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Thursday, 27 October 2016

European groups bet on Africa’s appetite for dairy

At Anno Walivaka’s two-acre family farm in a valley below Mount Elgon in western Kenya, daily milk production from its handful of cows has increased from less than 5 litres per animal to more than 15 within a decade. And Mr Walivaka is confident that soon “it could get to 20 or even 25 litres”. Milk consumption in Africa is among the lowest in the world but, like the yield from Mr Walivaka’s cows, it is on the rise. Among those betting on the expansion of the African dairy sector are Arla Foods, the Danish dairy co-operative and French group Danone, as they look to the continent to spur growth. On a visit to Kenya this month, Pierre-André Térisse, Danone’s executive vice-president for Africa, said he remained optimistic on the long-term outlook even though the recent slump in commodity prices and tight foreign exchange availability in some countries has made the business climate in Africa “more difficult”. He forecast that the company’s revenues across the continent would rise by up to 10 per cent a year until 2020, and double that in west Africa. That is more than twice its global growth outlook. It made €1.4bn in revenues in Africa last year. Arla Foods, the Danish dairy co-operative, also has big hopes for the continent. It has set a target of increasing its annual revenues from sub-Saharan Africa fivefold within five years — from €90m last year to €460m by 2020. Last year, Arla created joint venture companies in Senegal and Nigeria aimed at improving its distribution network for expansion into west Africa.

Source: www.ft.com/