MERU Dairy update, info fresh from experts in Kenya!

01-04-2015 Agriterra has been supporting Meru Central Dairy since 2013 in order to improve its business, realise increased production and ensure good milk price payments to its members. A new plan is in place to expand its processing capacity now and in the future. An onset of its current activities promises a growth impression in the future. Meru Dairy projects 300,000 kgs milk processing, a 323% increase in milk intakes and 523% increase in milk sales as at 2017. Leading to improved farmer's production price from Ksh.38 to Ksh.50. In order to discuss the plans, a team of experts from DeltaMilk/De Graafstroom, a cheese factory in the Netherlands, is currently visiting Meru Central Dairy for a week. Joris Aarts and Bas Lavrijsen tell us about their activities:

"We have met the Management team of Meru Dairy and the technical team, being the Factory Engineer, the Quality Control Manager and Productions Manager. We also had an extensive walk-around the processing machinery. Human labour is still excessively used i.e at yoghurt production. An assumption is they are undergoing a loss! The team believes a lot of costs could be saved. Production costs are to be determined before the end of the week. A proposal is to acquire new fermentation tanks and filling machines.

The next day we met the CEO who emphasized on Meru paying good prices to its members. We agreed on short daily meeting for briefing. With the Finance Manager we talked about loans and equity. The situation looks good except for a 400M loan from the Finnish government dated 1982. The coop is in the process of eliminating the loan from the books as the government of Kenya is responsible for its payment. Otherwise this payment would be worse than closing down the business!

In the meantime a new processing plan has been presented. The idea is to extend the building and not entirely build a new one. A possibility would be to acquire new-tetra pak machine and fresh milk sterilizer. And also new fermentation tanks and filling machines as earlier mentioned.

We're now compiling cost prices of existing products; Fresh milk, UHT, Yoghurt, Mala (fermented) and working on a second cost price evaluation of new proposed products, cream and butter."

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