INVESTMENT CHALLENGES IN MILK SECTOR (CASE OF A DAIRY FACTORY IN SOUTHWESTERNALGERIA): DEVELOPMENT PROSPECTS

Abstract

In this work, we are interested in studying the investment challenges of packaged reconstituted milk in Southwestern Algeria with respect to the high demand for this strategic consumer product. To reach this objective, we have calculated the cost price of two products (partially reconstituted milk and fermented milk) which present the main production line of the dairy factory of Bechar (Algeria) to assess the profitability of the company in terms of benefit or deficit. The cost price of milk is calculated from the general balance and shows all the movements of the accounts which we have established the table of counting results 'TCR' corresponding to the different charges directly related to the milk manufacturing. The analysis of spending data given by the TCR showed that for this factory, the cost price of one liter of pasteurized milk is estimated at 27.06 DZD/L compared a quay-factory fixed selling price at 23.20 DZD/L, which reveals a deficit of -3.86 DZD/L (-16.63 %), while produced fermented milk showed a profit of +14.65 DZD/L representing a margin of distribution equivalent to (+ 60.16 %) of the cost price that was estimated at 24.35 DZD/L. According to the obtained results, it appears that the dairy industries in Algeria, and elsewhere which are based mainly on milk powder as raw material for the manufacturing of reconstituted milk at a fixed price subsidized in a dairy policy of social character privileged by the state, can have significant profit margins generated primarily by dairy products that can be sold at a free price.This study provides a platform which can be used, not only, to define the ability of dairy factory to overcome competitive market challenges, but also the pre-requisite programs installation challenges required to implement a quality system promoting the quality of milk and dairy products.