Sustainable Market for Biftu Berga Dairy Production & Marketing Union
For members of the Biftu Berga Dairy Production and Marketing Union, a VCA beneficiary in Oromia region, the instability of the milk market has always been challenging. The union has 1,375 members, most of whom can produce milk throughout the year. However, since 180 days a year are fasting days for many Ethiopians, the milk market regularly fluctuates, meaning the union often produces under capacity and is forced to sell at low prices.
“Right now we collect only 500 liters per day because it’s the main fasting season. We know that our farmers could produce a lot more than that,” said Lemma Worku, chairperson of the union.
More than 400 members of the union have received training from VCA, and production and quality has increased significantly, but the market for milk remains volatile.
To address this challenge, VCA approached one of the biggest milk processors in Ethiopia, LAME Dairy Ethiopia PLC (commonly known as Shola Milk) to partner with the union. After a half-day meeting, Shola and the union signed an agreement on fixed price, quantity, and quality for milk production.
“Despite the challenges in the market, and the high expense of fodder, we are committed to milk quality. We are buying new refrigerated cars to make sure we collect the milk from the homes of our members without compromising the quality,” said Lemma. “I believe Shola milk has come to us at the right time.”
Marketing representatives from Shola indicated their business also suffered from the instability of the market since quality production was often hard to find. But because the union is working the VCA, Shola feels confident in their ability to purchase reliable, high-quality milk.
“We believe VCA provides standardized practical training to the members of the union, and we will be able to get milk that meets our expectations in both quality and quantity,” said Shola’s marketing representative Mesfen.
Most of the negotiation was on the price, which is too high on non-fasting days and too low when fasting. Both parties agreed to take the average price (14 birr per liter) for the entire year. Having a set price will help the union avoid price fluctuation, providing more income security for the farmers and their families.
The agreement stipulates an initial production volume of 500 liters of fresh milk per day, with a plan to gradually increase to 5,000 liters per day. In just the first week of the agreement, Shola has purchased nearly 3,200 liters of milk worth more than $1,600 from union farmers.
“Sustainability in the market is our goal. Our farmers are encouraged to have a formal buyer. We are grateful for the continuous support from VCA, from technical support on milk quality to finding us a market,” Lemma said.