Action plan - Developing business plan on milk processing In November 2010 a representative of Agriterra with support from a dairy expert from the Dutch dairy cooperative FrieslandCampina and hosted by Co-operative Alliance of Kenya visited Kiambaa Dairy for the first time and concluded that 
- Professional management and good leadership offer good prospects for company growth and dairy development.
- The company has a strong drive to strengthen position of producers in the value chain. 
- There seems to be a clear match between the request for advice by dairy and other experts stemming from the Dutch agribusiness and services Agriterra can offer, including those via AgriPool. 

In January 2011 a three days company assessment took place in order to achieve an in-depth understanding of the practice and performance of Kiambaa Dairy and also to jointly prepare a lean action plan as a roadmap leading to the development of a sound and investmentready business plan for Kiambaa Dairy by the end of 2011.

Kiambaa Dairy, SNV and Agriterra agreed to deliver the following targets by the end of 2011:
- Increase in active membership from .... (2010) to 2300 (2011)
- Average intake per day in kgs from ..... (2010) to 17000 (2011)
- No. of farmers accessing training through farmer field schools .... 
- 1 investmentready business plan for milk processing
- 1 investmentready business plan for water bottling and marketing
- Stock management 15 feedstores computarized 
- Extension service program in place through recruitment of extension officer in combination with a series of farmer field schools and field days.


ACTION PLAN 2012

300 farmers trained
Increase milk intake to 16,000 l/dayfor society
Sample Farmers increase milk production by 10%
Increased sales of Semen to Farmers by 5-10%
Increased area planted with fodder crops and use of silage by sample farmers (> 10%)
Well trained management  staff and Board> 500,000 net profit from milk business
Operational costs at 20% and milk payment at 80%
Marketing plan/strategy
Contract with Dairy land


The following activities will be executed:

Farmer trainings(general)
-	Maintain a Famerstraining register and update it regularly
-	Training of Farmers on fodder management, calf rearing and AI
-	establish 3 demonstration farms per route and manage expectations between the parties involved (Cooperative, Extension Officer and Farmers)
-	Undertake training needs assessment of the Extension Officer and Lead Farmers and carry out the  necessary training
-	Engage a Local Capacity Builder to backstop the Extension Officer 
-	Create a sample of 50Farmers and ensure follow –up to assist track impact. Design and use monitoring form.
-	Stimulate service provider enterprises through training of Service providerse.g. youth groups
-	Explore possibilities for use of Students undertaking research for their study preferable Agri-Business or Agriculture from the Membership of Agriterra.

Artificial Insemination/ Animal Feed
-	Farmer education on AI including breed type, cost etc
-	Periodic milk quality testing as well as animal feeds
-	Establishing links between AI Cooperative and AI service providers e.g. CAIS, Coopers, LGS among others
-	Undertake branding of the AI  services vehicle

Performance management
-	Follow up training of staff and Board
-	Undertake a training needs assessment to inform future trainings
-	Evaluate the 2011 salary review  in relation to staff turnover develop performance contracts
-	Develop an appraisal system
-	Develop a service charter

Implementation of supply chain recommendations
-	Introduce a log for tracking milk supply
-	Improve member loyalty through information sharing and incentives
-	Complete Google  maps, develop analytical tools and put in use

Value addition – Implementation of market and business case strategies
-	Improve chilling capacity
-	Stakeholder Forum once  a quarter
-	Develop a sales and pricing strategy as part of marketing plan
-	Training of sales team

Cooperation between Ndumberi and Kiambaa
-	Hold a brain storming workshop with the two management committees
-	Develop a roadmap for the Cooperation/venture

At present (January 2011) picks up 14,000 L of milk a day. Of that amount, approximately 30% goes to the processors Sameer, Brookside and Eldoville. Usually they make payment after 45 days, something that is, in fact, disadvantageous for the cooperative’s cash flow. 25% of the intake goes to medium-priced hotels in Nairobi and 45% is sold through hawkers, including their own milk shops as outlet stores. Furthermore it is estimated that coop members are supplying hawkers directly, without the offices of the cooperative, with as much as 40%!

The board and the manager are considering to make a next step upwards in the value chain in a series of phases. Members are currently building up share capital in order to increase the cooperative’s assets, making it able to get a loan to make the necessary investments. Since April 2010, it has been picking up 350,000 KSh per month for this purpose. In addition, the cooperative aims to start selling bottled water and makes use of a plot beside the office for paid parking and a car wash in order to generate more cash flow to realise expansion of the company in the near future. 

The cooperative is considering pasteurising the milk for sales in the region via techniques including a dispenser, estimated to cost 500,000 KSh. The cooperative sees this as a niche market, related to present sales of fresh milk in the region via milk shops. For the time being, the existing location and facilities are sufficiently equipped to receive milk. Nevertheless, to realise its ambitions, the cooperative believes a new location is necessary to realising sufficient quality, not only for the intake but also for the processing part. The cooperative is clearly looking for expertise to work out feasibility, market analysis and business planning and then realise it goals. Until now, the cooperative has always realised its plans on its own and has not received support from other development organisations.

The underlying action plan describes the activities foreseen in 2011 and targets mostly aspects related to increased productivity, improved supply chain management, scoping new markets and improving membership patronage. Activities related to daily operations such as intake, cooling and trading of milk have been left out of the action plan.

ACTION PLAN 2012
Looking at the developments and challenges in 2011, for 2012 the main recommendations are:
• To have a quality focus at Kiambaa by further improving the quality throughout
their supply chain and at the same time promote their quality of milk to (new) customers. This includes also the improvement of hygiene standards at farm level (during milking, cleaning etc)
• Focus on the markets Kiambaa is already in and improve their profit to substitute from low end to higher end. From there, gradually build new (niche) markets. Processing capacity should grow together with the market position.
• Gradually build a processing plant, first by increasing current capacity and install dairy equipment only when a profitable market position has been build or when milk supply volume has grown substantially.
• Find a partner (Ndumberi) to jointly invest or even merge to obtain loading for future processing equipment.
• Keep training staff and farmers. Further develop capacity of employees to strengthen sales and marketing staff and keep training the farmers to support further milk supply growth.

The next steps for Kiambaa in 2012 are to invest in chilling capacity (see business case 1), promote & invest in quality and continue the training programs. Furthermore, the intended merger with Ndumeri needs to be worked out and hopefully realized in 2012 to support future profit growth. Finally the development of a practical and innovative logistics analytical tool will be one of the activities in 2012.

For 2013: elaborate business plan for processing plant