Are investments of milk companieslikely to promote socially sustainable
business in developing countries?
Lessons learnt from West Africa and South-East Asia
Guillaume DUTEUTRE and Christian CORNIAUX
ContextInternational firms as opportunities or threats?
Part 1
The competition of dairy exports• La libéralisation va « hypothéquer l’avenir du
secteur du lait, qui fait vivre des millions d’éleveurs dans la région ouest-africaine, en permettant l’importation de poudre de lait européenne, largement subventionnée » (Media-part, 2016)
2007
Milk surplus and deficit per country
Source : IFCN, 2016
Source : Grain, 2011
Informal markets facing new quality standards
Total milk production
(2009)
Percentage of the milk market
handled by informal chains
Number of cows per farm
Rural jobs per million liters of
milk
DevelopedWorld(mainly North)
362 million t < 10%US, Australia, New-Zeland
> 1005
Developing world (mainly south)
337 million t 80%India <10
Kenya < 10Brazil < 30
200
Source : Grain, 2011
The new Mega Farms
• Importance of Farms of more than 1000 cows in the total production
1996 2006 2015USA 14% 50%Vietnam 1% 21%
The competition of International firms
• “Most dairy markets are supplied by small-scale vendors who collect milk from small farmers and pastoralists. But they are under threat from dairy corporations” (Grain, 2011)
Source : Grain, 2011
Towards inclusive dairy value chains
Source : IFCN, 2016
Towards inclusive dairy value chain
Source : IFCN, 2016
Farms number
Question
• Are investments of milk companies likely to promote socially sustainable business in developing countries?
What are the firms strategy related to local milk sourcing?
« Social business »?
« Non-social » business?
What is the social footprint of milk collection and processing?
Farmers’ employementand income
Community and value-chain
developmentSocial impact of sustainable business
West-African Dairy industryThe question of the « inclusion » of agro-pastoralists
Part 2
The « milk paradoxe » in West Africa
D’après Duteurtre et al (2013)
Strategies of Dairy Industries in West Africa
Sénégal
Mauritanie
Mali Burkina Faso
Niger
NigeriaBéninT
ogo
Ghana
Côted’Ivoire
Guinée
SierraLéone
Libéria
Sodiaal / Tiviski Lactalis / MaliLait
Lactalis / Cotim
Sodiaal / Eurolait
Belgomilk / Disnepal
Nestlé(Nido, poudre)
Friesland CampinaWamco Nigéria
Glanbia / Sicoma
Glanbia / PZ Cussons
Arla / Tolaram Group
Danone/ Abraaj
Glanbia / SicomaNestléArla / Mata Holdings
Sodiaal / Kirène
Lactalis / Meroueh
Lactalis / ISPL
Danone / LDB
Glanbia / Satrec
NestléLait collecte :
1991-2003
Sodiaal / Eurolait
Arla / Attieh Group
Solani
Social footprint
• Number of jobs (5 Sahelian countries)– Total volume collected by industries :
• 30 to 45 000 liters/day (monthly income for 5 000 families)– Total volume collected by mini-dairies:
• 15 to 25 000 liter/day (monthly income for 5 000 families)• Rural community development
– 1200 employments in processing+ collectors, retailers, input providers…
• Value chain upgrading– Investments in collection systems– New products– New production practices (intensification)
Source : Corniaux et al., 2014 ; Gret, 2015
South-East Asian Dairy industryDairying as a new business for smallholderfarmers
Part 3
Country profiles:Emerging dairy producers
0,000,050,100,150,200,25
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
2011
Senegal
0
10
20
30
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
France
0
10
20
30
40
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
China
00,20,40,60,8
11,2
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
2011
Thailand
00,20,40,60,8
11,2
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
Indonesia
0
0,1
0,2
0,3
0,4
0,5
0,6
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
Vietnam
Cow milk Production in selected countries(in million tonnes) Source : Faostat
Strategies of Dairy Companiesin South-East Asia
Firms Country Milk collection(l/day)
Specific processing lines N° offamilyfarms
N° oflargescalefarms
CSRprogram
TH Milk Vietnam 60 000 TH “True Milk” UHT Milk - 1 Yes
International Dairy Production (IDP) Vietnam 30 000 Local “Bavi” UHT milk 1 500 1 No
Vinamilk Vietnam 500 000 “100% fresh milk” UTH milk 15 000 5 Yes
Danone Dairy Indonesia (DDI) Indonesia 60 000 Lactic acid beverages 2 000 Yes
Danone Sari Husada Indonesia 1 500 - 50 - Yes
Firms collecting fresh milk in East Asia in 2014-2015
Family Farm in Ba Vi 3 cows, milking machine
Industrial Farm in Ba Vi185 cows, milking parlor
Social impact of Dairy companies
• Number of jobs– Family farms– Jobs in Industrial farming
• Value chain upgrading– Milk farms market participation (quality, payement…)– Input / output market
• Rural community development– Education (CSR)– Empowerment of local communities
ConclusionUnderlying complementarities
Part 4
Local milk as a business strategy
• To reach specific market segments• To limit cost volatility• To build long terms strategy
– Participation to Local development– Reputation and human rights issues (RSE)
• In coherence with local policies– Local Regulation with incitation to local milk collection– With diversity of State involvement in dairy development
policies
Inclusive business model 1:
= industries thatdevelop their local
sourcing
CSR programs : pros and cons
• Importance of credit, training and community support programs
• Limitations of “disconnected programs”
Beyond CSR programs :
The need for sustainable development strategiesof international and national firms
Inclusive business model 2:
= industries Involved in CSR
projects
References• Corniaux C., Duteurtre G. et Broutin C., 2014 : Filières laitières et développement
de l’élevage en Afrique de l’Ouest : L’essor des minilaiteries, Karthala, Paris, 229 p.• Duteurtre G. and Pannier E., 2016: “Local trajectories in the Vietnamese transition
to market economy: Alliances between firms, farmers and government officials in the livestock sector”, communication to the SASE 28th Annual Conference, June 24-26, 2016 - University of California, Berkeley, 24 p.
• GRAIN, 2011: “The Great Milk Robbery: How corporations are stealing livelihoods and a vital source of nutrition from the poor”
• Gret, 2015 : « Note d’analyse de l’impact des politiques commerciales régionales sur la filière « lait local en Afrique de l’Ouest » par Cécile Broutin, Laurent Levard et Amel Benkalha, 38 p.
• IFCN, 2016: ”Global dairy trends, drivers & outlook : Results of the IFCN Dairy Report 2016”
• MediaPart, 2016 : « L’accord commercial entre l’UE et l’Afrique de l’Ouest qui menace le lait africain », http://www.bilaterals.org/?l-accord-commercial-entre-l-ue-et-31729&lang=en