TABLE OF CONTENTS PAGE

1. Definition of the Problem....................................................................................................1

2. Background.........................................................................................................................2
3. Goal Statement and objectives............................................................................................3
4. Implementation Strategy.....................................................................................................3
4.1. Integrated raw milk collecting strategy........................................................................3
4.2. Quality milk Production Strategy...................................................................................4
4.3. Market strategy.............................................................................................................4
5. Management plan and key personnel..................................................................................4
5. Interventions and Activities.................................................................................................5
6. Results, Frameworks (Goals, Outcomes, Risks and Key Assumptions) and Sustainability Plan
................................................................................................................................................6
7. Linkage to Cross Cutting Issues.............................................................................................7
8. Innovative and Creative Ideas.............................................................................................7
9. The Budget and cost summery.............................................................................................7
9.1. Investment Cost............................................................................................................7
9.2. NALOTUESHA Working capital requirement..................................................................8

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1. Definition of the Problem

The dairy industry in Kenya and specifically milk has been documented as the most important
livestock product contributing 70 per cent of the gross value of livestock production to the agri-
cultural sector as of 2009 (Intergovernmental Authority on Development Center for Pastoral Ar-
eas and Livestock Development, 2013). The importance of the informal sector to growth and
development in Kenya has been recognized in Vision 2030 (Baiya and Kithinji, 2010). Evidence
suggests that the informal dairy sector in Kenya employs more people than the formal sector
accounting for 70 per cent of total jobs in dairy marketing and processing (Muriuki, 2011).

To this end, the legalization of the informal milk sector in 2007 saw dairy traders record an in-
crease of 54 per cent of milk volume traded in 2009 (Baiya and Kithinji, 2010). Most of the milk
sold in Kenya before and immediately after liberalization in 1992 was through the Kenya Coop-
erative Creameries (KCC), who had a monopoly to process all the milk but since it’s near col-
lapse in the 1990s, farmers were left with no outlet for much of their production (Bolo et al.,
011). This resulted in rapid growth of the informal milk trade. Questions have been raised on
whether a smallholder dominated economy can diversify and whether smallholders participate
significantly in product diversification towards high value products (Birthalet al., 2007).

The above scenario is a true picture of what is happening in Kajiado County which is among the
ASAL Counties in Kenya, with a population mostly practicing dairy as well as agro pastoral and
purely pastoralist activities.

Milk and milking activities within the Masai community is solely a woman’s duty and her source
of income. Milk in rural Kajiado is mostly in plentiful supply during the rainy season when the
cows have calved and well nourished by the plentiful pasture.

This creates an abundance of milk but in most cases a lack of market to sell surplus milk, while
where there is a market, the prices are too low to cater for the transport costs and some for
other needs.

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Recently there was a cry by hundreds of hundreds of dairy farmers in Kajiado County who de -
cried low milk prices saying the business has become untenable. They decried the low prices as
being counterproductive compared to the high costs of production and transportation of the
milk to collection centers.

The problem is exacerbated by unscrupulous middlemen who make it difficult for the farmer to
maximize on profits and this resort to women hawking their milk in towns.

The opportunities to earn more from milk and create value for the work put in by Masai women
can be extended beyond the usual “mala” that is normally sold during market days and in small
structures in cattle selling yards.

Previous studies on the dairy sector in Kenya have revealed that milk losses in the informal sec-
tor are high due to lack of milk collection and gluts during the rainy season (Kenya Agricultural
Research Institute, 2009; StichtingNederlandseVrijwilligers, 2013; Techno Serve, 2008;
Wambuguet al., 2011).

Informal milk traders often cite the lack of sustainability of their businesses given the erratic
supply of milk: during periods of excess supply (glut), the price of milk drastically falls making it
difficult for them to make profits (Republic of Kenya, 2011). Product diversification is therefore
an appealing strategy for them to pursue as it leads to poverty reduction and generates quick
returns with most high-value food commodities, hence offering smallholders, youth and the ur-
ban labour force a perfect opportunity to increase their incomes Baiya and Kithinji, 2010;
Birthalet al., 2007; Singh, 2011).

Therefore, there needs to be put in place plans to reduce the problem by improving the market
opportunity of the dairy farmers, developing market infrastructure and networks, and tools and
knowledge to enable the farmers collect the raw milk, process and create value addition that will
play a role in minimizing wastage in times of glut in the market, as well as increase incomes by
diversification of products.

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2. Background

SIMERA Milk will going to be established with the idea emerged of creating value adds on
the milk product. It collects about 20,000 liters of milk per day from local suppliers of the area
around Addis Ababa in 150 km radius. It could be highly competitive in the market and respects
the value and need of its customer.
The production and processing of flavored milk manufacturing industry is one of the priority ar-
eas of the government strategies which are highly focused in the government growth and devel-
opment plan.

3. Goal Statement and objectives

The goal is establishing flavored milk production and processing centre and supplying to
the market.
The general objectives of Family milk is production and supplying of flavored milk to
the market by collecting raw milk from dairy farmers though establishing of raw milk
collection centers at near site of the farmers.

