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Melkam Profile

A dairy farm and milk processing company in Ethiopia saw its sales plummet due to the pandemic as demand for dairy fell. With support from a Visa Foundation grant and technical assistance, the company was able to purchase more milk from smallholder farmers, pay employees, and adapt operations. As a result, the company increased milk purchases by 92% and revenues grew to exceed pre-pandemic levels, helping the business and its smallholder suppliers weather the crisis.

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54 views3 pages

Melkam Profile

A dairy farm and milk processing company in Ethiopia saw its sales plummet due to the pandemic as demand for dairy fell. With support from a Visa Foundation grant and technical assistance, the company was able to purchase more milk from smallholder farmers, pay employees, and adapt operations. As a result, the company increased milk purchases by 92% and revenues grew to exceed pre-pandemic levels, helping the business and its smallholder suppliers weather the crisis.

Uploaded by

Mubarak
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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SUPPORTED BY:

MELKAM ENDALE
DAIRY FARM AND MILK
PROCESSING
Sululta, Ethiopia

Melkam Endale Dairy Farm and Milk Processing built its business
by investing in relationships with smallholder dairy farmers.
A dramatic decline in demand for milk and dairy products
at the outset of the pandemic put those relationships–and
the business–at risk. A Visa Foundation grant and technical
assistance helped the company adapt to the situation and once
again grow alongside its suppliers.

About the Coalition for Farmer-Allied Intermediaries


In response to COVID-19’s impact on vulnerable food systems, a group of pioneering organizations working
with 600+ African food companies joined together to launch the Coalition for Farmer-Allied Intermediaries
(CFAI). Its mission is to catalyze a movement around vital small- and medium-sized agro-food businesses
in order to transform and build more resilient African food systems. In 2021, Visa Foundation provided
resiliency grants and enabled provision of technical assistance to eight Sub-Saharan food processing
companies to help them navigate the continuing COVID-19 crisis, adapt to shifting market demands, and
return to inclusive growth. TechnoServe and Partners in Food Solutions provided technical assistance to
these firms through the Alliance for Inclusive and Nutritious Food Processing program, which is funded by
USAID’s Feed the Future initiative.

Contact: Christine McCurdy | VISA Foundation/CFAI Program Manager | TechnoServe | cmccurdy@tns.org


AT-A-GLANCE
SECTOR DAIRY (MILK, BUTTER, CHEESE, AND YOGURT)

Challenges from Sharp fall in demand for milk and dairy products, limited working capital, and difficulty
COVID-19 keeping employees on salary

Visa Foundation grant of $50,000 to fund milk procurement, employee salaries, and
CFAI support
safety adaptations

92% increase in production, 83,000 liters of raw milk purchases from 343 smallholder
Key results
farmers, improved on-time payment to suppliers

ABOUT MELKAM ENDALE DAIRY FARM AND MILK PROCESSING


Melkam Endale Dairy Farm and Milk Processing (MEDFMP) began as a dairy farm on 2.7 hectares outside Addis
Ababa. When founder Melkam Endale decided to turn the business into a commercial dairy processor in 2017,
it became clear that MEDFMP would need to find additional sources of raw milk, beyond what the farm could
produce.
Since then, the company has worked with hundreds of smallholder dairy farmers to source milk. To build the
loyalty of smallholder suppliers, MEDFMP has invested in providing farmers a suite of services to boost their
livelihoods, offering agricultural training on techniques to improve the volume and quality of milk produced, as
well as low-priced forage and veterinary drugs. The firm also signs contracts with the farmers, providing greater
stability to them.
MEDFMP manufactures pasteurized milk, butter, cheese, and yogurt. It sells most of its products in Addis Ababa,
and bottom-of-the-pyramid (BoP) consumers are an important segment for the company. In the last quarter
before the COVID-19 pandemic, MEDFMP had $167,000 in sales.

CHALLENGES FROM COVID-19


The COVID-19 pandemic was challenging for Ethiopia’s dairy producers, including MEDFMP. During the initial
stages of the pandemic, there was a widespread public belief–fed by erroneous media reports–that consuming
animal products like milk, cheese, butter, and yogurt increased the risk of contracting COVID-19. As a result, the
firm’s sales plummeted.
Without its usual sales revenue, MEDFMP struggled with cash flow. It had signed contracts with farmers, so it
continued to take deliveries of raw milk, even as its output and sales fell. However, it started to fall behind on
payments to farmers, straining the long-term relationships it had built. The firm also struggled to maintain its
payroll and had to terminate the work contracts of some of its employees.
Even as sales started to rebound from their nadir at the beginning of the pandemic, MEDFMP faced challenges
due to its limited cash on hand.

RESPONDING WITH CFAI


Through CFAI, MEDFMP received a Visa Foundation grant of $50,000 to support procurement, payroll, and
making the workplace pandemic-safe. The injection of working capital was coupled with technical assistance
focused on digital accounting, COVID-safe manufacturing processes, and developing a market strategy adapted
to the changing circumstances.

2 | Melkam Endale Dairy Farm and Milk Processing: Sululta, Ethiopia


RESULTS AND IMPACT
As a result of the financial support, MEDFMP was able to increase
the volume of raw milk it purchased by 92% and grow the number of
farmers in its supply chain from 300 to 343 (of whom 120 are women).
The firm was also able to improve its rate of on-time payment to
farmers from 60% to 80%, helping to rebuild trust with suppliers and
attract new ones.
The grant also helped to pay the salaries of 80 employees, negating
the need for staff layoffs, allowed the company to add eight additional
full-time workers, and paid for investments in PPE and other material
to keep the workforce safe.
The technical assistance allowed the company to keep better records
of its finances and operations and also to forge linkages to new
markets.
As a result of these changes, MEDFMP’s revenues grew to more than
$1.1 million during the grant period, with its annual sales revenues for
2021 outpacing those of pre-pandemic 2019.

VISION FOR THE FUTURE


Looking ahead, MEDFMP plans to invest in the production of long-lasting, shelf-stable milk. This will allow it to
maintain its sales even during periods–such as fasting times in the Ethiopian Orthodox calendar–when its sales
typically decline.

Melkam Endale Dairy Farm and Milk Processing: Sululta, Ethiopia | 3

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