Dutch dairy co-op FrieslandCampina has reached an agreement to buy Nutricima, a milk powder packaging business in Nigeria. This deal could be a positive for Glanbia.

Up to 2015, Glanbia owned a 50% stake in Nutricima, before it sold its share of the business for €28.5m.

As part of the deal, Glanbia agreed a long-term supply agreement with Nutricima and remains the primary supplier of fat-filled milk powder to the Nigerian company.

Nutricima’s facility in Lagos can process 35,000t of milk powder per annum, which mainly comes from Glanbia’s plant in Virginia.

It’s too early to tell, but Friesland’s acquisition of Nutricima may turn out to be a positive for Glanbia. In February, the Central Bank of Nigeria announced restrictions on milk powder imports by limiting the number of companies that could import milk powder into the country to just six.

This move effectively blocked Irish co-ops from exporting milk powder to Nigeria, which is by far the largest market for Irish fat-filled milk powder. Irish co-ops export more than 100,000t – or €200m – worth of fat-filled milk powder to Nigeria every year.

However, Friesland is one of the six companies that was given approval by Nigerian authorities. Friesland’s ownership of Nutricima may allow Glanbia to continue to export fat-filled milk powder to Nigeria. The big question is whether Friesland has the capacity to manufacture enough fat-filled milk powder to displace the significant volumes that Glanbia ships to Nutricima every year. Time will tell.