‘Children are dying of malnutrition in this country.’ It’s the managing director of the biggest dairy company of Nigeria who raises the alarm.
Entering the production plant of the market leader in Nigerian dairy is an acquaintance with the companies professionality. After the official registration one is taken to a classroom to watch an introduction video about safety and hygiene in the company. You need to pay attention, warns the ‘teacher’, because he will test you afterwards. Only the ones who succeed, receive a Safety & Hygiene Induction Card to enter the company.
At the scrupulously clean production plant on the industrial area of Ikeja in the northern outskirts of Lagos, the most populous African City, standardization of procedures is implemented up to the highest level. Rahul Colaco, Managing Director at FrieslandCampina Wamco Nigeria PLC, welcomes us with a firm hand and a comforting smile, before insisting on presenting a company presentation.
“We are here to stay”, he assures, when a sheet shows a history of this company since 1954 when the Peak Brand first arrived in Nigeria. “It’s like a marriage. We are in this country in good and in bad times.”
Current times can be considered as bad times. Nigeria undergoes an economic and financial recession since oil prices collapsed two years ago. The inflation is enormous. Nigeria has the biggest population of Africa and depends for its food on imports, which becomes more and more expensive.
“Of course this has an impact on the dairy market and on our company. But the real crisis is that every day in this country, 3.000 children below five are dying. 1.000 of them are dying due to malnutrition. That’s where we as the market leader have a responsibility.”
Colaco made his international executive career within the multinationals Unilever and FrieslandCampina (see box: CV). Talking about business, he sounds modest and reserved. When it comes to issues as children’s health and also about the development of smallholder farmers, he goes passionately. The executive sounds like an idealist, more than a businessman: “Did you know milk contains more than forty healthy substances a human being cannot compile himself?”
Talking with Colaco, one understands that it makes sense that the London-based journal Capital Finance named FC WAMCO the company with the best CSR programmes in West Africa. The dairy company has a CSR-tradition dating from times before Corporate Social Responsibility became an issue. “Already in 1985 we started a demonstration farm to develop dairy production in the community”, Colaco knows. “It didn’t succeed“, he admits. “But we learned a lot.
Since five years, this company runs the Dairy Development Program, in partnership with the government which aims to cut the nation’s huge import bill for food, amongst which only for dairy they spend €1.2 billion. At the same time, they want to create jobs while developing the farmers’ communities.
FC WAMCO already invested more than €12 million in its Dairy Development Programme. It all started in Oyo State, not far from Lagos, where Fulani farmers who are traditionally nomadic herdsman are supported by settling, improving their production and working together with local collection centers. Over 2000 Fulani milk producers and potential smallholder dairy farmers already have been engaged and trained.
“We train them on water storage, feed production and on collecting their milk under clean conditions.” A breeding program will introduce crossbreeds that are able to produce more than half of the current production of about 1,5 liters per day. But hygienic handling and processing and the right conditions for storage and transport might be even more important.
At the moment expansion takes place in the form of knowledge, which FC WAMCO fulfills together with other technical partners, but also with the Dutch agricultural university Wageningen UR and recently two Nigerian Universities. An exchange with Dutch dairy farmers is part of the program.
The Dairy Development Program is in line with route 2020. A strategy launched by Royal FrieslandCampina, with the purpose: ‘nourishing by nature’. The largest dairy cooperative in the world takes its responsibility when it comes to feeding the growing world population. It’s not just about food, it’s about healthy food. “We aim for better nutrition, a better life for the family farmers and we want to establish this not only for this moment but for the generations to come.”
A better life for farmers means investing in smallholder farmers. “We believe small scale dairy farmers is the way to go”, Colaco mentions, even without asking. “Big scaled farming doesn’t work. It’s very expensive.” Colaco takes dairy farming throughout the world into account when he concludes: “Yes, there are some successful examples of large scale dairy farming with around 1.000 cows. But that number is very limited.”
It’s not that the managing director wants to keep farmers small and poor, he wants them to become small and successful. Profitable. Colaco is convinced of the agricultural potential of Africa, where 80 percent of all citizens is smallholder farmer. Where a transition from subsistence to commercial farming has a vast impact on society. “A transition to professional commercial farming helps the development of whole societies, where jobs are created in processing, marketing, and logistics.”
