Selale Dairy Cooperative Union enters dairy-processing business in Ethiopia

The milk processing plant is located in Sululta

Selale Dairy Cooperative Union (SDCU) has joined the dairy-processing business in Ethiopia with a new brand of milk and yoghurt at its new factory, which was built at a cost of 28 million Br.

The Union brought its pasteurized milk to the market, with yoghurt to follow in the coming two weeks.

The milk processing plant is located in Sululta, 40Km North of Addis Abeba. It took approximately three years to finalize the construction as well as the procurement and installation of machinery for the factory, said Hailu Tadesse, SDCU’s director. The Union exploited its stronger financial capacity to benefit more from the raw milk it collects by opening this plant, which was built after a five- month feasibility study, he said.

The Union used 13 million Br of its own, borrowing the remaining 15 million Br from the Cooperative Bank of Oromia.

The new facility can process 20,000lt of milk daily, while the Union collects 10,000lt to 12,000lt from its members. The Union expects to get the balance from increased supply by its members as well as from new members, explained Hailu.

The Union is now focusing on the Addis Abeba market, with emphasis on pricing as a penetration strategy, Hailu said. It is selling its milk to retailers for seven Birr per half-litre packages, whereas the retail price of other milk in the market ranges from 10 Br to 11 Br for the same half-litre.

SDCU was established in 2001, having nine cooperatives, with a total of 512 members in North Shewa Zone, Oromia Region. Presently, the union is an umbrella for 31 cooperatives, which have 3,000 members. Thirty five percent of the profit is always kept in reserve while the rest is divided among the members as dividend.

Currently, in Ethiopia, the demand for dairy products is met through domestic production and through imports. In 2014, around 2,544,579 Kg of dairy products were imported at a cost of 15,156,394 dollars, which shows a tremendous increase as compared to the previous budget year.

The big mark-up in imports is due to the diminishing amount of supply that fails to meet the existing demand, explained a study by Precise Consult International, a local firm. Data from the Central Statistics Agency indicate a decrease from 3.8 billion litres in 2012/13 to 2.9 billion litres in 2013/14.

The growing population,expansion of urbanization and urbanized lifestyles, as well as the income growth in Ethiopia are expected to increase the demand for dairy products, said Amanuel Assefa (PhD), deputy chief of party at Precise Consult International.

Currently, there are 32 registered dairy-processing companies in Ethiopia. In 2011, there were 22 dairy processing companies with nine of them operating in Addis Abeba and the rest in other major regional cities, according to the Food and Agriculture Organization of the United Nations (FAO) survey.