«FAO ANIMAL PRODUCTION AND HEALTH paper ADDING VALUE TO LIVESTOCK DIVERSITY Marketing to promote local breeds and improve livelihoods Cover ...»
Retailers. Tiviski has 12 vehicles that deliver its products direct to 2 000 retail outlets (corner shops, wholesalers, groceries, supermarkets and hotels) in Nouakchott, as well as to other towns. UHT milk is sold all over the country, and even in neighbouring countries.
Adding value to livestock diversity FIGURE 27 The Tiviski dairy uses modern equipment to guarantee quality Tiviski attempts to keep retail prices as affordable as possible. Retailers are allowed 10% margin on all fresh products, and the company takes back unsold products to reduce retailers’ risk. The strategy adopted is to have the best-quality product and to visit shops regularly so that the products are sold (or returned) before they go off.
ESTABLISHING A DAIRYIt was not always like this. Until 1989, Mauritania had no industrial-scale dairy outlet for local milk. There was not even any fresh pasteurized milk in the country. City-dwellers could buy imported sterilized or powdered milk, or they could keep their own animals. Two dairy plants (now closed) imported powdered milk and produced UHT milk and yoghurt.
During the 1980s, small dairy herds appeared around the main towns, selling raw milk.
Camel milk was the first to be sold this way, at a very high price compared to imported sterilized cow milk.
Although camel milk may seem exotic, people from the north of the country prefer it (southerners prefer cow milk). However, according to a hadith (a tradition associated with the Prophet Muhammad), camels and their products are generally regarded as superior to others.
Nancy Abeiderrahmane decided to establish a dairy for three reasons:
It seemed a good business – and development – idea to tap the country’s unused milk potential, bridging the gap between remote producers and former pastoralists who had moved into the cities and were deprived of fresh milk, their staple food.
She preferred pasteurized (vs. sterilized) milk.
Along with many Mauritanians, she liked the taste of camel milk.
The idea was to collect milk from producers (based on the belief that every part of the value chain should concentrate on its own task, do it well, and live from it) and sell it in the city as modern dairy products. However, this had not been done before in West Africa.
PART 3: Milk 89 Technically, for milk to reach urban consumers in significant quantities, it must be packaged and able to last a few days. That means it has to be pasteurized (heated to above 70°C).
The original plant was a mini-dairy, designed to handle 600 litres/hour, and supposed to break even at 1 000 litres/day. The equipment was basic but state-of-the-art and all stainless steel, with continuous pasteurisation.
The initial investment was 1.5 million French francs ($240 000), including a FF 1 million loan, from the Agence Française de Développement (French Development Agency), at 9% interest. This sum was used to buy a plot of land, build the plant, and buy the basic equipment and the first packaging. Optimistic planning, some contingencies such as a change of government policy and an unexpectedly costly power connection, and a lack of business experience led to a severe cash shortage for 5 years.
A border conflict with Senegal that began in 1989 forced Mauritanian refugees to return to their home country, bringing their cattle with them. That is how raw cow milk appeared in Nouakchott. Tiviski started processing some of this milk, and followed this with many more products based on cow milk. Nowadays 70% of Tiviski’s output uses cow milk, 20% uses camel milk, and10% goat milk.
GROWING PROBLEMSThe first 5 years were very difficult. The most important problems faced by the young dairy were as follows.
Although the original intention was to sell camel milk as an affordable product, the attempt to mobilize dedicated milk producers with contracts and fixed, reasonable prices failed. As a result Tiviski had to pay very high prices for raw milk, imposed by costly peri-urban production, the desert conditions, and consumers who were willing to pay higher prices for raw milk than for a pasteurized product.
There is a deeply ingrained traditional prejudice against selling milk: doing so is seen as miserly and undignified. That made it very difficult to buy milk, especially after the first couple of years, when sales started to pick up. Tiviski had recognized this problem early on, but had underestimated its severity. To this day, social pressure is stronger than the perceived economic benefit, and only a fraction of the potential milk is delivered. Only people with no “honour” to lose were willing to sell milk to Tiviski, and these are not the most educated producers.
