Summary
While FCW continues to invest in milk collection centres and farmer training to expand local milk procurement, local milk purchases continue to be dwarfed by the scale of milk powder imports form the EU. Indeed product development such as the introduction of Peak Fat Filled Milk for cholesterol conscious consumers would appear to further lock in the import dependent dairy sector development model which dominates West Africa. It may need to await fundamental changes in the dairy supply and demand equation for any changes in the current import dependent model to be brought about.
FrieslandCampina WAMCO (FCW), the Nigerian subsidiary of the Dutch dairy cooperative FrieslandCampina, announced the opening in 2017 of a fifth milk collection centre to expand its sourcing of local milk (1). The new milk collection centre ‘has the capacity to hold 12,000 litres of raw milk daily and will serve about 500 new dairy farmers in the area, reducing the distance covered to deliver milk for bulking’. This it is hoped will give rise to quality improvements in the milk delivered to the factory in Lagos for further processing. The addition of the new milk collection centre takes the number of FrieslandCampina WAMCO milk collection centres to 5 and increases its ‘daily milk collection capacity to 40,000 litres’ (2).
This forms part of FrieslandCampina WAMCO’s broader ‘Dairy Development Programme’ which includes training of partner farmers and the promotion of farmer to farmer links between the Netherlands and Nigeria. FrieslandCampina WAMCO also looks to use local government school feeding programmes to find outlets for locally produced milk.
These developments need to be seen against the background of the scale of import dependence of FrieslandCampina WAMCO’s dairy operations. The value added statement in the 2017 annual report revealed fully 85.7% of materials and services procured were imported, up from 68.4% in 2016 and 72.3% in 2015.
2017 also saw FrieslandCampina WAMCO expand its product range by the ‘introduction of Peak Fat Filled Milk’, aimed at ‘consumers who prefer milk that is low in cholesterol’. It is noteworthy that fat filled milk powders are playing an increasingly important role in the EU’s milk powder export trade to Nigeria, increasing 27.5% year on year in 2017 and being almost three times higher than in 2003.
EU milk powder exports to Nigeria (tonnes) 2013-2017
| WMP | SMP | FFMP° | Whey | Total | |
| 2017 | 24,526 | 24,632 | 84,189 | 3,571 | 136,918 |
| 2016 | 17 161 | 22 924 | 66,011 | 3 413 | 109,509 |
| 2015 | 27,757 | 22,673 | 87,439 | 3,906 | 141,775 |
| 2014 | 35 958 | 34 281 | 71,477 | 3 376 | 145,092 |
| 2013 | 38,467 | 27,284 | 57,410 | 2,548 | 125,709 |
Source: EC MMO and °EC market access data base
Overall in financial year 2017 FCW was able to increase its turn over by 13.2% despite very difficult economic conditions in Nigeria linked to the decline in oil prices and a fire at the company’s evaporated milk facility that disrupted production (1).
| Comment and Analysis Despite efforts to promote local dairy sector development the milk collection capacity of FCW’s five milk collection centres represents less than 1% of the milk equivalent volume of milk powders imported from the EU. This places FCW’s dairy development efforts in Nigeria in perspective, with these initiatives having little impact on the import dependency of the company’s operations.This is unlikely to change for as long as EU milk powder prices remain so low and new market opportunities can be developed through product innovation using tailored imported raw materials (e.g. the introduction of introduction of Peak Fat Filled Milk for the cholesterol conscious consumer). Indeed, in the long term product innovation looks set to mould evolving consumer preferences in ways which will build a bias in favour of import based dairy products rather than dairy products produced from locally sources milk. This could come to carry profound implications for dairy sector development not only in Nigeria and the wider West African region, but across the continent, given the underdeveloped nature of consumer demand for dairy products in Africa. Companies such as FrieslandCampina and Arla (both farmer owned dairy cooperatives) appear genuinely committed to supporting local milk producers in Africa and yet continue to find themselves locked into an import dairy sector development model by the commercial realities of competition in the West African dairy sector. It may well need to await the fundamental change in the dynamic of global dairy markets projected for the mid-2030s (when is projected a global shortage of milk will emerge) before any real prospects emerge for a substantive shift away from the import dependent model of dairy sector development which is firmly entrenched in West Africa |
Sources
(1) Business Day, ‘FrieslandCampina WAMCO makes new investment as revenue rises’, 21st May 2018
http://www.businessdayonline.com/morecompanies/real-sector/article/frieslandcampina-wamco-makes-new-investments-revenue-rises/
(2) FrieslandCampina-WAMCO 2017 Annual report, April 2018
https://s3-eu-central-1.amazonaws.com/fc-nigeria-prod/app/uploads/2015/07/FrieslandCampina-WAMCO-2017-Annual-Report.pdf
(3) FrieslandCampina-WAMCO 2016 Annual report, February 2017
https://s3-eu-central-1.amazonaws.com/fc-nigeria-prod/app/uploads/2015/07/FrieslandCampina-WAMCO-2016-ANNUAL-REPORT.pdf
(4) FrieslandCampina-WAMCO 2015 Annual report, March 2016
http://nasdng.com/downloads/nasd_publications/FrieslandCampina_WAMCO_2015_Annual_Report.pdf