Investment challenges in milk sector (Case of a dairy factory in southwest of Algeria): Development prospects

Abstract

In this work, we are interested in studying the investment challenges of packaged reconstituted milk production in Southwest of Algeria. To reach this objective, we have calculated the cost price of two products (pasteurized milk and fermented milk) which present the main production line of the dairy factory of Bechar, to assess the profitability of the company. The cost price of milk was calculated from the general balance that 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 showed that for this factory, the cost price of one liter of pasteurized milk was estimated at 27.06 DZD/L compared to fixed selling price at the dairy factory level (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. 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 (PRP) installation challenges required to implement a quality system promoting the quality of milk and dairy products.