Rearing milk producing animals has long been a traditional part of Ethiopia’s agricultural culture. At 49m head, its cattle herd is Africa’s largest and cow milk accounts for 92% of total milk production. However, most milk is still produced for own village and own household consumption. Linking producers and consumers is particularly challenging in Ethiopia. The dairy market suffers from a seasonal mismatch between supply and demand, the former fluctuating because of climate, the latter because of religious fasting.
Specializing in dairy sciences, Binyam Kassa worked for a government organization as a researcher and an independent dairy production/processing consultant for over a decade. He resigned to start his own business because of his strong vision to produce and market quality dairy products and capitalize on the strong relationships he had built with milk producers, input and equipment suppliers over the years.
Soon after entering into the dairy processing business, Binyam learned about the Ethiopia Sustainable Agribusiness Incubator (ESAI) project under Precise Consult International PLC in partnership with USAID. The three-year project works with start-up businesses, provides technical assistance to agribusiness entrepreneurs, supports innovative private sector actors, facilitates the start-up process for entrepreneurs and connects smallholder farmers to global markets. Although Binyam was well versed in the dairy sector, he saw working with the ESAI project as a great opportunity to gain the support he needed to start and manage a successful agribusiness that could tap into the untouched value-added dairy market and empower smallholder dairy farmers in Ethiopia. With the help of ESAI, Binyam was able to quickly develop a business plan that gained the interest of 9 banks who were willing to give Binyam the start-up capital he needed to fulfill his vision.
Lactal Creamery PLC raised 1.7M Birr in capital funds and established 3 shareholders as partners in the company. One prominent shareholder of Lactal Creamery is the Addis Ababa Livestock Production and Productivity Improvement Services (ALPPIS). Lactal Creamery is categorized as a manufacturing agro-industry engaged in the production of yoghurt, cheese and cream at its first phase, with future plans to diversify its product line to milk powder
after its second year of operation. The company’s head office is located in Adama but Binyam specifically chose to set up his milk processing plant in Asella in the Arsi milk shed zone of the Oromia region (175 km from Addis Ababa) due to the immense amount of opportunity in the region where currently there are no milk processors and raw milk prices are fairly low. There, he rents office and working space where within the first month all machinery was fully assembled and ready for production.
Binyam works closely with the Asella community. The Arsi Dairy Cooperative Union is the main milk supplier for Lactal Creamery, while Arsi University works with Binyam to transfer technology useful in the manufacturing of milk products. Aside from the strong relationship Binyam has built with local partners, he also reached out to other dairy incubatees in the ESAI project to sustain both his innovative efforts and to support theirs. Ethio-Feeds PLC will supply Lactal’s milk suppliers with animal feed to ensure that the cows are producing the high quality milk that they can and Hirut Dairy Product Distribution Company (HDPD) will assist with the packaging and distribution of the produced milk products.
If all goes as planned, Lactal will hire 27 employees once the factory is up and running at full capacity. Binyam has already secured clients ready to buy Lactal products: these clients include Beemnet Restaurant and My Burger. Lactal Creamery’s target market includes wholesalers, supermarkets, hotels and restaurants where milk products like cream cheese, ricotta, feta cheese, mozzarella, provolone, parmesan, gouda, and pasteurized and powder milk will be made available.
Although Binyam was well versed in the dairy sector, he saw working with the ESAI project as a great opportunity to gain the support he needed to start and manage a successful agribusiness that could tap into the untouched value-added dairy market and empower smallholder dairy farmers in Ethiopia.