Ayo Alonge, [email protected]
The Managing Director of FrieslandCampina WAMCO Nigeria Plc, Ben Langat, in this interview, discusses the benefits of the Dairy Development Programme (DDP) piloted by the company for small scale farmers. He also dwells on issues bordering on local production and challenges occasioned by the COVID-19 pandemic.
Background
In 2010, we started with Shonga Farms in Kwara State by supporting the farm to meet our quality standards. Then, we began to offtake milk from them. We then moved to Oyo State, putting infrastructure in place for our pilot Dairy Development Programme (DDP). We built milk collection centres in several communities in Oyo. The first milk collection centre was built in a place called Fashola in 2011. We started from scratch. Today, we have a total of 16 milk collection centres and 10 new ones are being constructed as we speak, with one bulking centre in Iseyin, where the raw milk goes into big cooling trucks and moved to Lagos. We are collecting about 40,000 litres a day. Our actual storage capacity is 85,000 litres, which means there is still a lot of room for this to increase. Presently, we are in five states Oyo, Ogun, Osun, Kwara and we have just launched into northern Nigeria with a large project that is going on in Niger State in Bobi grazing reserve. We have a milk collection centre there with plans to engage a third party processor. We are doing full backward integration with the DDP, which is also supported by government through the Central Bank of Nigeria (CBN) and the Federal Ministry of Agriculture and Rural Development.
Dairy farmers
We work with 7000 farmers presently; 950 of them are women and we are targeting to work with a lot more. We have established dairy cooperatives for a sustainable dairy value chain.
Challenges
There is a lot of challenges, having started from scratch. We don’t have quality dairy breeds in the country and have to build stock from very low mother stock. A key part of the DDP effort is in the cross-breeding programme to ensure we build enough dairy stock for farmers.
There is the challenge of poor infrastructure. There are also normal challenges of cow diseases, water supply to farms, nomadic lifestyle of pastoralists, etc. So, there was a need to educate the farmers on how to improve their feeds, get veterinary support for the cows. All in a bid to improve the milk yield. The challenge around animal husbandry is really getting the right animal that can give the right yield. The cows that are in Nigeria are largely beef cattle. Overtime, they have to be improved. Progress is slow and that is one big challenge.
COVID-19 brought about a lot of changes and challenges. We have felt the impact of the coronavirus pandemic in the same manner that every other company has felt it. From the safety point of view, having to take precautions, have people work from home, etc. We have felt all that like everybody else. But we provide essential services being in the business of nutrition. So we have been allowed to operate throughout this period; our factories have been running, we have been working very closely with government to ensure the movement of raw materials coming in and finished products around the country. We have been working together with industries that have similar products, food and pharmaceuticals, and other key essentials. Our production has been steady; consumers are focusing on real essentials; they are not buying luxury items, dairy is important to a healthy nutrition and lifestyle; more so, at this time when a strong immune system is important. We experienced some delays and difficulties with enforcement agencies, but we were able to resolve them, having been categorised among essential services that were granted access.
Our capacity to move was reduced by half; our trucks could only move during the day. Security officials required a lot of paperwork. We experienced all of those, but at the end, we resolved it all. There was a lot of consultation with government; so we had places to reach out to so they eventually allowed the trucks to move.
SMEs’ benefits
To produce a litre of milk from any cow, a lot of processes are involved. In all our DDP locations, there are a lot of small and medium businesses that have developed different things around those areas. They sell feeds and animal nutrition boosters to the farmers, they offer veterinary and consultancy services, even pasture cultivation, fertilizers, herbicides, drugs, etc. Others offer logistics trucks, farm equipment, tools, etc. At every DDP location, we have a laboratory that requires suppliers of lab equipment, chemicals and disposables. Even the motorcycle riders transporting milk from farmers to the milk collection centres are part of the value chain. We also have institutional partners – organizations, universities and government ministries. It is an ecosystem that is developing just like in other countries where we have DDP. Farmers are giving up their nomadic lifestyle and they are settling around FrieslandCampina WAMCO DDP locations where their wives have also set up cooperatives and established various businesses. The women have more time for themselves now because of having an income source; they don’t have to walk long distances to hawk items or fetch water any more.
Evaluation
The Dairy Development Programme (DDP) is still at infancy. It was difficult to call out DDPs percentage in the turnover reported because the yoghurt factory built for that was done mid-year 2019. Perhaps at the next AGM, it would be easier to call out its impact on turnover. I am sure it would be disclosed in the financial report. Right now, it is still at infancy stage. We have accelerated quite a great deal, but it will still be a long time before the expected returns on investment start to come in.
Accessing forex
We have felt the impact of COVID-19 on global oil prices. This has significantly affected the sourcing of foreign currency locally to bring in equipment and materials that we need. We are one of the six companies that have been granted access to forex and it is because of our steady investment in the dairy development programme, which we have been doing for the past 10 years.
The fact that we are expanding and scaling fast in the north doesn’t mean that there is enough raw milk. We need a lot more for production and it will take many more years of committed dairy development.