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NABA Member of the Month December 2016: Voxtra

The Norwegian impact investor Voxtra has invested in Amos Dairies, a leading dairy processor in Uganda. Amos opened its factory (pictured above) in June 2014, and has quickly become one of the top three dairies in Uganda, processing more than 200,000 litres of milk per day in the high season. The company was established by Mr. Punit Pruthi and Mr. Surinder Chawla, both have extensive experience in the dairy industry from India. The company has received financial and technical support from Erie Foods International Inc.—a US-based manufacturer of dairy protein.

The dairy sector in Uganda has a large potential, due to the country’s favourable rainfall patterns, ample green pastures and long traditions for keeping dairy cattle. Ugandan raw milk is competitively priced – it is among the cheapest in the world – and also has high quality with medium to high fat content and very low levels of pollutants. The country produces more milk than it can consume itself, so the growth of the sector needs to be export-led. Amos is the leading exporter, with a capability to produce export-quality niche-market products at a globally competitive price. It exports casein – a milk protein – in powder form to the U.S., and ghee – a butter oil used in Indian cooking – to India. In a time of historically low prices in global dairy markets, Amos has proven its business model by operating profitably.

With Voxtra’s investment, the company will add a processing line for whey (Norwegian: myse) into powdered products also destined for Asian markets, and finance increased working capital requirements as the company grows.

Amos sources its milk from 7-10,000 smallholder farmers. Future growth for Amos will translate into ever stronger incentives for the dairy farmers in the area to increase their production and thus their incomes, thus creating substantial social impact. Amos sources most of its milk from farmer cooperatives and independent traders, but also accepts direct deliveries from small farmers in the vicinity, as shown on the picture below. Every delivery is thoroughly tested for quality, and prices differentiated on fat content and other key quality parameters.

About Voxtra:

Voxtra invests for profit, but only in companies whose success is tightly linked to improving the livelihoods of smallholder farmers. The company’s investments enable such companies to grow and create both financial returns and social impact. In addition, Voxtra actively supports the portfolio companies to deliver on their growth plans. The company typically finds that they can drive improvements in management systems, sales and marketing and governance. The company’s technical assistance facility funded by the Norwegian Agency for Development Cooperation (Norad) allows it to co-finance such improvement initiatives. The Voxtra East Africa Agribusiness Fund currently stands at NOK 110 million (approximately USD 18 million). Among the shareholders are institutional investors such as Norfund, Gjensidigestiftelsen, Grieg International, and Kavlifondet, as well as private individuals in Scandinavia.

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