Transitioning from Development to Commercial Investment in Africa-Trevor Tomkins Ph.D.

Enterprise Based Dairy Development

Trevor Tomkins Ph.D.Founder and President venture | dairy

Transitioning from Development to Commercial Investment in Africa

Africa Dairy Association ConferenceSeptember 2014

Nairobi, Kenya – September 2014 | 2

Contents

Historical Perspectives Enterprise Model• Shared Values

• Upstream Needs

• Downstream Opportunities

Summary


Historical Perspectives - Background

Development has been a ‘push’ model – not ‘pull’ Processors have generally been “harvesters” not

proactive in sourcing milk and sharing value Skill and experience base of ‘technical service’

frequently not sufficient Lack of access to capital Lack of access to appropriate technology


Historical Perspectives – The Present

Low milk yields, poor feed efficiency <1 kg milk per kg of feed

Poor quality milk, contaminated, adulterated Lack ability for expansion Aging farming population Entrepreneurs without opportunity Need to connect the whole value chain Need public-private partnerships that WORK


FARMS FEED/SERVICES COLLECTION PROCESSING MARKETSCapacity Building

Fair Price Supply Contracts

AnchorProcessing

ProductionPlatform Farm(s)Extension ServicesCooperative SupportTechnical Assistance

Dairy HubFeed/Feed analysisPremixes/concentratesVeterinary/SuppliesQuality Laboratory and supportMicro loansServices, AI

CollectionTransportation SolutionsChillingQuality Laboratory and testingDigital payment to producersHygiene controlTechnical support

Capital lntensivePull Through for Supply ChainServices Multiple Dairy HubsServices Multiple collection CentersPackagingFormulation innovationProducts deeper into economic pyramid

Marketing/Sales/Distribution• Liquid milk• Fortified milk• Flavored Milk• Milk powder• Butter/ghee• Paneer• Yogurt• Cheese• Ice Cream• Whey• UHT/ESL/Pasteurized/raw• Research and

Development• Product innovation• Point of sale packaging• Distribution methods

For Profit Enterprises

Leveraging : Non-Profit /

Government Support

$

Dairy Hubs

$$

$$$

Servicing Multi Villages

Processing

Branded

Consumer Products $$$

venture | dairy - Shared Value

‘Pull’ versus ‘Push’Farmer focused processingFarmer and Employee Ownership


Operational Expertise

venture | dairy - Development through Enterpriseimpact model – “pull not push”`

Replicable Platform

Sca

lab

le E

nte

rpri

ses

Commercial returnsfor investors

Filling a missing link – milk processing

Business skills

Technology

Management systems

Finance

Dairy know-how

Technical Expertise Networks

Entrepreneurial empowerment

Anchor processing firm-based projects

Improved food security

Value chain enhancement

Job creation

Increased opportunitiesfor women

Smallholder farmer benefits

Positive environmental impact --Climate change --Water sparing --Waste reduction

Improved nutrition

Profit Motivation

Social Impact

Develo

pin

g E

con

om

ies w

ith

Hig

h

GD

P Accelerating Economic Development

Strategic Project Partners

Market Driven

Sector Specific – Dairy


Dairy Value Chain: As Is

7

Inefficient use of and waste of feed and fodder

No nutritional analysis of feeds fed to cows

Animal disease Poor genetics Unhygienic milking

conditions

Production / Farmers

Delivery / Collection

Informal Retail Markets

Poor road infrastructure, no accessible collection

Insufficient cooling Milk waste and spoilage Low quality and high

pricing of the products due to middlemen

Inadequate or missing facilities

Poor or missing quality control procedures

Old or inefficiently operated facilities

Lack of attention to product market demand

Milk waste and spoilage

No transparent pricing mechanism

Products unsuitable for mass market, i.e., perishable products, large package sizes

Inflation of prices by informal market

Challenges

MISSING LINKNGO FOCUS


Dairy Value Chain: Market Improvements

8

Production/ Farmers

Processing

Products and

Packaging

MarketsDairy Hubs/

Collection

Balanced diet and water

Animal vaccination and veterinary care

Modern genetics (artificial insemination)

Forage preservation Improved hygienic

conditions

Training and education to farmers

Well-managed and mobile collection

Readily available technology and improved infrastructure Record-keeping

Quality control Transparent pricing

UHT processing Pasteurization State-of-the-art

technology Provision of regular

demand to farmers Consumer market

development

Improvements Required Pasteurized or UHT

milk Smaller packaging Product

diversification and value-add products

Fortification (+nutrients)

Professional marketing and product placement

Branding

svc_act

Should we refer to Processors as 'Anchor Processors'


Economic Farming Units


Best Production Practices


Dairy Hub Concept

GENETICS VETERINARY SERVICES

RECORD KEEPING

MILK COLLECTION-

QUALITY

ANIMAL HEALTH

ARTIFICIAL INSEMINATION

FEED NUTRITIO

N

FORAGE PRESERVATION

SMALL HOLDER FARMERS SATELLITE HUBS

MILK

PR

OC

ES

SO

RM

AR

KET


venture | dairy Financial Model

NGO’s may support

capacity building(non dilutive)

Non-profit partners DiDC, Heifer

International, others

venture | dairy LLC

investment company

Dairy Hubs provide

services & products.

Set up model farms

Processing facilities

make products

Butter, cheese, ghee, paneer

YogurtsUHT and non-UHT products

Collection centerssell milk to established

markets

Small holder

farmers


Summary

A transition will only occur when three critical things happen• There is transparency along the value chain in terms of

pricing and access to markets

• NGOs understand that access to capital (both debt and equity) is the fundamental for change

• There is access to appropriate technology and supported by qualified and experienced technicians

• FARMERS THE WORLD OVER LEARN BY BEING SHOWN AND NOT BY BEING TOLD


Summary (cont’d)

We need:• Milk processors who will work upstream to provide

extension service, the payback is real

• Platform farms that will show best practices

• Providers of low cost farm infrastructures and equipment against which financial institutions will lend money

• Fair and equitable sharing of the value created along the value chain

Trevor Tomkins Ph.D.Founder and President venture | dairy

Transitioning from Development to Commercial Investment in Africa

Enterprise Based Dairy Development

Africa Dairy Association ConferenceSeptember 2014

Transitioning from Development to Commercial Investment in Africa-Trevor Tomkins Ph.D.

Economy & Finance

Transcript of Transitioning from Development to Commercial Investment in Africa-Trevor Tomkins Ph.D.