July 15, 2022


Arla Foods and Danone to invest in cattle farms in Nigeria


Denmark-based Arla Foods and French-owned Danone are investing in cattle farms in Nigeria following Nigeria's ban on foreign exchange for the import of milk, Global Financial Digest reported.


The Central Bank of Nigeria (CBN) strictly controls the authorised market and restricts access to foreign exchange for importers of 45 products, including milk. Nigeria has two official exchange rates, with the official rate being 45% less expensive than the unofficial rate.


The cost of conducting business in Nigeria has increased due to the difficulty obtaining dollars. Arla Foods and Danone are investing in cattle farms to support their businesses, despite the fact that the Manufacturers Association of Nigeria (MAN), an organisation with more than 3,000 members, identified access to dollars as the biggest obstacle to production in the West African nation.


Jimmy Johnmark, general manager Arla, said the company is spending US$10 million on a cattle farm in Kaduna State, Nigeria.


Johnmark said the business will be able to buy foreign currency to import 400 cows in August and 1,150 over the following five years.


As part of a state-built grazing reserve, it also intends to work with the Kaduna administration to purchase milk from 1,000 pastoralists.


Johnmark said Arla expects to reduce its milk imports by about 20% in five years by producing 46,000 litres per day on-site.


Ferdinand Mouko, managing director for Danone Nigeria, said Danone is investing in a cattle farm in southwest Nigeria's Ogun State and working with private investors, such as Obasanjo Farms, which is owned by Nigeria's former president Olusegun Obasanjo, to meet the 2028 local input target of 65%.


Danone offers technical support and pledges to purchase the milk, he said, while private investors provide the cows and farm infrastructure.


In contrast to the daily average of 1.5 litres a day for local breeds, Danone plans to increase its stock to 500 cows over a five-year period with a capacity to produce 15 litres per cattle per day.


Over 90% of the domestic milk production in Nigeria comes from roaming herders.


According to the central bank, local milk production is estimated to be 500,000 tonnes, while demand is expected to be 2.2 million tonnes as of 2020. Multinational corporations are primarily in charge of processing because they import almost all of their milk inputs due to the poor yields from locally bred cows.


-      Global Financial Digest

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