Shortlisted for the 2014 FT/IFC Transformational Business Awards
Achievement in Inclusive Business:
Engro Foods Limited (EFL)
Company Profile
Launched in 2005, EFL manufactures, processes, and sells dairy products, juice, ice cream, and frozen desserts in Pakistan.
It is the second largest producer of processed milk in the country. EFL is a majority-owned (87%) subsidiary of Engro
Corporation Limited (ECL), one of Pakistan’s largest conglomerates with seven businesses in a wide range of industries.
Base of the Pyramid Reach
300,000 small-scale dairy farmers as milk suppliers
Challenge
Strategy
Results
▪▪ Less than 1 million of the approximately
8 million farming households sell milk to
companies; the rest are in the informal
sector
▪▪ Dairy production is small-scale in Pakistan
with farmers rearing 2-5 cows that yield
2-3 liters/day
▪▪ Farmers are dispersed over a large
geographic area and access markets via
middlemen
▪▪ Milk yields and quality are sub-optimal
due to weak feeding patterns, lack of
modern farming techniques, and poor
access to veterinary services
▪▪ Build strong, long-term relationships
with small dairy farmers to ensure the
company has a stable and secure supply
of milk
▪▪ Establish village-level procurement
infrastructure to source milk directly from
farmers
▪▪ Improve milk yields and quality through
training and ongoing guidance for
farmers
▪▪ Increase transparency in pricing and
payments as well as efficiency of
procurement by leveraging technology
▪▪ EFL’s total revenues grew from $16.5
million in 2006 to $370 million in 2013
▪▪ EFL’s supplier base of small dairy farmers
more than doubled between 2008 and
2013 to reach 300,000
▪▪ A small dairy farmer supplies an annual
average of 1,000 liters of milk to EFL,
earning approximately $450 in sales
revenue
▪▪ Over 1,800 milk collection centers across
200,000 sq. kms and 40 agri-service units
that cover around 15,000 villages
IFC’s Role
▪▪ Provided a subordinated loan of up to
$50 million in 2009 to help ECL meet its
financing needs
▪▪ Played a counter cyclical role, financing
ECL at an important time in the company’s
growth trajectory as well as in difficult
market conditions for financing
EFL’s Inclusive Business Model
EFL sources milk from farmers through a vast village-level infrastructure—its 1,800+ Milk Collection Centers (MCCs)
reach 85% of the company’s 300,000 suppliers. Farmers who are far from an MCC can sell milk to EFL’s 1,700 Village Milk
Collectors (VMCs). VMCs, who include women, are trained in milk testing, handling, and hygiene practices and given
equipment. EFL also procures milk via independent contractors and village-level door-to-door milk collectors who
purchase milk from farmers and deliver to MCCs. Around 360 trucks transport milk from MCCs to EFL regional hubs and
processing plants.
The Engro Milk Automation Network (EMAN), a management information system, collects, transmits, and monitors real
time data from MCCs. Milk is tested and measured at delivery. After acceptance, a unique magnetic card assigned to the
farmer is swiped at a point-of-sale terminal to enter the transaction in EMAN. Data is transmitted to EFL to inform decisions
on improvements. EMAN is also used to facilitate payments via direct electronic deposits or to MCCs that pay farmers in
cash.
EFL has 40 agri-service units staffed with veterinarians to serve MCC clusters. Vets train and guide farmers in areas such as
vaccination, hygiene, and feeding practices. EFL also trains women in livestock and dairy management as a livelihood in
partnership with USAID and CARE Inc. USA. For more information, please visit www.engrofoods.com.