Consumers assumed that anything made locally was automatically bad. This initial major hurdle has now been successfully overcome.
After a few years, sales improved, and so did the milk supply. As a result the company recorded steady growth. Figure 28 reflects some of the difficulties encountered, including seasonal fluctuations, droughts, competition, and global crises.
The first substantial drop was caused by the onset of local competition in 1999, but the biggest challenge followed a severe drought that began in 2002. The food price crisis in 2007 also took its toll.
Seasonal and annual variations, both in production and consumption, have always been a problem. Camel milk production dropped dramatically after 2002, though it has peaked every 2 years since. Production also varies seasonally, with a low period between September and November.
Adding value to livestock diversity
By 2000, business was good, but these seasonal variations called for a solution: the dairy needed a product with a longer shelf-life. Tiviski decided to set up an UHT plant for cow milk. Because it is sterilized, UHT milk can be stored unopened for a long time without refrigeration.
Owing to all these problems, camel milk can only be sold on the local market, where it is viewed as a staple food, not a niche product, and has always had to compete with imported sterilized cow milk from all over the world. Therefore it has not benefited from any “niche”-based privilege.
However, Tiviski has not given up the hope of marketing camel milk in Europe. Research is continuing, and Tiviski hopes that one day it will be possible to make UHT camel milk.
CHECKING FOR CHEESECheese made from camel milk is another possibility. In 1993–4, with help from FAO, Tiviski learned how to make the world’s first camel-milk cheese. This product was aimed at the European market, as Mauritanians do not like or eat cheese, especially not the Camembertflavoured soft cheese that results from camel milk. Neighbouring countries do not want products from camel milk. In Europe, it would be possible to position camel cheese as a rare, specialty product that would attract a high price, so covering the airfreight and marketing costs.
Unfortunately, while Tiviski was developing camel cheese, the European Union introduced regulations that excluded all Mauritanian animal products, including camel milk.
Lengthy discussions have overcome some hurdles, but Mauritanian camel milk and cheese are not yet allowed into Europe.
The output of delicious (to European tastes) and unique camel cheese has hovered around 80 kg a month for the last 8 years, whereas the German market alone could have absorbed tonnes of it every week.
In 2008, an attempt to export to the USA failed because soaring global grain prices virtually halted the production of camel milk as herders trekked their animals to Senegal, where they could find pasture. Milk supplies have resumed recently, but in very small amounts.
DESIGN CHOICESQuite a lot of thought went into the initial basic design of Tiviski. Some decisions were
open-ended; others were imposed by circumstances. The main choices made were:
Collecting fresh milk from livestock owners instead of using imported powdered milk.
Making high-quality products, by processing the milk in a state-of-the-art dairy, albeit a small one instead of using low-tech approaches.
Packaging milk in attractive gable-top cartons instead of cheap plastic pouches.
Selling through existing corner shops, which all have refrigerators, instead of indirectly through middlemen or in specialized shops.
From the beginning, the whole operation seems to have strayed quite consistently from “expert wisdom”.
Some examples include:
For African markets, experts recommend low-tech/low-price products. This usually results in low-quality products in unattractive packaging.
Experts claim that African milk is not profitable because of low milk yields from the animals. They recommend importing high-yielding breeds, regardless of the environment.
Adding value to livestock diversity The experts also say that African milk is too contaminated for industrial processing.
Tiviski has disproved these claims. There is certainly a market for low-quality products, but everyone likes higher quality, and if the raw material is expensive, it is wise to target higher market segments. Tiviski has found ways to collect milk from hundreds of individual small-scale producers. And in terms of quality, although it is not possible to attain presentday Western bacterial counts, Tiviski has proved that local farmers are able to supply milk within reasonable hygienic levels, comparable to those in Europe 30 or 40 years ago.