It takes more efforts to invest in smallholder farmers then establishing a big professional farm that produces under the right conditions. It takes efforts and the costs are high. “The real advantages will come in the long term. An investment in smallholder farmers is an investment in the future. It’s sustainable.”
EU-subsidized dairy products
Colaco is only since two years in charge at FC WAMCO. He seems the right man in a company that takes its responsibility. A task that might be rooted in the Dutch heritage of FrieslandCampina. The Netherlands has a tradition of strong public opinion and pressure groups that criticize companies behavior.
A big issue among those groups in Western Europe is the production of agricultural surpluses. EU-subsidies make it possible those surpluses are exported all over the world, which leads to market prices this low, local farmers would not be able to produce.
FC WAMCO does its utmost to supply milk for the masses. In Nigeria, it is praised for their efforts to sell milk to the big low-income consumer groups. People throughout the country are able to buy sachets of 14 gram skimmed milk in their local shop, for as little as 20 Naira (€0,06).
Colaco is proud to have achieved this result. That his company is able to provide this source of health, even to the poorest people. In a country as The Netherlands, those activities are explained as an attempt of the European dairy industry to ruin the local market in Africa.
The subsidized dairy industry makes the competition on the world market unfair, is the reasoning. EU-subsidized dairy products from a big milk country as The Netherlands ruin the market of the local smallholder family farmer in West-Africa, according to this impeachment. Local smallholder farmers are simply not able to produce for the price of the milk that’s sold in their local shop. Also, FrieslandCampina is accused in Dutch papers.
In Nigeria however, this is not an issue at all. Agricultural professionals praise the company and its efforts to market dairy products for the mass. Healthy products which are also affordable for the very low-income groups.
When faced with this issue, Colaco seems a bit surprised. It indeed is not an issue in this country, he does not feel confronted at all. The market cannot be ruined in any way, simply because there is no significant dairy market. “The local production is very limited.” It did not have any chance to develop under the Nigerian regime of the past decades, which has been focussing on oil exports only for half a century.
And yes. In this line, it is true that developed countries have a lot of advances, a country like Nigeria can only dream of. “It is difficult for a developing country like Nigeria to catch up with the world market”, Colaco admits.
Nigeria imports 98 percent of all its dairy products. Also, FC WAMCO still needs to buy almost all of its raw ingredients in the form of milk powder on the global market. That’s the way the market is organized, it’s not FrieslandCampina who is to blame for this.
“But we sure do have a responsibility to develop the local market”, Colaco tells. “We owe it to the citizens of this country with whom we share a history.” But is it only ideology? Is there not a corporate advantage that lies on the base of this policy?
“Yes, it’s also good for the company when we do not only depend on the world market”, he admits. Especially in those times of tremendous inflation, when importing raw milk on the world market becomes rather expensive. That’s one of the reasons to invest in the Dairy Development Program.
Through this mission, the dairy manufacturer is able to collect at least 21.000 liters of raw milk from this local supply chain every day. This, however, is only 3 percent of the total demand of 260 tons per year. Their target is to collect 10 percent of their demand within five years.
But it’s certainly not the most important aspect, considering his reaction: “I think that countries that are strong in milk have a responsibility. Milk is a human right!” says the idealist in him. “It’s not only a role for governments, it’s also a task for companies.”
The feeling of responsibility goes far. The managing director aims to make the national dairy sector competitive on the world market. “Of course it’s possible. Nigeria has very good circumstances for dairy.”
It happened in his home country India. “Forty years ago the country depended completely on the world market. Nowadays it’s self-sufficient. Also, East-Africa is more or less self-sufficient at the moment. It took them 15 to 20 years. I don’t know how long it will take for Nigeria, but I hope it will not take forty years.”
And there’s no need for this. “We live in other times. There’s a lot of knowledge in the world today. Our Dairy Development Program gets support from Brazil when it comes to feed preservation, and if it comes to knowledge on establishing cooperatives, we get support from The Netherlands. We do not have to develop everything ourselves. We can use suitable genetics, the right feed ingredients, we can use sophisticated technology for milk collection and processing… everything.”
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© Marc van der Sterren | Farming Africa
This article is published in European Dairy Magazine