Making the milk processing factory functional

24-01-2022

Written by Habtamu Awoke, business advisor Ethiopia

Agriterra has assisted Gojjam Dairy Development and Marketing Cooperative Union (GDCU) in Ethiopia in making the long-time idle milk processing factory functional.

East Gojjam Zone, Amhara Region, Ethiopia is home to the union, which was established in December 2014. The union has 12 primary dairy cooperative members and 1461 individual farmers, of whom 121 are female farmers. Most of the union members are engaged in mixed crop-livestock farming activities.

GDCU has a Bulgarian-made brand new milk processing factory (5000 liters/daily processing capacity). The factory has been purchased with support from the former Agricultural Growth Program-Livestock Market Development (AGP-LMD) project. The union financed 50% of the cost and the other 50% was financed by the AGP-LMD project. The factory installation was completed in 2019 and the union tested pasteurised milk packing in December 2019, but till end December 2021, the union had not engaged in full production activity due to several issues.

Challenges

Most of the union’s issues were related to a lack of proper preparation in the planning phase. The union did not construct the needed additional facilities like laboratory rooms and offices for staff and there was a shortage of working capital and limited skilled manpower supply in the dairy processing area.
In addition, not having sufficient knowledge to identify the needed raw materials and spare parts and not knowing exactly what was needed to obtain a production license from the concerned government office, were challenges the union faced in starting its operations.

Furthermore, the members had contributed equity capital during the establishment, up to 5000 birr each, and were not ready to make an additional investment since they had lost confidence in the union operationalising the idle milk processing plant.

Actions

In March 2021, Agriterra conducted a detailed assessment and decided to support the union with a focus on making the milk processing factory functional, enhancing the union’s organisational development and improving the union’s relationship with Primary Cooperatives and member farmers. Thus, in 2021, Agriterra executed the following actions:

• Helped the union to purchase all the necessary spare parts, chemicals, and raw materials by identifying what was needed and where.
• Advised the union to construct a laboratory room.
• Assisted the union by cost sharing the key staff salaries for 6 months. All the needed staff to start the operation had been hired (production manager, quality assurance, etc.).
• Delivered marketing and branding training to the union staff and board members. Afterwards, a full-fledged marketing and branding strategy was prepared by an intern.
• Assisted the union in identifying the required documents/requirements to obtain a milk processing license from the Ethiopian Food and Drug Administration. The union gained permission to start processing.
• Hired local Agripoolers who conducted a preliminary assessment on the functionality of the milk processing factory and they also conducted a staff skill gap analysis. Based on the assessment, proper maintenance and repair of machinery and equipment was done. In addition, the union operations team received on the job coaching and training support on dairy machinery operation, dairy plant management, and dairy product quality assurance. By now, the union staff has become capable enough.
• Consultation was conducted with potential distributers and the union signed with five potential dairy product buyers.

The official start

On Saturday, December 25, 2021, the union organised an Annual General Assembly meeting (the first in the last 2 years) and inaugurated the official start of their factory. Members were delighted when they saw their factory become functional and produce different dairy products.

As a business advisor, I was so happy when I saw farmers' happiness and member farmers become more enthusiastic about making additional investments to alleviate their union’s finance shortages. Overall, with Agriterra's great support, the Gojjam Union milk processing factory started processing pasteurised milk, yogurt, local cheese, and butter.

In the year 2022, we will put emphasis on assisting the union to promote its products further, improve its financial management and governance practices, and also support the union to mobilise internal resources to further expand its business. In addition to engaging in milk processing activities, the union has different future business ambitions; establish an animal feed factory, supply cattle drugs and veterinary services, animal breed improvement and supply of new dairy technologies and equipment.