Sri Lanka needs to promote the consumption of fresh milk as a source of protein. However, there is an issue as the production of fresh milk is not very lucrative for the small scale farmer in the long run, said Management Consultant, Maliban Milk Products (Pvt) Ltd, Asoka Bandara. The average cost of production of one litre of liquid milk was Rs 34.69 and the average farm gate price was Rs. 66.34. There is a profit of Rs. 30 to 35 from the production of a litre of milk. However, with the waste and other related problems that the farmers face, they need to be stimulated to remain in the business, he said.
“As a milk powder importer we also find it difficult to be in business due to the escalating cost of importation and distribution.
Value chain inputs which include processing, packaging, retailing and marketing result in margins where profits earned are reduced. As the government controls input and output prices, the companies engaged in milk powder imports have no control over the matter,” he said.
“We are not talking about a subsidiary driven industry, but a sector with reasonable profits,” Bandara noted.
There are strategic considerations required by the dairy industry such as the gelatin issue, need for cow based curd and the commercial impacts. The sugar level in the liquid milk packs is another issue. The industry needs time to adjust and benchmark with global standards. The industrialists request the government to consider revising the VAT and Duty charged on equipment related to the dairy industry. They are seeking the possibility of having a special registration procedure with the Customs and have a clear tariff classification for dairy equipment.
Measures needed to be taken to regulate fresh milk quality at field level and public education needs to be stepped up. The dairy industry proposes a joint action plan to upgrade the industry. While it emphasizes the importance of consuming milk for protein requirements, the industry is of the view that market forces should determine prices. It expects to be considered as a strategic partner in the economy and stresses that coherence in policies is adopted. The growth of the industry depends on research and development initiatives and needs to leverage R&D to ensure commercial viability based on consensus and consultation, Bandara said.