Impact of our funds’ portfolio: How a new domestic product benefits both consumers and farmers

There are around 5.9 million people in Ethiopia with acute food needs and 3.9 million women and children in the country who are nutritionally vulnerable, according to the World Food Programme. Milk, which is a vital part of a basic diet in many developing countries, is often inaccessible because the dairy industry faces a number of challenges.

Despite Ethiopia producing an estimated four billion litres of milk a year, the industry is vulnerable to poor logistics, such as transport delays, and the impact of climate change, for example the impact of increased temperatures on grazing times and health of cattle. This makes it an unreliable source of nutrition. Added to those challenges, milk often ends up being imported, which results in high prices and means it’s unaffordable for those who need it most. Importing milk also results in domestic farmers losing out, as well as causing an unnecessary carbon footprint.

Recognising the acute need for an affordable milk supply in the country, a company called Family Milk was set up to launch the first domestically-produced, long-life milk in Ethiopia. The company was started as a local dairy plant in the country’s capital, Addis Ababa, to supply its families and communities.

Made at a fraction of the cost of imported milk, the company is both providing access to essential food for consumers, including those most in need, at affordable prices, as well as creating opportunities for small farmers and retailers.

Because the milk is long-life, it means consumers can keep the product for longer, reducing food insecurity. It can also be transported further than fresh milk. As a result, the milk can be transported to rural communities who often rely on powered milk due to their remote location.

The company is also committed to creating market access for farmers in Ethiopia. Family Milk sources fresh milk directly from farmers and offers loans and grants to help finance farmers’ equipment and buy food for cattle. At a community level, the company provides training on quality milk production, nutrition, and farm management.

As well as having an impact on people’s lives, the company is also having a positive impact environmentally. Producing milk domestically, as well as other dairy products including cheese and yogurt, reduces the carbon footprint of the product and helps to build a more sustainable industry and supply chain. In addition, the milk is sourced from nearby farmers, which helps further in minimising carbon footprint.

The company is seeing significant results. Since its founding, Family Milk has increased its production capacity to 48,000 litres of milk a day and hopes to increase this to 100,000 litres. To date, the company has sold nearly one million litres of long-life milk.

We’re invested in Family Milk through our commitment to the fund SGI Ethiopia Growth and Transformation Fund, Ethiopia’s first private equity fund. We committed to the fund in 2013 and have worked closely with the fund manager to develop and implement an Environmental and Social Management System for the first-time fund.