Dairy Day creates new, sustainable business model

Dairy Day (Pty) Ltd creates jobs and gives investment value to farm employees, but also hedge revenue for milk producers. In a ground-breaking move, 30 dairy farmers in KwaZulu-Natal have created three business entities enabling them to guarantee a supply of dairy products to retailers. This gives them an innate hedge against price fluctuations on the market and a bigger share of the consumer’s wallet.

Every farmer holds shares in Dairy Day in direct relation to the number of litres of milk he or she can supply. The company holds 85% of the shares of an operating entity running two dairies, Honeydew and Stonelees, that have been acquired and a processing plant of   22 000 m² in Howick, newly built at a cost of in excess of R100 million, which packages private labels on behalf of retailers and brands and produces its own products under the Honeydew brand.

The operating entity is capable of processing 600 000 ℓ of fresh milk daily, includes cold rooms and production lines, operates in excess of 100 vehicles, and employs 1 200 people. It produces sterilised milk, maas, yoghurt, cream, juices, dairy blends, butter, and powdered milk.

The remaining 15% of the shares in Dairy Day are held by the Dairy Day Workers, in which the producers’ employees participate.

Paul Marshall, CEO of Dairy Day, says that unlike other farmer-owned or cooperative organisations, they are focused on providing a service rather than simply a product to their customers, who are the major retailers. As a company they know exactly what their own milk producers can deliver and, therefore, what the processing plant’s output will be. “Ensuring stability of supply to retailers will create demand that should drive steady growth for the farmer shareholders.” Press release. To read more, click HERE.