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… Cautions Nigerians must begin to see diary production as a business rather than a culture

The Nigerian livestock sub-sector of agriculture has been challenged over the years by a lack of appropriate national policy and lately by insecurity which now jeopardises not only the sub-sector but the nation’s food security through the activities of criminals, parading as pastoralists.

In this interview with our Abuja Bureau Chief, Emma Ujah and Gabriel Ewepu,  the Managing Director of L & Z Integrated Farms Nig Ltd, a major player in the nation’s dairy industry, Alh. Muhammadu Abubakar identifies ranching as a panacea to the current insecurity involving farmers and pastoralists across the country.

He also suggests how the government could stop criminals operating from bushes by turning them into ranches. 

Excerpts:

How would you evaluate doing business in the Nigerian dairy industry?

It is challenging, like any other business in the country.   However, overall, we are happy with our performance so far. There are challenges in the country but certainly, at the end of the day, it taps into opportunities and challenges. We try to see the opportunities and the challenges; we overcome the challenges and take advantage of the opportunities. This has been our strategy in L&Z since its inception.

What would you say are the major challenges before talking about opportunities? 

The major challenges are the ones that face every manufacturer and to add salt to injury, we have additional challenges with the agricultural sector.

We have the challenges of the manufacturing entity and also the challenges of the agricultural space. You can see it is a dual challenge for us.

Which area is your company involved in Nigeria?

We are involved in the entire value chain from production through processing to marketing of dairy products. Our processing aspect is the manufacturing side. The production side is the livestock and also the cooperative business relationship.

There is also the marketing side in the sales and the route to the market.  So, you can see we are involved in the entire value chain.

Let’s take a look at livestock production in Nigeria.   From your experience, what do you think we are not doing right in Nigeria?

I think we are not providing the enabling environment for the sector to prosper. That is just what we need. Now, what I mean by enabling environment, is what every investor needs to be able to settle down and concentrate on their business.

Our markets have had a lot of challenges lately.  The dairy market suffers due to the dumping of cheaper imports that local producers cannot compete with. Unless that is addressed, it is not likely that any business can prosper in that sector in the country.

This has been the major challenge.  But by default, now, due to the challenge of foreign exchange for cheap imports, they don’t come in cheaply anymore, as also the policy of the Central Bank of Nigeria, CBN. The CBN policy was not a deliberate policy to save the industry but to conserve foreign exchange. 

 At the end of the day, these actions have been able to make dairy production profitable. When we started 2008, the imports came much cheaper at N120 per litre of milk, when you reconstitute powdered milk that is imported. But now when you reconstitute it, the cost comes to about N420 per litre. At that time, local production was N240 per litre.

So it was not possible to compete with imports at N120 per litre. Today, local production is at about N350 per litre, while a litre of reconstituted milk from imported sources comes to about N420 per litre.  So the table has turned in favour of local producers. But if things happen by default, it does not allow for good planning because anything can happen again.

But if it is a deliberate government policy that brings about this favourable situation, then one can plan properly and then this is the time for direct foreign investment to start coming in. But they can trickle in because these are happening by accident. They can’t continue to happen by accident.

Now talking about deliberate policy to get the local production of milk to a point where you can be competitive. What kind of policies do you expect the government to put in place?

All we are saying is: that these policies that happened by accident should be turned into deliberate and consistent policies. For instance, we are talking about imports that are no longer cheaper. How can you sustain that? Look at what other countries are doing.  

They enforce their regulations and laws, and levy dairy imports, and these levies are used to develop local production.   They have institutionalised backward integration. So you are not allowed, of course, to bring in your cheaper dairy imports, but you have clear guidelines of engaging in backward integration- that after a certain period of time, you have to stop importation and continue to develop the local dairy. The third thing that should be done is import substitution programmes. So when you do the import substitution programme, you say today, we are doing 100 per cent imports; we need to reduce it by year two of imports to substitute with local production and then probably even at 50-50 is a good deal for Nigerians.

I recall that the Governor of the CBN, Mr. Godwin Emefiele, has been harping on backward integration in the dairy industry because many companies have been importing milk for many decades. What more can the CBN or the Federal Ministry of Agriculture do to sustain this kind of policy?

I think that is where we come to the issue of the National Dairy Policy. Every country has a dairy policy where all these things are brought together and then it becomes a law and it guides the dairy industry in the country.  Mercifully and thankfully, we have been able to have something like that, and then stakeholders were brought together and were able to talk with the ministries of Industries and Agriculture.  

