Soy dairy performance metrics

Abstract

Soybean (Glycine max (L. Merr.) has been a crop of interest to address both poverty and malnutrition in the developing world because of its high levels of  both protein and oil, and its adaptability to grow in tropical environments. Development practitioners and policymakers have long sought value added  opportunities for local crops to move communities out of poverty by introducing processing or manufacturing technologies. Soy dairy production  technologies sit within this development conceptual model. To the researchers’ knowledge, no research to date measures soy dairy performance, though  donors and NGOs have launched hundreds of enterprises over the last 18 years. The lack of firm-level data on operations limits the ability of donors and  practitioners to fund and site sustainable dairy businesses. Therefore, the research team developed and implemented a recordkeeping system and  training program first, as a 14-month beta test with a network of five dairies in Ghana and Mozambique in 2016-2017. Learning from the initial research  then supported a formal research rollout over 18 months with a network of six different dairies in Malawi and key collaboration from USAID’s Agricultural  Diversification activity. None of the beta or rollout dairies kept records prior to the intervention. The formal rollout resulted in a unique primary dataset to  address the soy dairy performance knowledge gap. The results of analysis show that the dairies, on average, achieve positive operating margins of  61%, yet cannot cover the fixed costs associated with depreciation, amortization of equipment and infrastructure, working capital, marketing and  promotion, and regulatory compliance. The enterprises in our sample operate only at 9% of capacity, which limits their ability to cover the normal fixed  costs associated with the business. The challenge is not the technology itself, as when operated, it produces a high-quality dairy product. The challenges  involve a business that requires too much capital for normal operations relative to a nascent and small addressable market.