September 30, 2022
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    Less spilt milk

    October 20, 2019

    Dairy development is significantly important in the rural economy of Sri Lanka due to its ability to generate income and employment opportunities. Milk production has been a traditional industry which has survived thousands of years playing a key role in infant nutrition and alleviating nutritional poverty in all age groups.

    Milk has been a crucial source of high-quality protein, minerals and vitamins for the population, by way of milk, meat and eggs. For many rural smallholder farmers, dairy animals are a ‘living bank’ that serves as a financial reserve during periods of economic distress.

    The livestock sector plays a vital role in the economies of many developing countries. It provides food or more specifically animal protein to the human diet, income, employment and possibly foreign exchange. For low-income producers, livestock also serves as a store of wealth, provides draught power, and organic fertilizer for crop production as well as a mode of transport. Milk provides relatively quick returns for small-scale livestock keepers. It is a balanced nutritious food and a key element in household food security.

    Development of the dairy industry is crucial since it increases food security, reduces rural poverty, slashes import bills and prevents the rural to urban migration. Furthermore, several constraints were identified in developing the Sri Lankan dairy sector such as difficulties to access the required amount of input, finding the correct breeding stock, difficulties in getting adversary and veterinary service and finding proper markets.

    Present status

    The Animal Production and Health Department (DAPH) estimates that the domestic milk production was sufficient to meet 40 percent of the milk requirement of the country during 2018, while the rest was met through the imported powdered milk. The total domestic milk production was estimated as 471.5 million litres which consisted of 385.6 million of cow’s milk and 85.9 million of buffalo milk. In 2018, the total imported powdered milk and the milk products were 106,873 metric tonnes. The total import bill accounted around Rs. 54 billion and is increasing over the years. Imported powdered milk is a huge burden on the economy of Sri Lanka.

    According to the Health Ministry, it is recommended to consume 200ml of milk per day per person. This can be any form of dairy product such as yoghurt, cheese or curd. If we assume that people of all age groups consume 200ml of milk, the required total amount of fresh milk per day is 4.19 million litres. Accordingly, Sri Lanka requires 1,529.23 million litres of milk per year to become self-sufficient. However, in 2018, domestic production was 471.5 million litres and it is required to produce another 1,057.85 million litres to achieve self-sufficiency level in milk.

    According to the household income and expenditure survey, per capita, powdered milk consumption has risen from 1.63kg in 1980 to 17.41kg in 2006. This consumption pattern forced Sri Lanka to import more powdered milk over the years. Therefore, shifting from powdered milk to fresh milk is highly important to the development of the dairy sector and the nutritional status of people in Sri Lanka.

    Government intervention

    The DAPH implemented several dairy development programmes in recent years. With the objective of increasing domestic milk production through the upgrading of the cattle population, dairy breeding projects continue by providing facilities for artificial insemination service throughout the country, strengthening and maintenance of artificial insemination centres, progeny testing of bull calves for natural breeding and pasture development. In addition, the heifer calf-rearing project is also carried out to ensure the nutritional status of female calves with the expectation of future production performance.

    Priority was given to increasing fresh milk consumption, establishing breeding farms, implementing medium-term livestock development projects, milk cattle importation, establishing MILCO milk processing units at Badalgama and establishing small-scale milk processing centres to facilitate the value addition process.

    The Hector Kobbekaduwa Agrarian Research and Training Institute (HARTI) conducted a value chain analysis of the milk industry in Sri Lanka during 2018/2019. The study reveals that farmers’ experience in the dairy industry is relatively high as dairy farming is a traditional activity attached to crop farming. Youth involvement in dairy farming is quite low (6.9 percent) and the majority of the farmers are in the 30-60 age group (74 percent). The modern input supply and other support services should be provided to start dairy farming as entrepreneurship projects, through which the youth can be attracted to the dairy industry.


    According to the DAPH, the majority of milk producers are small-scale farmers. The HARTI study found small-scale average herd size is five animals per herd. In a herd, one to two milking cows can be seen. It is noted that around 66 percent of the farmers receive less than Rs. 40,000 monthly income from the dairy industry. Therefore, it is essential to maintain economic herd size to manage dairy farming as a profitable venture. If dairy farming is the sole income activity, farmers need to rear 14 dairy cows in a herd to obtain a mean household income of Rs. 62,237 (Household income and expenditure survey 2016/2017) and these dairy cows should be managed properly to ensure different stages of the lactation cycle.