The specific objectives are:-

 Creating work opportunity as per the capacity of the factory of which fifty percent of
them are female.
 Creating market opportunity for the raw milk suppliers
 Improving market infrastructures through developing raw milk collection centers
 Increasing government revenue through paying tax
 Creates knowledge and Technology transfer in the production process and improves the
consumption habit of the nation by diverting from the beverages such as alcohol and etc.

4. Implementation Strategy

SIMERA MILK follows three strategies for the success of the business.

4.1. Integrated Raw Milk collecting Strategy

The Integrated raw milk collecting strategy focuses on the following main points:-

- Four model districts, 2-3 PAs from each district and about 300 model Dairy farmers will
be selected in collaboration with government officials and concerned body.

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 - Training will be given for 8 agriculture and livestock development office leaders of the
district, 8 district dairy experts, and 16 development agents from the districts and to 300
selected model farmers of which 80% of the model farmers are female.
- Milk pricing techniques would be implemented so as to benefit those who are supplying
good quality raw milk,
- Conducting review meeting with government official raw milk suppliers and stockhold-
ers.
- Constructing collection centers at milk potential areas of 150km radius of Addis Ababa.

4.2. Quality milk Production Strategy

- Using appropriate technology of production processing will be established at the centre
of the country.
- Equipping the organizational structure with a skill full professional is a mandatory to
produce good quality product.

4.3. Market strategy

The market strategy focuses on the following points

- Creating market net works with the selected 300 farmers.

- Secure raw milk supply and timely delivery of the flavored milk.
- Advertisement and promotional work.

5. Management plan and key personnel

Driven by competitive markets and new management methods, SIMERA MILK strives to make
a reasonable profit; either way, the businesses deliver the products at market price and on sched-
ule in order to be judged effective. The management team plays a significant and growing role
in pursuing these and other issues. Depending on the above novel concept, SIMERA MILK will
plan to hire about 15 permanent workers and 20 temporary workers (50% of the hired employees
are females).

Key personnel: - The manager of the plc is expected to be the key personnel while other three
department heads and about four section heads are expected to be the key members of the man-
agement team.

5. Interventions and Activities

Flavor is one of the most important qualities that determine the acceptability of milk.

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  Awareness creation about the importance of good quality supply of raw milk to potential
raw milk suppliers of 300 house hold (80 % would be female).
 Conducting Training and review meeting on time schedule on fresh and good quality sup-
ply of Raw Milk to with farmers, development agents, experts, decision makers and other
stakeholders.
 Advertisement and promotion: IT will advertise and promote the flavored product by us-
ing available government and private Medias of communication such as TV,

6. Results, Frameworks (Goals, Outcomes, Risks and Key Assumptions)

and Sustainability Plan

Goals Outcomes Result Assumptions Indicators

Establishing raw milk col- Construction materials are Constructed - About 50 peoples get temporary Available collection
lection centre made available and con- collection work for at least 6 month centre will be seen
structions are carried out centre -people engaged in a
work will be visited
Collecting of 5000litres of Purchase for raw milk Organized -About 300 HH gets market opportu- Households of get-
milk would be carried out raw milk nity for the raw milk ting market opportu-
collected nity will be visited
and ready
for process-
ing
Adjusting organizational Employing professionals Well struc- -About 15 permanent and 20 tempo- Hired employees will
structures tured organi- rarily employment opportunity will be be visited
zation and created
man power
requirement
filled
Supplying 5000 liters of fla- Sale of milk would be Revenue Both the seller and the buyer would be Financial aspect
vored milk to the market made generated benefitted from the merchandise would be analyzed

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7. Linkage to Cross Cutting Issues
The production process of flavored milk has two linkages. The foreword linkage is the expansion
and establishment of milk and milk product supplying business organization and the backward
linkage the emerging of dairy farms that supplies high yielder and disease resistance heifers to
dairy farmers and the increment of farmers engaged in dairy farming activities

8. Innovative and Creative Ideas

The SIMERA Milk develops the following innovations so as to produce and supplies flavored
milk to the market.

 Developing unique and new Nutrient-rich flavored milk in the country which would
come in a variety of flavors and offers the same unique nutrient package of nine essential
nutrients as unflavored milk.
 Primary focus would be given to the flavor trends such as savory flavors, premium qual-
ity, natural and authentic, and health and wellness and conducting raw milk pricing tech-
niques.

9. The Budget and cost summery

9.1. Investment Cost

Total
Cost for
Grant
Description (Birr)
1 Building and Construction
S. Total 525,000
2 Vehicles
Refrigerator Van Truck 900,000
S. Total 900,000
4 Machinery and Equipment
S. Total 400,000
5 Furniture and Fixture
S. Total 42,880
6 Pre-operation
S. Total 160,000
Total 2,027,880

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 Required Total working capital
Description Months ET Birr
Raw milk 1month 565,594
Additives 4month 312,934
packing materials 4 month 204,134
Wage & salary 1 47,210
Employee benefits 1 540
Traveling Expense 1 1,359
Medical expense 1 2,704
Stationary & P.T.T 1 833
Miscellaneous Ex-
pense 1 2,083
Electricity 1 1,200
Fuel, Oil and Lu-
bricants 1 13,207
Repair and mainte-
nance 6 month 66,700
Insurance 12 52,152
Total working cap-
ital 1,222,900

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