DIASPORA: U.S. dairy conglomerate, Land O’ Lakes expands into Africa
U.S. butter, cheese giant partners with Kenyan magnet to form Bidco Land O’ Lakes NAIROBI, Kenya (AFKI) — Land O’ Lakes, an agricultural cooperative that is one of the largest butter and cheese producers in the U.S.,
U.S. butter, cheese giant partners with Kenyan magnet to form Bidco Land O’ Lakes
NAIROBI, Kenya (AFKI) — Land O’ Lakes, an agricultural cooperative that is one of the largest butter and cheese producers in the U.S., has partnered with Bidco, a business conglomerate owned by one of Kenya’s richest men, as part of expansion in Africa.
Together, the two companies will create Bidco Land O’ Lakes Ltd., an animal feed production and agricultural services business based in Kenya.
Bidco is the largest manufacturer of edible oils in East and Central Africa, Forbes reported. The Kenya-based firm also makes detergents, soaps, and baking powder. CEO Vimal Shah and his family ranked No. 18 on the Forbes Africa 40 Richest list in 2013.
Bidco owns 49 percent of the edible oils market in Kenya, according to Forbes. Shah, his father, and younger brother started manufacturing soaps and in 2002. In 1985, they acquired a significant portion of Unilever’s edible oil businesses. Three family members share ownership of the fortune.
Bidco grosses over $500 million in annual revenues and its products are made, sold and distributed in 14 African countries.
With headquarters in Minneapolis-St. Paul, Land O’Lakes netted $13 billion in sales in 2015, including $4.2 billion from its animal feed business.
In 2015, the U.S. agricultural cooperative made its first commercial investment in Africa when Land O’Lakes bought 52.5-percent of Villa Crop, a Johannesburg company considered the market leader in South African’s crop protection chemicals industry, according to an earlier AFKInsider report.
Land O’Lakes chose to partner with Bidco for its market knowledge and distribution networks across East Africa, the magazine, Twin Cities reported. Bidco Land O’Lakes Ltd. will focus initially on animal feed production in Kenya with plans to expand into other East African countries.
“This is an exciting new chapter for us, and will allow us to experience meaningful growth in the feed sector while making a positive impact on local farmers,” Shah said in a statement. “Farmers in Kenya need access to critical resources like high-quality feed, otherwise, their efforts will be both inefficient and ineffective.”
The investment in Kenya “presents an important and exciting opportunity to … expand our international commercial footprint,” said Land O’Lakes CEO Chris Policinski in a statement.
Land O’Lakes has 4,331 members including 2,259 dairy producers, 1,273 agricultural producers and 799 co-op members, according to the company website.
Land O’Lakes is no stranger to Africa. It has done nonprofit aid work on the continent for decades building food infrastructure, Policinski said in an earlier report.
In the past, the company has worked in conjunction with U.S. government funding, but not in an ownership role.
Land O’ Lakes has aid programs, advising farmers in Ethiopia, Kenya, Liberia, Madagascar, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe, according to its website.
“In the developing world, there are only a handful of vertically integrated cooperatives operating as independent businesses that are not closely tied to the government,” the company said on its website. With funding from the U.S. Agency for International Development (USAID) Cooperative Development Program, Land O’Lakes examined dairy cooperatives in Kenya and Uganda to understand how these businesses evolved.
More recently, it said efforts have been scaled up in Rwanda and Ethiopia.
“Africa is emerging and we think this is a great growth opportunity for agriculture,” Policinski said.