Growing confidence in tomorrow!!! Dairy Cooperative

Growing confidence in tomorrow!!! Dairy Cooperative "Lelo 2014"

21. 11. 2018

We are visiting Gocha Jikhaishi, a poor farming community located some 35 km west of Kutaisi. The aim of the visit is to learn the progress of cooperative "Lelo 2014" - a union of 10 smallholder farmers that was established in autumn 2014 and received a grant from PIN few months later. In conclusion of the visit we are sitting around a table in the courtyard of cooperative's little dairy plant and talk about the history of "Lelo 2014" with its members - Mamuka Vashakidze, Gia Gudava, Lamzira Khvedelidze, Elene Kikvidze and Elguja Janelidze. While having the conversation, we taste various soft cheeses and creams made at the plant. From time to time, Mamuka and Gia walk to the storage room to bring new samples of cheeses and creams - the table is full all the time and this creates a feeling that the supply is inexhaustible.

"My grandfather was growing vegetables, my father was also a vegetable farmer, and I was engaged in the same business until the last year", says Gia Gudava who leads the cooperative. "My family, like many other families in our village, possesses one hectare of arable land and this is the main cause of our poverty - in the local agro-climatic conditions the resources that you generate from farming at such a small piece of land can only cover the most basic needs of the family. You get no money left for investing in growth and expansion of your farm".

"For years we, a group of five friends who have some experience of farming and marketing together, were trying to find solutions to our livelihood problems - individually or together" adds Mamuka Vashakidze, an energetic and cheerful man in his forties, said to be the cooperative's soul. "Some of our attempts were not completely fruitless, but the best they could bring about was a little and short-term relief. We needed long-lasting and tangible improvements, but these required radical changes in production base and investments of finance that we, subsistence farmers, can never afford. Our unpreparedness to assume risks of failure was another important constraint preventing us from changing our income generation approaches".

It was in autumn 2013, when we, getting tired of our own complaints and fears, finally agreed to jointly switch to cattle farming and start producing dairy in commercial quantities - the business that is not much dependent on arable land, though requires good access to pastures and investment in purchasing some basic equipment, refurbishing a little building to accommodate the equipment and buying at least a dozen of milking cows" continues Mamuka. "We thought we could take a loan, but after visiting a number of banks, we learnt that bank money would be extremely expensive for us - due to the high risks pertinent to small-holder farming, interest rates for small agricultural loans are never lower than 24%".

After all, we decided not to apply for a commercial loan this time. Instead, we called neighbours to join our group and mobilized the money to buy cattle and refurbish the building internally, within extended families of the group's new and old members. However, the mobilized amount was not enough for buying the required equipment. This was limiting our production and marketing potential - without proper equipment, we could not ensure consistency in the product quality and proper hygiene at the workplace. Consequently, we've got no chance to access more lucrative markets as they are more strict about the quality of produce. Eventually, we were "stuck" in the middle of the way".

"The solution appeared on the horizon when PIN, in the frame of EU supported ENPARD project, which is co-funded by the Czech Development Agency, announced a grant competition for groups of small farmers who intend to jointly tackle their problems in production, storage, processing and marketing. To access the grant, one had to meet dozens of conditions and prepare a complex business plan that would describe not only economic, financial, technical and marketing aspects of the new business project, but also propose a structure of farmer cooperative with specific roles and financial investments from each member" adds Lamzira Khvedelidze, one of the four women in the cooperative. "Realizing that this was probably a once-in-life opportunity for us, we started putting together our business plan that was envisaging the refurbishment of dairy plant building as a direct investment by the group and set up of relevant dairy making equipment as a co-investment from the project".

"Preparation of the business plan was a new exercise for us, we never did that before. Quite often we were feeling lost because we could not make proper calculations or present facts in a right way" smiles Mamuka. "Fortunately there were consultants assigned by the project to help farmers in business planning, so after all, our plan was prepared and submitted to PIN for evaluation along with applications from 26 other farmer groups. Few weeks later we received a notification that our plan was assessed as one of the most promising and realistic, thus we could claim the grant. The news brought a lot of joy to us and our families, but at the same the start of our business project made us extremely busy because we had to quickly complete the investments at our side and get the building ready for granted equipment.

"To make the long story short, the preparations at our side took nearly 5 months. During the winter period, we increased the number of milking cows from 14 to 20, accessed new pasture areas, and finished refurbishment of the building dairy plant. The equipment came in February and our enterprise started working at a full scale two months later" says Gia who returns back from the storage room with a new bowl of wonderful whey cheese with mint. The equipment that we received included a pasteurizer, a cheese boiling tank, on operational tables made of stainless steel, a set of quality analysis instruments, and dozens of smaller elements of a dairy line. In addition to that, we were granted a second-hand mini-truck with a refrigerator to bring milk to the plant and to transport the dairy to markets".

At this point Elene and Elguja, who were virtually silent since the beginning of our visit, join the conversation almost simultaneously. "Look what outputs we've got since the start of our business project in April" says Elene. "The quantity of milk we deal with on a daily basis has increased from 200 to 500 liters - our cows give us a half of this amount and another half is bought from other farmers in the village. This milk is sufficient for making some 65-70 kilograms of basic white cheese. Even if we sell it fresh, with no further maturation and processing, the cheese brings us income of some 400-450 Lari a day".

"But we do not stop at this" tells us Elguja. "We turn the basic cheese into Sulguni, a local variety that resembles the world-famous Mozzarella. Or we add dried herbs to the basic cheese, let it maturate and thus get new varieties of the product. In the near future we also plan to start smoking Sulguni - this is what the markets pay a good premium for."

"If in the beginning of our business project the profit per member was not exceeding 5-6 Lari a day, it is now doubled and in some cases even tripled. This is the result of the investments into our enterprise that was made by us and by PIN. We produce better quality and more expensive cheeses now and take them to better paying shops that are located in town of Khoni, the municipality capital".

"And this is only the beginning" continues Mamuka. "We have no free money to buy more cows, but if we accept more members into cooperative, we can quickly increase the supply of milk. This means we can boost the output of our enterprise. In addition to this, if we manage to further improve the quality of the product and focus on more valuable varieties of cheese, we can then approach shops in larger urban centers such as Kutaisi, Batumi and Tbilisi - as you know, they pay better. This all will result in higher incomes for the coop members and more money for investment in further growths. As we are planning to continue buying a proportion of milk from non-members of the cooperative, the increase in milk acquisition by our coop means more incomes also for the non-members."

"By the way, we have a number of villagers who observe our success and want to join our cooperative" adds Gia. "Some of them are the skeptics who did not believe in our chances for success just a year ago".

Our conversation comes to an end - we hurry to pay a visit to another cooperative in the area that also received a grant from PIN last winter. When we were saying goodbye to each other, Elene told us confidentially: "Money is of course essential. It improves our lives. But another equally important contributor to the better quality of our life is our growing confidence in tomorrow. We are grateful to PIN for bringing us this great feeling".

Project: Enhancing Small Farmers' Cooperation and Productivity in Imereti and Racha Regions

Donor: EU’s European Neighbourhood Programme for Agriculture and Rural Development in Georgia (ENPARD Georgia), Czech Development Agency

Implementation period: January 2014 - June 2017

Author: Buba Jafarli, Project manager