Wednesday, January 31, 2007

Danone, Grameen and Yogurt in Bangladesh

A lot is being made out of the Grameen, Danone joint venture in Bangladesh which will produce fortified yogurt for the malnourished children in Bangladesh.

A detailed article from Fortune appears in Saving the world with a cup of yogurt

The modus operandi is as follows:

Danone will invest $500,000 in the venture. Grameen will supply the rest. Three years down the line, Danone will take back the initial investment and keep ploughing the rest of the profits back into the venture. (I think Telenor also said the same!)

Grameen borrowers will supply milk to the venture. Danone will make yogurt and sell them in cups priced $0.07 (approximately Rs. 3, or Taka 5). Grameen members will buy these cups and will sell them across their villages. The plant manufacturing yogurt will also employ women.

What is surprising is that such a venture actually requires french technology and investment. In India, plenty of local milk cooperatives make milk, yogurt and derivative products. The largest player in India is Gujarat Co-operative Milk Marketing Federation, which owns the brand name Amul. The multinationals Nestle or Danone or nowhere in the game. Yunus could have easily obtained technology at near zero cost or free from Amul, and could have run the plant with his own money.

The story of Danone's involvement is over-romanticised in the Fortune article. The $500,000 investment is probably just a fraction of what the CEO of Danone spends on his travel around the world.

We hope the malnourished children of Bangladesh get their nutrition quickly.

No comments: