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Milksop solutions for dairy industry

May 11, 2012 2:30:21 PM - www.ft.lk

MOST newspapers on Friday carried massive full page advertisements calling on people to increase their consumption of liquid milk. However, there are many infrastructure shortcomings that the Government has failed to address, which are likely to undermine consumption and keep consumer patterns unchanged.

The protest of dairy farmers which culminated in the spilling of 12,000 litres of milk on the streets of Hatton generated a high degree of publicity in the media. While protests by farmers who are unable to find a market for their produce is not unheard of, dairy farming in Sri Lanka has hitherto been unable to meet consumer demand through local production.
Increases in production may be attributed to the policy on increasing local dairy production, which was featured prominently in the ‘Mahinda Chinthana’. While covering the more sensational statements made in regard to the protest, it was not entirely clear as to whether the difficulty faced by farmers was caused by a glut in supply, a fall in demand, or (as alleged by a Government Minister), a conspiracy. The most plausible explanation as put forward by the larger private-sector buyers is the lack of capacity, particularly storage capacity, to meet the increase in supply brought about by the production drive.
Government remedies to the problems faced by the industry including a new levy of Rs. 92 per kg on imported powdered milk and a higher guaranteed minimum price may help to protect dairy farmers, but may not help address the underlying issue: that is, the vulnerabilities in the supply chain, with lack of distribution and processing capacity to handle increasing production.
Industry commentators have also identified that a shift from powdered milk to liquid milk requires not only an increase in the availability of liquid milk, but also an attitudinal change amongst consumers who are accustomed to powdered milk. Therefore, the overall success of the policies relating to local liquid-milk production will be reliant on addressing both the supply-chain issues and the nature of consumer demand.
The Government’s usual stop gap policy of providing a glass of milk to school children in Nuwara Eliya is both unsustainable and fails to take into consideration these two key issues. The Government buying excess milk and redistributing it will take much funds and infrastructure capacity that is yet to be put in place. Without market forces at play, excesses in other parts of the country will not be addressed – indeed there have already been reports of dairy farmers in the east being notified by milk buying companies that their products will not be bought from next month.
Without the core issues being solved, it merely means that the same issues of Nuwara Eliya will reappear in the east. This is all the more tragic given the amount of hard work that has gone into developing the dairy industry after the end of the war. Before hostilities began, the east was known as the highest dairy producing region in the country, but the conflict decimated the industry for over two decades, forcing the farmers to start from scratch. Everything from breeding cows to treating their diseases and finding grazing ground for them had to be meticulously restarted. Such hard work cannot be allowed to go to waste, but neither can the problem be solved through newspaper advertisements.

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