Sri Lanka milk competition intense, investment inadequate
COLOMBO (EconomyNext) – Demand for fresh milk is high in Sri Lanka but production is inadequate with intense competition to collect what’s available by many players including private firms, an industry official said.
“There’s tremendous demand for fresh milk if it’s available at an affordable price,” said Waruna Madawanarachchi, Director of CIC Agribusiness.
“Today consumers have to pay about 180 rupees a litre or around 1.30 US dollars – that’s quite expensive. But if milk is available at a reasonable rate people are prepared to drink fresh milk.”
Despite the potential demand, investment in increasing milk production remains inadequate, Madawanarachchi told a forum with visiting Dutch dairy industry company officials and experts looking to modernise and invest in the sector.
Except for one big private firm the rest of the corporate sector has not gone into production and is more keen in collection and processing.
“The private sector is more keen in collection,” Madawanarachchi said. “We’re fighting for a share in that pie without putting in a genuine effort to enlarge it.
“That’s an area where we need change – someone to give leadership. We need a holistic approach to increase the production base,” he said.
“At the moment there’s huge competition for milk collection by many players including the corporate sector.”
Policy barriers and inconsistency also hindered investment.
“In transporting animals, even to sell, you need permission from two levels – from the veterinary surgeon and the government hierarchy which sometimes takes time,” he said.
“Price intervention from the state – sudden increases, the controlling price of various milk products, is not conducive from a long term investment view point,” Madawanarachchi said.
The bulk of production comes from small scale scattered farmers which makes milk collection difficult.
“Productivity levels are extremely low and are pulled down by the large number of low productive cattle we get in the dry zone part of the country,” Madawanarachchi said.
“We often get quality issues when we try to collect from the large number of scattered farms.”
But Madawanarachchi said there was scope since milk consumption is set to grow with rising per capita incomes.
The country also imports 70,000 tonnes of milk products, mostly powdered milk, worth 300 million US dollars a year.