NIGERIA – Nigeria’s dairy industry, crucial to the country’s agricultural sector, is poised for growth with increased investments and government backing, despite current challenges in meeting rising milk and dairy product demand.
With a current population of over 227.9 million, projected to swell to 401.31 million by 2050, the need for dairy is expected to rise significantly. Yet, the industry remains fragmented and unable to fully capitalize on this demand.
The Nigerian dairy sector is divided into three primary production systems. The pastoral system, operated mainly by Fulani herdsmen, contributes approximately 95% of the country’s raw milk. Despite its scale, this system faces challenges due to traditional practices and insufficient infrastructure.
In contrast, the commercial system, which includes established dairy farms with a mix of indigenous and crossbred cattle, produces only 5% of the milk. This commercial system is more structured but still unable to bridge the gap between production and demand.
Currently, Nigeria’s dairy farms produce around 600,000 liters of milk annually, falling far short of the estimated 1.6 million tonnes required to meet domestic demand.
This shortfall results in Nigeria spending about US$1.5 billion annually on dairy imports, with around 70% of the demand being met through imported milk powder. Despite efforts by multinational corporations and local processors to boost production, the industry continues to face stagnant growth.
The formal dairy market in Nigeria is dominated by multinational companies such as Friesland Campina WAMCO and Arla, which largely rely on imported milk.
These companies have made some progress, with FCW being the only multinational currently sourcing raw milk locally. Meanwhile, indigenous processors like Integrated Dairy Limited and L&Z Integrated Farms are also making contributions, though their impact remains limited.
Infrastructure issues further exacerbate the problem. Poor roads in rural areas hinder farmers from transporting their products to market, resulting in significant losses.
Additionally, inadequate storage facilities lead to postharvest losses, diminishing the profitability of dairy farming. Financial constraints are another major hurdle, as many farmers lack the funds needed to invest in improved breeds, veterinary services, and modern dairy equipment.
Marketing and distribution challenges also persist. The absence of organized marketing systems and distribution networks forces farmers to sell their products to middlemen at reduced prices, limiting their profit margins. Moreover, inadequate packaging and labeling reduce the marketability of dairy products, impacting overall demand.
Despite these challenges, the dairy sector in Nigeria has a promising trajectory. The sector is expected to experience growth driven by population expansion, increased disposable income, and a shift towards healthier dietary options.
Market insights suggest that Nigeria’s milk market generated revenue of US$5.90 billion in 2024, with an annual growth rate of 10.70% anticipated between 2024 and 2028. The yogurt and cheese markets also show strong performance, with significant revenue growth expected.
To address the sector’s challenges, the Nigerian government and stakeholders are investing in agricultural development and support for local farmers. Initiatives such as the National Dairy Policy (2023-2028) aim to guide investments and enhance domestic milk production.
Furthermore, partnerships with international and local companies are fostering improvements in local production capacity and reducing dependency on imports.
Check out the latest issue of Dairy Business Africa Magazine for a detailed article on the state of Nigeria’s dairy sector.
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