    Sri Lanka being a small country, land has always become a limiting factor to develop both agriculture and the livestock sector. According to the research study, most farmers possess less than half acres for their dairy farming activity. Therefore, maintaining own grassland is always difficult. As a result, providing quality grass at a recommended level is always challenging for high potential animals and hinders production performance. However, some enthusiastic farmers manage to provide high-quality feeds by their experience.

    Most of the dairy farmers utilise family labour for dairy farming. Large-scale farms utilise hired labour. The study calculates that the average cost of production of one litre of milk is Rs. 59.63 including family labour. If the opportunity cost was not included (without family labour) the cost of production of one litre of milk is Rs 29.78. From the total cost of production, labour cost accounts for 53 percent of the total cost whereas feed cost accounts for 40 percent. Most of the dairy farmers sell raw milk to milk-collecting agents in the respective area.

    The milk collection network is highly competitive and consists of both formal and informal collection. Based on the fat and content of solid non-fat (SNF), different collecting agents develop their own pricing mechanism and the government also intervenes to determine the selling price of milk. Accordingly, the farm gate price of a litre of cow’s milk varies from Rs. 60– 72 whereas buffalo milk price ranges from Rs. 90-100 depending on its fat and SNF content. The main milk collectors are MILCO, co-operative societies, private collectors and milk processors. In addition to milk collection, these companies have formed dairy farmers’ societies under the respective company and introduced some welfare programmes to dairy farm families. Further, with the objective of clean milk production, these collectors subsidised dairy farm equipment, training on clean milk production, feeding and handling practices.

    At present imported powdered milk consumption is a controversial issue and due to the prevailing consumption habit, the government has to spend a huge amount of money for powdered milk importation. Therefore, fresh milk consumption should be encouraged in all income groups. It is noticed that the trends of consuming fresh milk in dairy farm families are limited compared to urban consumers. Affordability of fresh milk is problematic to most of the low-income families. Sri Lanka is facing malnutrition issues in rural, urban as well as the estate sector. According to the Demographic and Health Survey 2016/2017 in the estate sector, 30 percent of the children are underweight and 25 percent of the infants are born with low birth weight. Therefore, planning and implementing national-level fresh milk consumption programme targeting schoolchildren and pre-school children will enhance the socio-economic standards of the country. Furthermore, facilities should be provided to open mobile milk sale units in the urban and peri-urban areas to enhance the fresh milk consumption.

    Dairy input supply is an essential factor to enhance milk production. Provision of concentrate feed cost is around 40 percent of the cost of production. Therefore, the government’s intervention and regulation of the feed cost at an affordable level is crucial to develop milk production. Manufacturing commercial level hay and silage is vital to achieving the milk production targets of the country. Furthermore, the provision of contemporary knowledge on feed supply and preservation of cattle feed are also important. In the dry zone, due to the lack of feed resources in the dry season, maintaining healthy herd is problematic. Therefore, proper input supply with modern technology is essential.

    The Artificial Insemination (AI) is the main cattle-upgrading programme and the government provides facilities to enhance the service. However, farmers demand sexed semen to increase the number of cows in the herd. Most of the farmers complain that purchasing a high-quality animal is always problematic. There is no guaranteed place to purchase new animals and the price of a good quality animal is also difficult to afford for small-scale farmers. Therefore, promoting dairy breeding centres according to the agro-climatic zones are crucial to enhance dairy production.

    The majority of the small-scale milk producers do not engage in value addition. However, some farmers and other entrepreneurs engage in milk processing in small and medium scale. These processors collect milk from the surrounding farmers and provide employment opportunities as well. However, the competition created by multinational companies always affects the marketing of products.

    In addition, due to the trade name of large-scale products, small-scale producers lose the opportunity of selling their products. For example, small-scale yoghurt producers have to face huge competition in the market. Therefore, it is very important to protect local processors by introducing favourable policies.

    According to scientists, imported powdered milk contains additives that are hazardous. However, it is argued that dairy products coming from multinational companies utilise imported powdered milk for the production of value-added products. Therefore, to ensure the quality of dairy products, the government should monitor closely both local and multinational companies by introducing strict rules and regulations to protect consumers.

    In the case of curd production, traditional systems of buffalo-rearing are difficult to maintain at present due to land limitation and degradation issues. Farmers also complain that unavailability of natural grasslands leads to shrinking of buffalo farming. Therefore, introducing intensive farming with improved breeds is essential to develop and sustain the prevailing systems.

    Most of the new knowledge and research findings have not reached yet to farmers in many areas. Establishing a proper field level extension service will benefit the small-scale farmers. Therefore, strengthening and expanding extension linkages is key to develop the dairy industry of Sri Lanka.

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