DOB Equity’s investment will help Tanga Fresh to meet the growing demand for long-life milk in Tanzania
East African consumers are increasingly moving from fresh milk to long-life milk, presenting a major potential for market growth.
DOB Equity’s investment will allow Tanga Fresh to expand its production in the long-life milk market, as well as overall production capacity, providing access to a fair and reliable market for dairy farmers in the Tanga region.
Less than 7% of milk in Tanzania is processed, leaving a lot of room for growth in the market. We expect to see increasing demand for higher-quality processed milk in the market.” – Toine Huijbers, CFO at DOB Equity
Toine Huijbers, CFO at DOB predicts that Tanga Fresh will be well positioned to meet the rising demand sparked by regulation and consumer awareness. Tanga Fresh has already demonstrated tremendous growth capacity; in recent years, its production facilities expanded from producing 15,000 litres of milk to more than 80,000 litres per day.
Improving quality, yields, and sustainability throughout the supply chain
One of the key issues hampering growth in the East African dairy sector is the supply and quality of milk from farmers. To address this problem, Solidaridad and Tanga Fresh are teaming up to provide services and support to 6,000 farmers with the goal of improving quality, yields and sustainability throughout the supply chain.
Frederik Claasen, Head of Policy at Solidaridad, comments: “We provide impact investors with practical solutions to create a meaningful impact. We believe our work in strengthening the supply chain complements DOB’s investment for the benefit of the market and Tanzanian people.”
Strategic partnerships work
Solidaridad, Tanga Fresh and Mruazi farm (2,000 hectare commercial heifer breeding unit) are piloting four innovative business models that will economically boost the Tanzanian dairy sector. At the core of this project is the set up of so called ‘dairy hubs’. These are milk cooling and collection centers that provide other services to farmers (like veterinary services) as well.
DOB Equity’s investment in the dairy hubs ensures better service provision for farmers’ dairy business and working capital so Tanga Fresh can pay its farmers quickly.
The partnership pays off on three levels:
Improving the efficiency of the supply chain increases the quality and quantity of milk delivery to Tanga Fresh. This is lowering the risk of producing at a loss giving capacity rate,
Having eyes and ears on the ground allows us to identify and discuss pressing issues with stakeholders, leading to improvements for farmers and Tanga Fresh;
But most importantly, in the future, we can play an important role in how to balance social impact and profit.
Tanga Fresh CEO, Innocent Mushi comments, “the investment from DOB strengthens our working capital flows and production capacity. This will be key in supporting Tanga Fresh’s innovation and increasing its national market penetration.”
“The development of Tanga Fresh will also be helped along by our collaboration with Solidaridad, which will provide farmers in the region with the capacity to supply the volumes of higher quality milk needed in a growing market.”
Read more about our work in Dairy.