By Trevor Tomkins
After 40 years of working in the dairy industry, I wanted to put my passion, experience and worldwide dairy connections to work to advance dairying (and particularly small-holder farmers) in emerging markets around the world.
That is where the vision for venture|dairy began. Prior to venture|dairy, I was CEO of Milk Specialties Global, which I was fortunate to lead as we turned it into a half-billion dollar, industry-leading player over a 12-year period. In 2011, I helped guide the successful sale of the company to a management-led team and then created venture|dairy as a way to use my skills and expertise to begin the next chapter of my life.
The vision began with a not-for-profit organization that was established in 2010. Through the work of this not-for-profit, the need for a for-profit impact investment company that could provide larger investments to anchor dairy processing firms became apparent.
With my business partner at Milk Specialties Global, Mike Drennan, we formed venture|dairy enterprises to work with local businesses in emerging dairy markets. Our goal is ultimately to be the leading investment company in emerging dairy markets, working to establish sustainable enterprises that respect the environment, provide employment and improve human and animal nutrition in communities around the world.
Starting in Latin America
Our initial focus has been on Latin America and the Caribbean, East Africa and India. We have located no shortage of opportunities to use our value-chain-focused model to connect small producers to markets. By identifying an anchor processing firm capable of creating market demand for milk, greater volumes of high-quality milk from small producers can be “pulled” into the value chain. This milk can then be converted into a variety of superior-quality products to satisfy consumer demands and meet nutritional needs.
Through an enterprise- and market-based “dairy hub” approach, we are able to bring technology, tools and training to small dairy producers and add value across the entire dairy value chain.
We have reviewed and assessed a Nicaraguan dairy hub company (Cattle Hub|Nicaragua) for the potential to receive a larger investment. Over the past 14 months, the dairy hub approach implemented by Cattle Hub has demonstrated the large potential for adding value across the entire value chain.
The project began with 28 farms that are members of a local cooperative and is now expanding to include 300 other farms that sell milk to the cooperative. A neighboring cooperative of 950 farms has asked to join the program. In total, we estimate that at least 1,500 farms can be enrolled and improved over a five-year period.
The value of the dairy hub activities in increasing milk supply over five years shows $26 million of incremental contribution to the processor, over and above the base volume available. In addition, contributions of $5 million to the hub, $26 million to the farmers and $23 million to retailers are created. These are substantial incremental benefits to a dairy processing investment. The Cattle Hub’s activities are scalable with the resources applied to the local opportunities.
Investing in an anchor processor
We are investigating similar initiatives in East Africa and India where there are similar challenges throughout the dairy value chain, including lack of access to veterinary service, poor quality control and poor market connections for small producers. In these locations, our goal is to invest directly into an anchor processing firm that shares our vision to connect small producers to markets. Through this investment, we will work with a processor to develop dairy hubs that can improve the quality and supply of milk for the processor as well as improve producer livelihoods.
The opportunities are certain and the investment returns are significant, but more importantly, the potential to positively impact the lives of so many is without question, immense and undeniable.
Trevor Tomkins is the founder of venture | dairy, Chicago, www.venturedairy.com.
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