Dairy (Milk) Production – it’s hugely profitable but largely disregarded
Milk consumption and production in Africa is the lowest in the world. Africans, on average, consume about 36kg of milk per person annually, compared to the World Health Organization‘s recommended consumption of 200kg per capita, and the world average of 103kg per capita.
How come? Africans don‘t like milk? Of course they do! Then what‘s the problem? Well, milk production is very low on the continent with some countries producing as little as 174kg of milk a year per cow, compared to over 12,000kg per cow per year in some developed countries. That‘s quite a huge gap!
One of the biggest reasons for this disparity is the inadequate infrastructure for milk production in Africa. While most cows are bred by smallholder farmers who largely extract milk by hand and other crude methods, dairy producers in developed regions of the world use technology-backed production methods to maximize the quantity of milk produced.
However, there is an even bigger underlying reason for the shortfall in Africa‘s milk production across the continent and that is that hardly any African government promotes the livestock sector and invests in dairy production facilities. The fact is that dairy production development is not only important for the nutrition of Africa‘s growing population, but it is hugely profitable too.
As more African households in the growing middle class gain discretionary spending power, spending patterns will shift and the demand for dairy products will surely increase. At the moment, Africa‘s milk market remains underdeveloped and investments in this sector are likely to reap huge rewards. The potential for milk in Africa are huge. Several countries on the continent still import huge volumes of milk to satisfy local demand. Nigeria, for example, spends over $100 million every year to import milk and other dairy products.
Business Concept
There are various ways you can tap into the dairy sector. If you own or rent land you can of course build a business right at the start of the production cycle through livestock production. But if farming is not an option for you, setting up a system for collection, refrigeration, processing, and packaging of raw milk among Africa‘s livestock holders is the business model that you will need to build. You don‘t need to consider a huge state-of-the-art production site. You can start with a small milk processing factory with the basic equipment and grow your dairy production business from there.
Niche Ideas
1) School milk production and distribution network
2) Children‘s fruit yogurt
3) On-farm ice cream production
4) Export milk for the production of baby milk powder – there is a huge demand for this, but it is still widely imported.
Top Countries & Policy Guidance
Although governments‘ ignorance towards the livestock sector can create a somewhat challenging environment in some countries, it‘s actually good news for you. There is a huge demand for milk and no one is providing it. Just one example: Rwanda has recently invested in the country‘s dairy sector, and after just a few years revenue generated from dairy exports has exceeded that of traditional coffee exports in 2014!
Today, Rwanda is one of the main exporters in the East African region, and Tanzania has become its biggest customer. This is a strong indication that you can easily find an export market for your dairy products within Africa.
Action & Tips
Most countries in Africa have a local dairy processors‘ or breeders‘ association. Get in touch with them to find out about the opportunities and challenges on the ground first hand. You will find the contact details of some offices online.
Dairy production will be of growing importance in Africa and it will be of value to really understand a country‘s policies and needs in regard to this sector. The local Ministry of Agriculture is a possible source of such valuable information.
Be aware that you do have funding options from African development organizations that would support such private initiatives, in particular if you build a rural development and food security context around it.
