The end of EU milk quotas - Implications in West Africa. Literature review and future perspectives

The abolition of milk production quotas in the European Union (EU) in 2015 allows for an increase in dairy production, especially in the EU's biggest exporter countries. This review aims to project the possible impacts of this policy change in West Africa. Several factors, including a predicted increase of exported European whole milk powder (40 % increase in 2015-2025), the investment of several European dairies in West African markets, the strong demographic growth projected in the region and the stagnating domestic production, culminate in the conclusion that the abolition of EU quotas is likely to accelerate milk powder imports in West Africa. This could diminish demand for local milk and, more importantly, discourage efforts to reinforce the local dairy sector, possibly resulting in long-lasting negative effects on local production and processing conditions. However, accelerating imports would likely not transform the sector profoundly. Rather, it would deepen the existing structural dependency of West Africa on imported European milk powder. The negative consequences mentioned do not occur automatically but depend for instance on the substitutability of local milk by imported milk powder. Even the possible positive effects imports can bring, such as spurring local processing industry, should not be taken for granted, as they are conditional to low milk powder prices. Increasing the share of local milk processed in regional dairies is key for reinforcing the local sector but, due to numerous constraints, this requires considerable investment. Whilst European dairy companies already active in the region could provide the local sector with the needed capital, the regions' governments must formulate appropriate agricultural and trade policies to ensure these investments prove successful. The West African dairy sector can neither rely solely on local milk today nor in the foreseeable future, which is why “inclusive” industrial strategies are promoted: instead of concentrating exclusively on milk powder, as most industrial dairies do today, using both milk powder and raw milk could provide wider economic gains to both dairies and producers. This study calls for more research on the substitutability of the two product types and on the trade of fat-filled milk powder, an increasingly interesting product on West African markets, in order to better predict the future of the local dairy sector