We were able to agree on a policy that will help in this area. The policy is on the desk of the Minister of Agriculture. Unfortunately, it is taking forever to be out, but once that is out and is implemented as agreed by the stakeholders, it would go a long way in bringing about some succour to the industry and enable it to incentivize investment in the sector. We advocate for ranching. It is only when you ranch that you will really be doing the dairy as a business. It does not work as a business if it is free range. You do not cost whatever you do and at the end of the day, you think things come free. Actually, you are not doing business.

That is just the truth. So we need to advocate that you can only do that ranching if the environment is enabled and it is only when you do ranching that people that studied Animal  Science will now come into dairy production. People that are investors and interested in dairy will now come into the dairy business. Unless that is done, it remains a culture. If it remains a culture, it is not a business. It will only be a source of crisis.

 You have touched on a very important issue, which has been of concern for everyone. The Federal Government’s attempt to introduce RUGA was rejected by many, forcing the government to embark on the National Livestock Transformation Plan. Now, if we ranch, what difference would it make compared to free range or open grazing?

I can give you an example. Maybe we take cows out of it.   In your village, it is common sense; the women have goats that are free. So if you want to go into the business of goat production in your village, you will have to ranch your own goats, which means you have to bring them into a pen and bring a pedigree to make sure that you are having quality meat from the goats.

 When we are talking about ranching it means ranching the entire livestock system, and that is just it.   At the end of the day, though ranching is costly, that is when you have control and you can even have a pedigree that will give you a better yield. It is not difficult to initiate. It has happened with poultry.   Before now, poultry was a free range in the villages until people started caging, and you can see that egg production due to science and technology is massive. You cannot compare that with the local chicken now.

The National Livestock Transformation Plan is a wonderful idea. The only challenge with that is the need for state governments’ support because it has to do with land allocation, and land is domiciled by the state governments. So until you have the buy-in and sincerely so, by the state governors, it will be difficult to fly; but once states key into it, it would remain an idea.

I do understand that Nasrawa State has already keyed into the programme and it is making some progress. So, if you have stated that key into it by providing the land, bringing the office up to speed on what they are doing, and collaborating, that is when the private sector will want to invest in it and then it will really be a good thing.

We remember that when Chief Audi Ogbe was the Minister of Agriculture, he pushed a lot on the ranching because he was insisting that the yield could be much more in terms of the beef, milk production, health of livestock and the people

That’s absolutely true.   You can’t inseminate a cow, for instance, even if you want to, which is vital if you want to get a high yield of a cow, there are three factors involved in order to succeed: Feed, Environment and Genetics. Genetics has to do with artificial insemination where you can improve the bloodline of the local cows to give you a high milk yield. 

When you inseminate a cow, for instance, in Maiduguri, you cannot start pushing it to Lagos on foot and especially with that zygote that is fertilized ovum in it. Definitely, it will lose weight and probably abort.

That is why the NLTP can only work with ranching. And then when you are talking about the environment you’re talking about when you are bringing in exotic blood into animals; they tend to react to harsh tropical environments and worse if they have to traverse that tropical environment searching for pastures. 

The last one is feed. You cannot just by chance allow animals to be picking anything and just think it will work. It is science.   

You need to work out the necessary feed ingredient, nutritional value needed for a particular reason; is it for beef, milk yield or breeding? Based on that, you compound a feed where scientists have to come in to do that and then you supplement those animals and even if you are giving the bulk feed which comes in terms of fodder, there are lots of value addition on fodder that is done all over the world, and the commonest is in ensilaging.

 The nutritional value of feed is more when you ensilage grass, for instance, rather than giving it raw to the animals. There is a lot of interplay of good things that will happen when the ranching advocacy succeeds.  All of these come with a cost and the only way you can sustain that cost is if at the end of the day, your product is competitive in the market, and that brings us back to the most important issue that the market has to provide guarantee. The investor needs to be incentivized that whatever it is that he is getting and selling into the market is competitive.

  What is Nigeria’s deficit gap in milk production?

  We don’t have a deficit in milk production but we have argued it anyway. My position and our position in CODARAN (Cooperative of Dairy Ranches) is that we have enough cows even though they are low-yielding, but the milk is enough once it is aggregated and collected. Our challenge here is collection of the milk even if you have 30 litres of milk per cow. If it is not collected and if there is no system where you will get these 30 litres to the factory for processing, it is useless. Even if you have a one-litre producing cow and you have 20 million, you are talking about 20 million litres. Our challenge is just collection. In India, for instance, there are no high-yielding cows.

