This archive report was first published on 27 June 2020.
From Humble Beginnings to a Multi-Billion-Shilling Enterprise ¶
It all started in 1961 when 31 disgruntled dairy farmers in Githunguri decided to contribute Sh. 1 each for every litre of milk sold and register a co-operative. This marked the beginning of Githunguri Dairy Farmers Co-operative Society, which would eventually become a multi-billion-shilling business.
Originally, the idea was to find a lasting solution to the persistent milk price volatility. However, the more they pushed on, the deeper they sank into financial difficulties, forcing them to increase their contributions from one to two shillings.
Despite the initial setbacks, the society's resolve hardened, and they continued to push forward. In 2013, the enterprise was officially registered as Githunguri Dairy Farmers Co-operative Society.
At the time, the society's credit-worthiness was nearly zero, and no bank was willing to finance their business plan. However, they persevered, and their membership enrollment went up, as did milk supply.
The society decided to supply milk to the then market leader, Kenya Cooperative Creameries (KCC), and a local hotel. However, when KCC collapsed in the early 1990s, the society was sent back to the drawing board.
Undeterred, the society decided to raise capital and set up their own milk plant. With the help of Oikocredit International, they successfully approached the global co-operative and social investor for funding and received Sh90 million.
In 2004, Githunguri Dairy Farmers Co-operative Society went commercial with the first processing plant that produced Fresha whole milk, its flagship product. The plant produced 18,000 litres of milk daily, selling it in Nairobi and its environs.
Today, the society's capacity has increased to 220,000 litres from a workforce of 8,000 as of July last year. The market has also expanded beyond the borders to neighbouring South Sudan and Tanzania, where the society has 23,000 members with 40,000 dairy cattle.
However, the society has faced challenges in the mushrooming of small dairies across the country that are eating into its market. The milk market is also fraught with punitive policies both locally and regionally, making it hard for startups and established companies to enter new markets.
More recently, the introduction of value added tax (VAT) on milk has adversely affected uptake in most homes, shrinking the market. Despite these challenges, the society's chairman, Charles Mukora, attributes their success to the absence of political interference and boardroom wars.
"We also have 12 training sessions every month targeting dairy farmers on milk hygiene and farm management given the high competition in the market," he says.
