Increasing membership, raw milk intake, and output marketing of processed dairy products

Adaa Diary Cooperative Society (founded in 1997) is a primary cooperative located in Adaa Woreda, Debre Zeit town, approximately 100km south from Addis Ababa. The overall purpose of the cooperative is to improve its members' income through establishment of well-organized access to market system for its members. For this, it collects raw milk at a fair price from members and adds value on it by processing and reselling it to consumers using different channels. Adaa has a processing factory, where it is able to process around 15.000 liters of milk a day, mainly into pasteurized milk. Next to that small amounts of butter, cheese and yogurt are made. Currently, the daily milk intake is around 2500 liters a day, which is rather low compared to some years ago, where the cooperative managed to collect around 10.000 liters a day from over 900 members. Reason for the significant drop in production was a serious governance crises in combination with problems in repayment of loans. In 2012, 425 members were still determined to save their cooperative by electing a new board to revive the cooperative business. In April 2014 Agriterra conducted a company assessment at Adaa and decided based on this assessment to support Adaa in strengthening the cooperative. While working with Adaa on the 2014 Action Plan it turned out that there was still severe board interference within the daily management of the cooperative. Therefore it was only partly possible to implement the Action Plan. Because little development was visible, Agriterra together with the Regional Cooperative Promotion Agency addressed its severe concern on the future of Adaa. Fortunately Adaa and various governmental stakeholders started to address the governance problems at hand and after 3 special General Meetings, a new board was elected in August 2015 and roles and responsibilities have been clearly outlined and bylaws and cooperative regulations adapted. As a results of the changes within Adaa, Agriterra has offered Adaa its support in a second Action Plan for 2015. Currently there already is more operational freedom for the management team and as a results the general manager has started more proactively performing his job. Furthermore, the cooperative has managed in July 2015 to pay back all of its outstanding long-term loans and CNFA (donor organization) has approved a grant to Adaa for the acquisition of a truck and industrial inputs. The audit over the period July 2014 - June 2015 shows an approximate 50% increase in income and although the organization still shows a loss, the loss was around 50% less compared to the year before. The loss is mainly caused by the high amount of depreciation on the factory (Adaa is profitable if depreciation is not taken into account). The 2015 Agriterra action plan will focus on the following key critical areas: - Strengthening the overall governance capacity of board, control committee, and management. - Increasing the active membership from 175 farmers to 300 and the daily milk intake from 2500 liters to 7000 liters. - Accessing 1 million Birr working capital loan and increase own internal capital in order to realize on time milk payment to farmers and to buy various inputs. - Increase output marketing of high quality processed dairy products through developing and implementing sound branding and marketing strategy. - Reviving the animal feed production activities by supporting several pilots.