They are low-yield cows (but they are transforming also). The beautiful thing is that they have been able to put a collection system in place that no matter how small the yield is, it gets into the system. Here no matter how big your production there is no system it gets into.   Who are the people that are supposed to off-take? They are busy importing because they are established by their home countries as a market. So nobody will come and guarantee your food security and guarantee you foreign exchange savings; you have to do it yourself.

  Do you have an idea, for instance, of the volume of milk we produce in the country?

  It is common sense statistics. We have been hovering around 20 million cows as per the last census.   If we say okay, only half of those cows are productive, that is you are talking about 10 million. If you say half of that 10 million are females, then you have five million. Even if each female produces one litre of milk a day, you are talking about five million litres a day.

Do we consume five million litres of milk a day in Nigeria?  If you go to  Adamawa and Mambilla they are throwing away milk into streams because there are no off-takers.   There is no incentive to off-take and nobody is off-taking because we are an import-dependent country. It has gone deep into our psyche that even what we are good at is now outsourced to other countries.

 It is a pathetic situation. We need to do something about it otherwise the reality is certain and we have been saying we cannot afford to be wasting foreign exchange on food that we can produce and there is no food that we cannot produce.   Is it wheat? What is the size of Ukraine compared to Nigeria? What is the population of Ukraine? All of a sudden and because something is happening in Ukraine, we are crying because we are so lazy; we are waiting for somebody to produce our food. We are sourcing out our food security.

  There is a factor that affects food production in Nigeria, which is insecurity.

  Insecurity is a recent development. I don’t know how long you have been around this country. But you will say then at least five years ago, this was not the situation. Are we looking for excuses?  Ranching is also a panacea to the insecurity problem. It could be turned into a solution to the insecurity problem. 

Even the bushes these criminals are hiding. Now say okay, this place is going to be completely turned into a ranch. It will deny them a place to stay. Everybody who wants a ranch goes here. It started in Bobby, Niger State but unfortunately, the security situation there became so overwhelming; but it is overwhelming because there is no collective effort towards sustaining that system.

  What government needs is to identify those places and turn them into ranches for God’s sake, and say anybody who wants to come and take a free land, some people will provide their own security to acquire such land; then before you know it there will be no hiding place for them or at worst, you will be able to concentrate them into a place where it will be easier for government to handle. 

So all we need is political will and then the willingness of Nigerians to do the things that are supposed to be done right.

You spoke about livestock as business rather than some people who see it as a cultural thing. In your association, have you had discussions with such people to make them see the benefits of ranching?

Yes, it has been demonstrated and positively so. Most of our members have about 1000 cooperatives under them and all these cooperatives consist of pastoralists. So in some states, these pastoralists have been organised into cooperatives and they see practically that once they produce milk, they sell to make money and they don’t have incentive not to do that.

They have been cooperating. So the culture thing is because there is no option. We have a common denominator- make your profits whatever it is your culture that is denying you a good life, you have an option. We all have bad cultures but when the white man came, once he was able to convince us it was based on good life, which you see practically.

Even if your father refuses you to go to school, his neighbour’s child goes to school. He sees this example that the low-level boy is now becoming an  important personality. We have models. What we do is to organise the pastoralists into cooperatives. We have a model among them that we will deliberately make efforts, when we see is the most cooperating; we make efforts to make sure that everybody sees him as a success story.

Other pastoralists see that he has light, only in his house you will see his children go to school, living a better life as his family eats good food. His wife doesn’t hawk milk and he doesn’t carry the cows to start moving around causing trouble for himself. So at the end of the day, it turns, just as the adage that says: “Monkey see monkey do”. It is not rocket science. I am not a business administrator or an animal scientist, but over time because I have passion for the business and I have been practising it for a while I am able to deduce a lot of things and I have travelled widely.

I was in Sri Lanka some five years ago and I saw the farms with ferocious dogs and then the farmer had a gun, then I said: what is happening? He said there are rustlers. The problem of rustlers is not only in Nigeria. They come in the night to steal cows, so he has to protect himself. And this will come if we realise that we are out of culture, we are now doing business and we need to protect our businesses.

  What are some of your major achievements as President of  Commercial Dairy Ranchers Association of Nigeria, CDARAN?

We have been at the forefront of National Dairy Policy. We have also been able to bring stakeholders together to share ideas on best practice. We have been an advocacy organisation that has been putting pressure on government agencies to do the right thing, particularly when it comes to supporting local dairy production.

We have also been able to establish a hub for statistical data from where we can easily get information because information is a key ingredient in planning and development. Outside that, we have been able to bring together local producers and then share common interests. Instead of seeing ourselves as competitors, we see ourselves as collaborators to make sure that the industry progresses and then we make it an industry that can attract investment both from within and without the country.

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