Organic milk from tropical grassland

First stage: The product is pasteurized “ecological” milk in two varieties: fresh and chocolate milk. 2,000 Lt/day, which amounts to 730,000 Lt/year. At this point, we will not have the organic certification yet, but will have a transitional certificate that will allow our milk to be sold as ecological.

Second Stage: Starting from year 3, we will produce yoghurt, cheese and milk cream. The production level will be 5,000 Lt/day

Third Stage: Starting from year 5, community-based production is added to a level of 10,000 Lt/year.

Our business concept is to develop a line of natural and organic dairy products, starting first with ecological milk in the first stage of the project, and by year 5 we will produce also yoghurt, cheese and milk cream. Ecological and organic milk have better value than conventional milk, and therefore the sales price will cover all expenses and generate profit. When producing products with higher added value, the profit margin is even higher.

In order to process the milk, we need to have a processing plant equipped with the necessary machines and infrastructure. The plant will be small at first, according to our production plan, but the layout will allow growth, in terms of new equipment that will be added as the business grows, both in the volume of milk production as well as in the demand side. The equipment needed include a pasteurizer, homogenizer, cooling tanks for milk, mixers for yoghurt and cream, a small laboratory, a packing machine, cool storage for finished products, a truck with a cooling tank for milk pick-up and 2 trucks to deliver finished products. The materials used will have to comply with organic production regulations, limiting the use of some chemicals and preservatives. Some of these products will have to be imported from Argentina or Europe.

The organic milk farm will require the use of compost machines and some new infrastructure such as “live” posts using leguminous plants and trees. It will also need a holding facility to produce humus from worms. The humus will be used to fertilize the soil for the new improved grass varieties.

The organic farm and processing plant will require labour in terms of 12 people for the processing plant and 8 for the farm. The workers at the plant will have to be trained in food processing, including HACCP and industrial safety norms. We will aim at obtaining an ISO certification by year 5. The farmers already know how to run a dairy farm, except they will have to be trained in organic production which bans the use of pesticides, hormones and antibiotics. Instead, they will have to be trained in homeopathic medicine and the use of natural repellents and biological controls.

The target market is comprised at first by 2500 families, from higher income brackets who live in the city of Santa Cruz. They are mainly young educated couples with small children who are more aware of health issues and have enough purchasing power to spend more on organic food. Our customer base will also include some restaurants, hotels and ice cream parlours. Our growth projection includes the city of Santa Cruz (2 million people) and the surrounding towns (another half a million). This growth implies that some of our customers will also be rural families who in the past consumed raw (unprocessed) milk and now have access to pasteurized milk. The geographical area encompasses about 150 square kilometres. Our projection by year 5 is to reach 10,000 customers (families). Our distribution strategy is first to do it ourselves, using 2 trucks and sales personnel. By year 2, we hope to identify and recruit a distributing company that has infrastructure (vehicles) and a client base made of grocery stores, supermarkets and kiosks. We will then sell our products to this company that will specialize in the distribution and sales activities. We think that first, we must prove ourselves in the market, in order to negotiate a good distribution contract.

The main raw material is fresh milk, which will come at first mainly from our own farm. Gradually, we intend to convert more and more farmers to organic production, and thus, we will be able to draw in their milk production as well.

Our marketing will emphasize the following concept: “Natural and organic milk from the tropical rain forest". Therefore, our products will be first channelled through the natural and organic products market, directed toward an ecological and environmentally sensitive audience, who is willing to pay a premium for organic products that are healthy. Thus, our products will first be found at organic food stores, supermarkets and special fairs.

Another strategy will be to market our products as a solution to a health issue, in order to replace the unprocessed raw milk that a large segment of the population continues to consume. We will exploit the health issues, emphasizing the statistical data of infectious diseases transmitted through unprocessed milk that affects the local population (Tuberculosis and Brucellosis). For this strategy, we will launch an educational campaign with posters and flyers at most food markets in our target region, including the small towns close to our farm and close to the city of Santa Cruz.
Finally, the main bulk of our potential customer base, found in the City of Santa Cruz, will be reached by commercial advertisement on radios and posters placed at grocery stores. The marketing will continue to emphasize the health factors and the risk of consuming raw milk or milk with traces of hormones and antibiotics.
The only other ecological milk sold in the country is produced by Pairumani out of the city of Cochabamba, which is a Swiss Foundation that supports sustainable development in Bolivia. Their production is limited and, therefore, they only sell in the city of Cochabamba with great success. We have approached this foundation seeking their support and have received a pledge for technical assistance to our project. They will not be a competition to us; instead will be a supporting institution to our business.

Therefore, our only competition will be PIL ANDINA with their conventional milk products. Since, they do not offer organic products they cannot be a threat to our business. Nonetheless, their pricing will be a reference for our own products, since we intend to price our products a little higher that PIL’s products.

Organic milk is naturally higher in certain nutrients than non-organic milk and one such nutrient is Omega 3 essential fatty acid. This nutrient is essential for maintaining a healthy heart, supple and flexible joints, healthy growth and strong bones and teeth. Research has also established that organic milk has higher levels of vitamin E, vitamin A and antioxidants
Organic dairy farms do not use artificial pesticides (insecticides, fungicides or herbicides) on pastures where cows graze. By contrast, there are about 500 different pesticides licensed for use on non-organic dairy farms and 1,550 which can be used on non-organic mixed farms (farms which have both dairy cattle and grain crops).
Organic cows are not fed GM cattle feed, and their feed is also free from solvent extracts and urea. This means that there is no possibility of GM or solvent residues being found in organic milk.
Finally, our product will be free of traces of antibiotics and hormones, since we will practice homeopathic medicine.

As a farmer and as a professional, since I am an Agricultural Engineer with a Master’s degree in Rural Development, I know all the technical aspects involved in a dairy farm, which is the starting point for a dairy industry.

My personal experience in this region has been as a leader and motivator, including my role as President of the Rotary Club and professional positions held for several years in local government (in planning) and at a Foundation for rural Development as Executive Director.

I also designed and promoted a project, funded by The World Food Program of the United Nations, by which milk producing cattle was given to the community (3 cows per family) so that they could start a milk production industry. The farmers have already paid back the cost of the livestock.

Another project that I designed and promoted in the region, was the Natural Renewable Resources Protection Plan for Santa Cruz, project funded by The World Bank and KFW.

From my professional experience, I have learned that one needs to act on his or her ideals in order to make a difference.

Direct employment by year 5 should be 35 people.
Indirect employment by year 5 is estimated at 300 people, including all the farmers from the neighbouring communities that will participate in the business, shifting to organic production of milk.

These jobs will generate new income at fair wages, estimated at an average of 220 USD per month, which is much higher than the average of 100 a month that is prevalent these days.

The income generated by the small farmers is even higher (350 USD/month). Therefore, the people employed will be able to improve their living standard, in terms of access to food, health, housing.

The technological transfer component is very important in this business, since there will be training involved for all farmers who want to join in the business.

Finally, the spin-off impact of this project is great, since the likelihood for its replication is very high. Many more producer associations can be organized, providing higher incomes to tens of thousands of farmers in this region. By year 10 we expect to have 1000 farmers working and profiting from our business.