Nigeria Signs $1bn Milk Import Deal with Uganda, Despite Larger Cattle Population

News in brief:

-Nigeria will import 200,000 tonnes of powdered milk from Uganda under a $1 billion (₦1.45 trillion) agreement.

-Analysts say the deal highlights decades of underinvestment and policy failures in Nigeria’s livestock and dairy industry.

Nigeria has signed a major milk import agreement with Uganda valued at about $1 billion (₦1.45 trillion), a move that has reignited debate over the country’s long-standing challenges in livestock development despite owning one of Africa’s largest cattle populations.

Under the agreement, Uganda will export about 200,000 tonnes of powdered milk to Nigeria, marking Kampala’s largest dairy export deal to date. Shipments are expected to commence before the end of the year, with milk transported from Entebbe to Lagos to meet Nigeria’s growing dairy demand.

The deal, initially announced in 2024, has drawn attention because Nigeria, with an estimated 20–21 million cattle, has a significantly larger herd than Uganda’s, about 14.5 million cattle. Yet Uganda produces 3.8–3.9 billion litres of milk annually, while Nigeria’s output is estimated at 600,000–700,000 tonnes, far below its annual consumption requirement of 1.6–1.7 million tonnes.

Heavy Dependence on Imports

As a result, Nigeria currently imports around 60% of its milk and dairy needs, spending over $1.5 billion annually on dairy imports.

Dairy products remain one of the largest components of Nigeria’s food import bill, placing sustained pressure on foreign exchange reserves and widening the country’s agricultural trade imbalance.

Industry observers say the steady influx of imported dairy products has weakened local production capacity.

Many Nigerian dairy farmers struggle to compete with cheaper imported milk substitutes, particularly fat-filled milk powder from Europe, forcing some out of business. Several local dairy farms have shut down or been sold, with owners redirecting capital to ventures perceived as more profitable.

Analysts describe the situation as fundamentally unequal.

While European dairy farmers benefit from heavy subsidies, organised supply chains, and export incentives, Nigerian farmers operate with limited state support, poor infrastructure, and restricted access to finance, making competition extremely difficult.

Why Uganda Succeeds Where Nigeria Lags

Experts say the contrast between Nigeria and Uganda reflects policy choices, not natural resource constraints.

Uganda has invested consistently in modern dairy farming, improved cattle breeds, processing plants, cold chain infrastructure, and export logistics. Nigeria’s dairy sector, by contrast, remains largely traditional, dominated by low-yield cattle producing as little as 0.5–1.5 litres of milk per cow per day.

Uganda’s dairy industry is now one of East Africa’s fastest-growing agricultural sectors, supported by lower production costs and a deliberate shift into value-added processing.

Strategic Shift in Uganda’s Export Focus

The Nigeria–Uganda deal is expected to boost Uganda’s dairy export earnings into hundreds of millions of dollars annually, positioning Nigeria as its single largest export market.

Ugandan officials say the agreement also reflects a strategic move away from unpredictable regional markets. Kenya, once Uganda’s biggest dairy buyer, has frequently imposed import restrictions.

“With or without approval from certain quarters, milk will move,” a senior Ugandan agriculture official was quoted as saying.

What Nigeria is Losing

Experts argue that if Nigeria invested even a fraction of the $1.5 billion spent annually on dairy imports into improved breeds, ranching systems, processing facilities, and cold chain infrastructure, the country could meet domestic demand and potentially become a net exporter.

Beyond food security, analysts warn that rising dairy imports worsen foreign exchange pressure, weaken rural livelihoods, deepen poverty, and intensify land-use conflicts linked to grazing routes, further aggravating broader security challenges.

Some point to isolated successes in states such as Adamawa, where modern dairy projects show that local milk production can scale with the right investment, technology, and policy support.

However, such examples remain exceptions. Although the federal government has announced several livestock reform initiatives, including the creation of a livestock ministry and ranching programmes, progress has been slow.

For many observers, the Uganda deal underscores a hard truth: Nigeria should not be importing milk from countries with fewer cows.

“It is a national emergency affecting food prices, jobs, security, and global standing. We already know what needs to be done; what is missing is the will to act,” one analyst said.