Organizational strengthening and revival of the dairy marketing activities ADA'A Dairy Cooperative Society is an organization formed by 425 dairy member farmers. The overall purpose of the cooperative is to improve its members’ income through establishment of well-organized access to market system for its members. For this, it collects raw milk for fair price from members and adds value on it by processing and resale to consumers using different channels. Currently the daily milk intake is around 2000 liters a day. A substantial drop compared with some years ago, where ADAA maanged to collect between 8000-10.000 liters a day from over 900 members. ADAA has a processing factory, where it is able to process around 15.000 liters of milk a day, mainly into pasteurized milk. Next to that small amounts of butter, chees and yogurt are made. 

ADAA is in the phase of recovering from a serious management crisis. Currently the board is getting the cooperative back in its feet. It managed to stabilize the cooperative and make some steps towards expanding the business. The largest challenge is to acquire adequate management staff that brings the cooperative to further business expansion (increasing supply, more contracts, professional marketing and sales). Next to that it is supported to be geared to attract more investment and working capital for business expansion, cooperative strengthening (financial management, business planning) and assessing the viability and feasibility of getting the feed equipment operational and profitable. 

Key objectives of the ADAA action plan are:
• To install a sound management capacity at ADAA and clearly divide roles and responsibilities of board and management bodies
• To develop a bankable business plan and attract finance for expansion of the dairy intake and business
• To develop a adequate marketing and branding strateegy for the dairy products of ADAA
• To assess the feasibility of involving in feed processing and relaunch the feed processing business

Few years back there were close to 900 members in the cooperative. The number of members decreased due to mismanagement of the previous cooperative leadership-both board and management team. Because of that some members left the cooperative. Furthermore, due to critical shortage of animals feed some farmers left the dairy business at all. Now the cooperative is left with 425 members. 425 are currently registered ones. 

Over the last three years, the main components of the basic financial statements (balance sheet and income statement) indicate that the asset, equity, liability, purchase, sales, etc., entries were in decreasing trends due to mismanagement practices. Nevertheless, due to improvement in cost of operation, the cooperative has revived from the serious loss encountered in 2012 and gained significant profit in 2013. From the currently ongoing activities, it is expected that in 2014 the cooperative will be more profitable. Gradually, based on new experiences gained over the last one and half years on how to minimize cost and properly manage the cooperative businesses, the current leadership aims to increase its transaction volume (purchase, processing and sales) which is expected not only to reverse the prevailed situation but also to maximize effectiveness of the cooperative. 

Initially, the cooperative was established and run by the members’ own equity which had been raised through share capital and registration fee. During those early days, the cooperative was profitable and its members were well satisfied with its services. Being encouraged by their early days’ achievements, the members of the cooperative decided to expand their cooperative business to dairy processing from raw milk sales. Accordingly, the cooperative has received a grant from donors for purchase of milk processing machine in 2008/09. In addition, the cooperative took a loan in 2009 for the same purpose. With all the resources the cooperative decided to indulge in a huge investment. 

Despite the investment and subsequent dramatic increment in business operation (especially in the volume of purchase and processing) from year to year the cooperative couldn’t maintain its profitability. The main reasons, among others, were intuitive initiation of the business expansion without undertaking proper market study that coupled with mismanagement of the cooperative leaders. Because of that the cooperative was not able to sell its final products in time, which has caused dumping a huge amount of milk and milk products after they were perished due to expiry on shelf. The situation has further resulted in failure to pay bank loans, milk purchase on credits from members, etc. With that entire situation the cooperative indulged in to a crisis and around 2011/12 doomed to be collapsed. It is because of this that the Oromiya Cooperative Bank loan repayment was rescheduled. 

Nevertheless, of all about 900 members of the cooperative, 425 members were still determined to save their cooperative by electing new board to restart the cooperative business. On top of that, the General Assembly of the newly reconstituted members gave permission for the new leadership to take a new loan to restart the cooperative business. Accordingly, the newly elected cooperative leadership restarted the cooperative business of milk collection, processing and sales before one year and has become effective in reversing the loss situation in one year time. This result has enabled them to fully pay over dues of members from supply of milk on credit and start repayment of the bank loan. With the current pace of repayment, the new loan will be finalized as of June 2014 while the old one will be fully settled before end of 2015.

Currently, the cooperative handles different dairy products that include raw milk, pasteurized milk, butter for different uses and cottage cheese or “Ayib.” The processing capacity of the dairy factory is about 15,000liters/day (intwo shifts of operation) while currently it processes below 2000liters due to shortage of working capital, limited capacity of the current leadership to plan and expand market for the products of the cooperative. 

The cooperative also used to process animal feed for supply to its members and non-member dairy farmers as well. The processing capacity of the factory is about 400-500quintals/day. Nevertheless, the feed processing plant is not currently operational due to shortage of working capital to purchase raw materials and finance other inputs including human power to operate and manage the plant and the feed business. Therefore, before to decide on re-launching of this feed processing plant, the cooperative with the support of external bodies or alone, should undertake assessment on the condition of the processing equipment and how its inputs’ supply and products’ delivery to the buyers could be effectively organized. Moreover, technically appropriate operators and managers should also be identified.

At this point in time the cooperative can significantly benefit from support on its marketing activities and strengething of the management.

• To install a sound management capacity at ADAA and clearly divide roles and responsibilities of board and management bodies
• To develop a bankable business plan and attract finance for expansion of the dairy intake and business
• To develop a adequate marketing and branding strateegy for the dairy products of ADAA
• To assess the feasibility of involving in feed processing and relaunch the feed processing business