La Laiterie du Berger - Kossam
- Business model
Investment Name: La Laiterie du Berger – Kossam
Contract signature date: December 2020
Total AgriFI Financing: Equivalent in XOF/ECO of EUR 600,000 (Subordinated debt)
Environmental and Social Category: B (medium)
(A) high risk, (B+) medium high risk, (B) medium risk or (C) low risk
In 2018, La Laiterie du Berger (LDB) decided to “spin-out” its milk collection activity by creating Kossam, a subsidiary in which LDB and a farmers’ cooperative (supplying cow milk to LDB) are shareholders.
In addition to Kossam collecting milk from farmers and selling it to LDB, Kossam also provides animal feed as well as coaching to farmers. Given the growing demand for dairy products, LDB is expanding its milk production capacity and its fresh dairy products, Therefore, it needs to increase its milk collection in the Richard Toll area (North of Senegal). The project has the objective of supporting Kossam in developing its activites by strengthening the milk supply chain and assisting farmers in the Richard Toll area in increasing milk production by implementing mini-farms and providing capacity building.
To allow this, AgriFI will lend the equivalent in XOF/ECO of EUR 600,000 to LDB that will provide Kossam with a shareholder loan and equity investment of the same amount.
Funding objective and impact:
Kossam is setting up an investment plan that will be financed by a large proportion via a grant received by the Master Card Foundation and a loan from AgriFI. This will allow Kossam to:
1. Develop its milk supply chain by:
a. Increasing the number of farmers collected: Between 2,500 and 4,000 farmers will be collected by 2023 (against around 1,000 today) in the Richard Toll area. It should allow to collect 3,000 tons of Fresh milk by 2023;
b. Investing in “mini-farms” (little barns where a farmer stalls its best dairy cows);
2. Support, give training to farmers and improving access to veterinary services and animal feed;
3. Empower Kossam and the farmers’ cooperative capacities and governance.
Why AgriFI wants to fund this project:
– Local economic growth: LDB and Kossam are creating economic opportunities for cattle breeders. Between 2,500 and 4,000 herders will join the cooperative by 2023 (1,000 today);
– Partial substitution of imports: the project will foster local production of fresh milk, currently the 2nd main imported product in Senegal after rice;
– Food security and rural development: Augmentation of yields for farmers improves livelihood and contributes to food security in the country;
– Farmers empowerment and entrepreneurship: The project has a structuring effect on the milk value chain by empowering farmers via the cooperative and developing entrepreneurship;
– Gender-smart investment: Women have been historically involved in Senegal’s milk value chain and Kossam is collecting currently around 38% of women.
Environmental and Social Rationale:
The investment is rated category B.The company has developed policies and procedures to identify and mitigate social and environmental risks. IFC Performance Standards 1, 2 and 3 are applicable.