Socio-economic model for the operation of a solar platform for the conservation and valorization of local milk in the village of Tatki in Northern Senegal

Abstract

Livestock is a strategic sector that occupies nearly 60% of rural households and accounts for 4.3% of Senegal's Gross Domestic Product (ANSD, 2016). The dairy sector plays a decisive role in this sector, given its importance in the food security of the population and the income it generates (Alari et al, 2011). However, national milk production is in deficit; the country relies on imports of large quantities of milk powder, 25,000 tons/year, to cover its consumption needs (MEPA, 2016). These imports weigh heavily on public finances, up to 60 billion FCFA/year, thus accentuating the trade balance deficit, which was 2,977 billion FCFA in 2016 (ANSD, 2018). The analysis of the milk value chain highlights, in addition to the difficulties of securing production in the dry season, the poor access to energy in production areas (Enda Energie, 2015). Thus, in these localities, the milk can neither be preserved nor processed to be valorized and allow producers to earn stable incomes. It is in this context that a milk valorization platform was installed in 2016, in the village of Tatki located in a dairy basin in northern Senegal. After two years of operation of the platform, the financial results showed real difficulties in making the business of selling fresh milk to dairy industries profitable, given the landlocked nature of the area. Indeed, the cost price is 320 CFA francs per liter, for a price proposed by the industrialist set at 325 CFA. According to economic calculations, the floor price of a liter of fresh milk should be set at 550 CFA francs, for a minimum average commercialized volume of 471 liters per day, within the framework of a concessional credit at a rate of 5%. These conditions do not correspond to the reality of the current market and could not be applied without a subsidy. Thus, in order to make the platform profitable, it seems essential to add value to the milk by processing it on site. In this regard, the production of yogurt has given very interesting results that could be replicated in other villages in the northern zone. The financial analysis of the activity, for financing at a subsidized rate of 7.5% per year for a period of 7 years and a deferred repayment of 2 years, shows a rate of return of 18% for a period of 15 years, when local milk is processed into yogurt. The wealth generated (10% NPV) amounts to 227,269,450 FCFA and the time to recover the capital invested is 3.90 years.