The fifth largest dairy in the world is setting up in Nigeria and Senegal. Arla Foods, a Danish company, intends to increase its revenue in the region fivefold by 2020. What impact will this have on local producers and consumers?
Strengthening Senegal’s local milk industry will help meet consumers’ needs. Photo credit: Kamikazz photo agency
The Danish dairy cooperative, which includes 12,700 European farmers among its members, is set to take over the West African dairy market. In Nigeria, where it already has a presence, Arla Foods plans to triple its turnover.
To achieve this, Arla Dairy Products has been created which, since September 2015, has been responsible for packaging, marketing and distributing Arla products under the Dano brand within the country.
In Senegal, where it does not yet have a presence, the company has created a subsidiary for which it holds 75% of the capital. Arla Sénégal SA will have the same roles in Senegal as its counterpart in Nigeria.
The Senegalese milk market already contains several large companies, such as the French companies Lactalis and Danone, which have partnered with a local company, Laiterie du Berger.
“West Africa faces a milk deficit, which gives Arla an opportunity to provide milk powder and other dairy products that meet consumers’ needs. We are here to build a long-term business, and that requires strong local partners,” says Steen Hadsbjerg, head of sub-Saharan Africa at Arla Foods.
However, in Senegal, the ‘local partners’ are not milk producers. Arla argues that the low quantity and quality of local milk means that supplies should come exclusively from imported goods. However Arla also highlights possible negative impacts of mass imports on the local markets, with consumers switching to powdered milk exclusively and dairy farmers being unable to sell their products.
For this reason, Guillaume Bastard, an expert in agricultural sectors and representative of the French development NGO, GRET, in Senegal believes it would be better to support the milk industry and help producers improve the quality and quantity of the milk produced.
“Of course, building up the local milk sector is a real challenge, but milk products are currently Senegal’s second most imported foodstuff, amounting to CFA 65 billion (€39 million) annually. Local businesses, the government and dairy farmers all have an interest in seeing it done so that income can be redistributed to the most marginalised rural populations,” he concludes.
This article by Anne Perin was originally posted on the Spore website at http://www.spore.cta.int/en/business/setting-up-in-west-africa.html