Can You Guess How Much The African Milk Market Is Worth?
Do you know how huge and interesting the African milk market really is? You’re about to find out.
It is likely that more than 60 percent of you reading this article who live in urban areas had milk in their breakfast this morning. Very likely.
It’s very likely because milk is one of the richest sources of animal protein for humans and is contained in almost everything we love from powdered milk and cheese to ice cream and yoghurt.
On a continent where cows are abundant, it remains a shocking reality that Africa currently does not produce enough milk to meet its own needs.
Despite having more than 10 percent of the world’s cattle population, Africa contributes less than 3 percent to global milk production but spends more than $500 million every year on milk imports from Europe and North America, while thousands of its cattle farmers remain poor.
The potential for milk in Africa is huge!
Yes, the potential for the milk business in Africa is huge and remains largely untapped.
For a food product as basic and vital to the human diet as milk, the consumption and demand potential for milk in Africa remains underexploited. On a continent with over one billion people, milk consumption in Africa is currently the lowest in the world.
According to the World Health Organisation (WHO), the average African consumes about 36 kg of milk every year. This is very much below the WHO’s recommended annual consumption of 200kg of milk per person.
In fact, Africa’s milk consumption compares very poorly to the global average of 103 kg of milk per person per year. These figures present a favourable picture of the interesting growth potential for milk consumption in Africa.
In spite of the huge local demand for milk in Africa, the continent produces less than 3 percent of milk worldwide. This is a shocking statistic for a continent with more than 10 percent of the world’s cattle population.
While the average annual milk production in developing countries stands at nearly 12,500 kg of milk per cow, in Africa, the average volume of milk produced by a cow in a single year averages just about 200kg in most areas.
Although these volumes are improving in some places on the continent, milk production is not growing fast enough to satisfy Africa’s expanding milk appetite.
As a result of the huge gap between Africa’s high and rising milk consumption demand and its terribly low milk production, many countries on the continent spend significant amounts to import milk from Europe and the Americas.
In fact, a country like Nigeria, with a population of over 170 million and an annual milk demand of roughly 1.5 billion litres, produces less than 5 percent of its milk locally.
As a result, Nigeria spends more than $200 million on milk imports from abroad every year. This doesn’t make any sense! Even the government knows it. Little wonder the Nigerian government is trying to place a ban on imported milk to encourage local production.
Other countries across the continent, like Niger and Mali, spend upwards of $20 million yearly on importation of pasteurized milk, a situation that negatively impacts the trade balances of these countries.
Although the challenges facing local milk production in Africa are huge, it presents a huge business opportunity for entrepreneurs who can solve the continent’s milk problem.
How can a continent with an abundant supply of cows be deficient in milk production?
The gap in the milk market is currently being plugged by importing milk products from outside Africa. While this may be working in the short term, it is definitely more expensive and not sustainable in the long term.
As income levels continue to rise across the continent and more people enter the middle class, the demand and consumption of milk will explode in the coming years.
Better still, over 300 million Africans will move to cities and urban centres over the next 20 years. As a result, the demand for milk and milk-based products such as cheese, yoghurt, ice cream and several others will increase.
A sustainable solution to milk production in Africa needs to be found. And fast!
The 3 Major Ways To Make Money In The African Milk Market
So, you’re probably interested in the impressive potentials of the milk business in Africa, in this section, we’ll outline the key segments of the milk business to help you decide exactly where you plan to fit in:
The first guys in the milk production supply chain are the milk producers. Of course, as you may have guessed, to produce milk, you need to own one or several cows.
In many parts of Africa, milk is produced by small holder farmers who typically milk their cows manually (by hand); a time-consuming and labour intensive process.
However, in developed countries, milk production is dominated by large farms which use machines to milk their cows.
Processors and Value-Added Products
Milk, in its fresh and natural form, is just a simple product and raw material. Although fresh milk can be consumed directly by humans, not very many people can enjoy the privilege (unless you live close to a dairy farm).
To extend its shelf life and quality, milk is usually processed into other products and is also used as an ingredient in several different products in the food industry.
Some of the most popular dairy (milk-based) products that sell huge volumes in Africa include; powdered milk, pasteurised milk, Ice cream, yoghurt, infant formula (baby food), and cheese.
Supporting Products and Services
The businesses in this category do not produce or process any milk but they provide products and services that help milk producers and processors succeed in their businesses.
These products and services vary quite widely and include everything from manufacturing and supplying machinery that are used by dairy farmers (like milking machines) and milk processing equipment.
Other common items in this category include veterinary products and services, training programs and technical consultancy services.
This is part of an article written by John-Paul Iwuoha for SmallStarter.com. The full article can be read here
3 April 2018