The Nigerian economy is growing at an estimated rate of about 7%, there is increasing consumer incomes, a growing middle-class and high population (about 170 million people, the 8th largest in the world).
• There is also high urbanisation rate, expected to grow subsequently.
• The rebasing of our economy has put Nigeria as a frontier for investment having good returns on investment.
• The commercial companies are rapidly innovating – and super/retail markets are rapidly expanding providing market opportunities for dairy products. Additionally, hotels, restaurants, and shopping malls in the major cities is spurring further demand for dairy products.
Overall growth opportunity in the dairy market
•In response to changing consumption trends in urban centres , commercial processors are introducing numerous marketing and product innovations to attract new dairy consumers. Examples of the innovation and dynamism in the Nigerian dairy industry includes:
1. Introduction of flavoured milk based drinks (targeting children);
2. Smaller packaging of milk-based drinks (targeting price-sensitive
consumers).
3.Small sachets for condensed/evaporated milk (targeting those using
milk complements for tea and other beverages and foods);
4.Increased visibility and widened distribution of smaller commercial
players in certain dairy segments.
Overall growth opportunity in the dairy market
•Imported milk powder is the dominant input into the dairy industry, accounting for over 75% of inputs .
•Nigerian dairy processors are known to import and repackage milk powders or to reconstitute imported milk powder into liquid milk and other dairy products.
• The use of imported milk powder is a growing practice also among most local yoghurt processors.
Overall growth opportunity in the dairy market
•Government is now using monetary policy to indirectly discourage imports of powdered milk so as to enhance backward integration of dairy value chain.
•This new trend will encourage large scale commercial players to come into this sector thus opening myriads of opportunities for partnership amongst commercial dairy farmers within Nigeria and other African Agic- businesses for investments
Conclusion
Thank you for listening