Forex restriction: Dairy product import drops by 25.19%

Following the Central Bank of Nigeria (CBN) restriction on foreign exchange for importation of certain products, Nigeria has witnessed a 25.19 per cent drop in importation of dairy products from New Zealand and three other countries.


New Telegraph reports that Nigeria imported N211billion ($578. 97million) worth of the product between 2017 and 2018.


Findings by New Telegraph revealed that the sharp drop had to do with CBN’s policy on foreign exchange restriction on the product, as statistics by International Trade Statistics (ITS) show that the country imported $331.19 million worth of the product in 2017 and $247.78million in 2018.


According to the details, the ITS data indicated that New Zealand export dropped by 9.4 per cent from $122.4million to $110.9million while that of Netherlands declined by 41.97per cent from $107.94million to $62.6million.


In the same vein, Germany recorded 32.01per cent drop in its export to Nigeria from $64.4million to $43. 79million, while 16.47 per cent crash was recorded by Ireland from $36.41million to $30.42million.


Despite the decline, demand for skim milk powder from Netherlands and Denmark has increased by 43 per cent due to deficit in local milk production.


Nigeria currently has a deficit of 600,000 tonnes of skimmed milk valued N558.6bllion (1.55billion euro). The dairy sector’s capacity is estimated at 700,000 tonnes or 53.85 per cent of the domestic demand of 1.3 million metric tonnes.


Findings had revealed that the price of skim milk powder, which was 2,300 euro per tonnes in 2017, had remained at 2,217euro per tonnes between March and December, 2018 before it was reviewed downward in order to avoid stock accumulation.


About two months ago, CBN initiated moves to implement ban on forex access to milk importers.

According to a document reportedly sighted by New Telegraph, the regulator directed banks in the country to stop the processing of milk and its related products on “Bills for Collection basis,” which allowed the importer to buy on credit.


In a circular addressed to the banks, CBN also announced that the mode of payment with regard to the importation of milk and its related products must be on the basis of Letters of Credit (LC) only.

According to a letter sighted by NewTelegraph, an email a Tier 1 lender sent to its customers included the directive as part of CBN’s efforts aimed at streamlining payment modes for food imports.


Between 2015 and 2017, importation of skim milk from Europe slumped by 34 per cent because of earlier foreign exchange policy by the apex bank. It, however, picked again in 2018.


The United State Department of Agriculture (USDA) exporters’ guides on Nigeria imports, had revealed that the country was in short supply of about 600,000 metric tones, stressing that Nigeria was a massive market for European milk.


It added that the country’s dairy market had a potential of $3billion in excess.


Also, USDA explained that two of the European Union’s most important markets for milk powders, Netherlands and Denmark, had significantly increased their exports to Nigeria because of high demand by consumers.


“Condensed milk and dried milk powder are mostly used and account for approximately 50per cent of each product,” USDA noted.


Last year, a former Minister of Agriculture and Rural Development, Audu Ogbeh,  said that milk worth $1.2 billion was being  imported into the country yearly.


He lamented that an average cow in the country produced less than one litre of milk per day, compared to other country where a cow could produce 100 litres per day.


In  order to bridge the gap, in 2017, the President of Dangote Group, Aliko Dangote, said that he would take charge of 50,000 cows by 2019 in order to produce 500,000 tonnes (500million litres) of milk per year.


The company said that it would invest $800 million in dairy production in the next three years.


Also, as part efforts to tackle milk shortage in the country, in 2015, an Irish company, Ornua, formerly known as Irish Dairy Board, opened a new packing facility in Nigeria to generate sales of 3billion euro dairy products. The company explained that it took the decision to capture the milk market in the sub-region.


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