Dairy society eyes new products for growth (Business Daily story)

When 31 disgruntled dairy farmers decided to contribute Sh1 each for every litre of milk sold and register a co-operative in 1961, there was no telling that they were laying the foundation for a multi-billion-shilling business.

The enterprise that became Githunguri Dairy Farmers Co-operative Society last year grossed Sh6 billion in annual turnover and has attracted a couple of buyout bids.

Originally, the idea was to find a lasting solution to the persistent milk price volatility. But the more they pushed on, the deeper they sank into financial difficulties, forcing them to increase their contributions from one to two shillings.

Although this did not unlock their expected success, it hardened their resolve to push on.

“At that time, our credit-worthiness was nearly zero and no bank was willing to finance our business plan. Nearly all our applications for loans were turned down,” says Charles Mukora, the society chairman.

“The problem with Kenyan banks is that they present themselves as very close to potential customers but, practically, are very far from that reality.”

Unbowed and with no clear capital outlay to set up a processing plant, the membership enrolment went up, as did milk supply.

The society decided that they would supply the milk to the then market leader — the Kenya Cooperative Creameries (KCC) — and a local hotel.

“It was a desperate move and we had to start working with what was readily available. The profits were not forthcoming yet this was the only source of livelihood for most members,” says Mr Mukora.

Then the worst happened when KCC collapsed in the early 1990s, sending the society back to the drawing board.

“This was our lowest moment and we decided to raise capital and set up our own milk plant,” says Mr Mukora, who became a member of Githunguri Dairy while a student at Kenyatta University.

“We had no collateral but successfully approached Oikocredit International for possible funding and got Sh90 million.”

Oikocredit is a global co-operative and social investor that provides funding to small and medium enterprises to enhance business growth and development.

In 2004, Githunguri Dairy Farmers Co-operative Society went commercial with the first processing plant that produced Fresha whole milk, its flagship product.

It produced 18,000 litres of milk daily, selling it in Nairobi and its environs. That capacity has since increased to 220,000 litres currently from a workforce of 8,000.

Read more here http://www.businessdailyafrica.com/Corporate-News/Githunguri-Dairy-plots-to-cement-its-place-in-big-league/-/539550/2383882/-/mibs19/-/index.html

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