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Monday May 17th, 2021

Sri Lanka’s Watawala Dairy avoids pitfalls of foreign cows

ECONOMYNEXT – The dairy subsidiary of Sri Lanka’s Sunshine Holdings Plc has managed the risk of diseases hitting yields of imported milch cows, which is afflicting smaller farms, the firm said.

Small farmers who bought imported milch cows had got into debt and cows were hit by diseases and milk production was below expectations.

 "Watawala Dairy was largely able to avoid these pitfalls thanks to prior preparation which included training and development for employees, the proper feed being prepared and stored, and the necessary infrastructure being put in place before the imported animals arrived," the firm told shareholders in the annual report.

It said that instead of having the cattle graze in the rocky fields at the estate, the farm uses ‘Total Mixed Ration’ method of a blended feed diet.

The farm, located at the Lonarch Estate in Watawala, works closely with maize farmers to ensure the feed is of high quality, it said.

"To ensure that the quality of the maize remains high we work closely with the farmers, advising on how to grow crops and even providing seeds when harvests have failed."

The rich feed has given milk produced at Watawala Dairy a higher fat content, and the dairy is sold at a higher price (84 rupees a litre), compared to the mandated minimum farmgate price of 66.88 rupees a litre, Sunshine Holdings said.

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Sri Lanka dairy farmers in trouble after buying imported milch cows

Sri Lanka has signed a deal to import 20,000 milch cows in its drive to boost domestic milk output partly to reduce dairy imports, which are a regular whipping boy for mercantilist nationalist lobbyists.

Sri Lanka runs into foreign exchange problems due to money printing by the Central Bank, which operates a pegged exchange rate regime.

The imported cows suffer from heat stress and poor quality feed, increasing risks of diseases.

Most farmers have around two to five cows, and lack Watawala’s scientific expertise.

Agriculture Minister P. Harrison told in parliament that 406 imported milch cows had died from July 2015 to March 2019.

Opposition Legislators had complained that imported cows yielded only 7-8 litres of milk per day, while Harrison had said better managed farms, including Watawala Dairy, are around the 20-25 litre per day yield potential of the milch cows.

Watawala Dairy averaged 18.70 litres of milk yield per cow daily in 2018, compared to a national average of around 4.4 litres.

International expertise had helped the Watawala Dairy operations remain ahead of competition.

Duxton Asset Management, a Singapore-based dairy investor which held a minority stake in the Watawala Dairy farm until June 2019, had helped set up the farm with technical assistance.

It had employed a herd manager and operations manager from South Africa for the farm’s first year of operations.

"Their practical expertise and work ethic were the boost the farm needed to make a flying start in an industry where, except for a few players, the technical expertise is limited to knowledge gained through trial and error," Sunshine Holdings said.

The farm is expected to post profits in three years, now managed by locals.

It posted an after tax loss of 234.6 million rupees in 2019, up 158.5 percent from 2018, due to higher finance costs from repaying loans taken to set up the farm.

The Watawala farm has 1,285 cows, including 851 milkers. In its first full year of operations ending March 2019, it produced 6 million litres of milk, compared to 2 million litres in 2018.

National milk production in 2018 was 471.6 million lires, up 19 percent from a year earlier, but was enough to meet only 45 percent of local demand. 

Currently there are 240,000 milch cows in Sri Lanka, and an additional 250,000 are required for the government’s self-sufficiency target, Sunshine Holdings said.

(COLOMBO, 6 June 2019)


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