SERVICES TO SUPPLIERSBuying milk directly from each supplier, with no intermediate trader, is the key to controlling raw milk quality. Tiviski pays the same price for all kinds of milk, at all times of year, to avoid renegotiating prices each season.
Every day, the lorries take a list of how much milk each producer has delivered to Nouakchott. There they are inputted into custom-designed software. From that moment, the producers can get paid whenever they want. To get paid, the producer hands over his or her delivery slips, and the computer checks the amount due, subtracting any loan reimbursements (see below). Although it would be more practical if payments were spread out, most producers want to be paid at the beginning of the month, putting stress on staff and cash flow. Such a system is possible only because it is computerized: the very large number of suppliers and customers generate a considerable volume of data to be processed each day.
The dairy provides the milk producers with various services, including supplying feed concentrate, milk cans and veterinary care (all on credit), as well as providing training in hygienic milking, advice on feeding, and cash loans. A Tiviski liaison officer maintains communication with the herders and develops such services. The producers are organized into groups, which are responsible for ensuring that loans to their members are repaid. If a member fails to repay a loan, Tiviski deducts what is owed from the group members’ milk accounts. Social pressure and solidarity ensure that defaults are rare.
INVESTMENT In the 19 years since its founding, Tiviski has invested a cumulative total of $5.4 million in its operation and has made a cumulative profit of about $5 million, or a return on capital of about 7.7% a year (though fluctuating exchange rates make such calculations rather uncertain). All the profit has been re-invested: although it is a limited partnership, Tiviski has never distributed any dividends.
The years 2000 and 2001 showed such a fine profit that a major investment decision was made: the UHT plant. Tiviski had to borrow a large amount to pay for this costly plant, but competition from milk importers meant it failed to increase revenue significantly. In 2008 this situation started to improve slowly, owing to various unrelated external market factors.
Tiviski is entirely self-sustaining. Revenue must not only cover costs, but leave enough profit to allow for expansion, equipment replacement, etc. Tiviski has bought much of its equipment second-hand, putting heavy demands on the technicians’ very African genius to keep them running.
PART 3: Milk 93 CHALLENGES Tiviski’s history has not been easy, and challenges have evolved over the years. Some have been overcome, others have subsided, and others still remain.
Milk collection. Collecting milk is a commonplace notion, but it was not done yet in West Africa, and it is made more difficult by the fact that the herders move around.
The physical difficulty of collecting milk was compounded by the deeply ingrained traditional prejudice against selling milk.
Seasonal supply and demand. Milk production is seasonal everywhere, but in the Sahel seasonal fluctuations are extreme. There is always too much milk, or not enough. Plus, consumption also varies widely, but always in the opposite direction.
This translates into recurring seasonal dissatisfaction, either among suppliers or among customers. The UHT milk plant was built to solve this problem.
Skilled labour. The lack of skilled workers and vocational training in the country are a major hindrance for an industrial plant.
Input procurement. Procuring packaging, spare parts, cleaning products and so on, is much more complicated and expensive than in developed countries. Access to foreign currency was a headache for many years.
Consumer awareness. Consumers do not know about microbes, they do not understand what pasteurization and sterilization mean, and they do not know the difference between butter and margarine. Well-off urbanites are willing to pay more than $2.00 for a litre of raw camel milk, but not for pasteurized camel milk, thus distorting suppliers’ perception of what is a reasonable price.
Advertising. Although Tiviski has made many efforts to advertise, it faces four main hurdles: the cost of advertising, a lack of suitable media, the lack of local skills to produce commercials, and the widespread belief that advertising reflects insufficient sales. Mauritanians read little, so most never see advertisements in newspapers or magazines, and they do not actively read posters or packaging. Television is expensive, and viewers tend to watch foreign channels and zap the commercials. As a result, even when Tiviski has run adverts, there has been no detectable impact on sales.