CBN to regulate Fintech companies, Financial inclusion, CBN FX Manipulation, CBN Governor, Foreign exchange, Economic report, Outflow, Inflow, Forex, Godwin Emefiele, Central Bank of Nigeria, Forex reserves

Milk and other dairy products might be added to the Central Bank of Nigeria’s list of restricted products on the foreign exchange.

This is connected to the desire of the apex bank to boost local production of dairy products and increase investment in ranches within the nation.

According to reports, CBN Governor, Godwin Emefiele told operators in the industry that milk and some other dairy products would be restricted from accessing foreign exchange, both at the official and parallel markets if they don’t invest in ranches.

What this means: Ranching has become delicate since the Federal Government’s proposed RUGA policy. This move made by the CBN could intensify the struggle for land between herders and farmers.

Operators in the industry might feel coerced to participate in the policy without CBN checking the existing business model and the socio-ethnic concerns milk and meat may incite.

[READ ALSO: Insight: Why Domino’s Pizza is the consumers’ choice]

The decision was reached after two meetings by the Central Bank of Nigeria with dairy product manufacturers. The meeting focused on better ways they can start investing in ranches, as the operators in the meeting expressed concerns about the bank’s use of monetary policies to address fiscal issues.

Operators’ views: Many of the operators in the industry said that adopting ranching in other locations would not align with their companies’ strategies. They also said that the successful model for Nigeria would be driven by the conversion of pastoralist community breeds to better yielders through cross-breeding, milk collection, and the introduction of smallholder farming model. They urged the CBN to ensure that the existing 5% import duty on milk raw materials and access to forex remains for all dairy companies involved in backward integration with proof of on-ground facilities, milk collection, and usage.
The operators also noted that powdered milk should remain a raw material since it’s been used in producing other products consumed in the country.
Importation of milk: Audu Ogbeh, former Minister of Agriculture and Rural Development, disclosed that milk worth $1.2 billion is imported into the country yearly. He further noted that national dairy output and demand were estimated at 700,000 metric tonnes and 1,300 metric tonnes, leaving a supply gap of about 600,000 metric tonnes.He said that an average cow in the country produces less that one litre of milk per day, compared to other climes where a cow could produce 100 litres per day, and that moving cows from place to place is a major problem affecting the animals and milk production in Nigeria.Can Nigeria meet up with the demand gap? According to some of the operators, there could be implications for consumers if the bank succeeds in its resolve to restrict access to foreign exchange for dairy products without a backward integration plan.

They also noted that consumers may have to pay more for the products, and since the demand gap for milk cannot be immediately met, it would encourage smuggling. Also, companies’ investment in the industry might be at stake and the renewed struggle for land between herders and farmers could worsen.

[READ FURTHER: CBN is set to recapitalise Nigerian banks again]

 

Coronation Research

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.