Akmal Wickramanayake is upbeat about the prospects for the dairy sector

Compiled by Yamini Sequeira

Q: How is Sri Lanka’s dairy sector positioned and what more can be done to improve productivity?

A: The local dairy sector is growing rapidly at an annual rate of 25-30 percent. Although the market reflects a wide portfolio of imported dairy products for the convenience of consumers, there are numerous opportunities and demand for locally produced dairy-based products.

The main obstacle to deriving greater yields and productivity in the dairy farming sector is insufficient milk to cater to the demand. Therefore, we should increase the scale of dairy farming and produce more milk, while enhancing quality and productivity.

Q: Has the government prioritised the sector adequately – and if so, how? And if not, what more would you like to see in terms of policies?

A: The government has recognised the dairy sector as being a vital and substantial contributor to the country’s GDP, as well as conserving foreign currency. The 2021 budget extended tax relief to the sector in the form of low-interest loan facilities for dairy farmers to upscale and improve their businesses.

But the government needs to follow this up by making land available along with the required infrastructure for expansion of dairy farms.

The unorganised dairy farmers or small-scale farmers play a critical role in the sector as they boost the production of fresh milk in the country. However, this segment needs to be educated on hygiene, sanitation and health requirements to become viable entities.

Q: Do you believe that Sri Lanka will become self-sufficient in fresh milk production anytime soon?

A: Yes. In the past, dairy farming was not recognised as a profitable venture but now it has become a financially viable business with a growing demand for cow’s milk, partly boosted by the increase in locally produced dairy products.

Furthermore, it has been observed that youth are willingly entering the dairy business, which provides a sustainable solution for the unemployment problem in the country. These positive trends will directly impact Sri Lanka and make it self-sufficient in dairy in the near future.

The domestic production of milk was sufficient only to meet around 38 percent of the national requirement in 2019. This makes it critical to encourage local farmers further and also address the remaining bottlenecks in domestic production processes.

In addition, small-scale milk processing should be promoted as the output of such producers is important – particularly when the price of powdered milk increases in the international market.

Q: In terms of packaging and hygiene, how do you rate the dairy sector – and what consumer related trends is it catering to?

A: Most dairy products are still packaged in polythene-based packing materials that are not conducive to the environment. The government must introduce stricter policies for producers to use environmentally-friendly packaging.

Recent trends indicate that consumers have been moving away from carbonated drinks and opting for dairy products instead, given their nutritional value and people’s evolving health conscious lifestyles.

Q: Is there a sufficient cold chain in place to support expansion of the sector?

A: At the point of raw milk collection, cold chain functions can be met but more needs to be done to increase the volume of raw milk further and ensure quality.

Q: What has the impact of the pandemic been on the local dairy sector as a whole – and how has the government looked to support local producers during this time?

A: At the beginning of the pandemic, local dairy farmers faced several challenges with the sudden curfew imposed in the country. However, the government offered relief to local milk producers to continue production throughout the lockdown period.

Furthermore, the government has taken steps to minimise the importation of dairy products to protect the local sector. These measures will have a positive impact on local dairy producers and enable them to increase volumes.

According to estimates published by the Department of Animal Production & Health, milk production grew by 8.2 percent year on year to nearly 241 million litres during the first half of last year. This was largely due to part-time farmers having extra time to care for and maintain their animals during the curfew, as well as the high remunerative prices paid by milk collecting companies.

Cattle milk production – which accounted for around 88 percent of total milk production – increased by 12.5 percent year on year to almost 212 million litres.

However, buffalo milk production declined by 15.3 percent to 28.9 million litres due to a lower demand for buffalo milk products during the lockdown period. Farmers encountered difficulties in feeding these animals amidst mobility restrictions as buffaloes are typically free-range grazing bovines.

Q: What is your assessment of the dairy sector’s performance last year and its ability to meet local demand?

A: It is expected that milk production increased by around 20 percent to 509 million litres in 2020. However, this would be sufficient to meet only around 42 percent of total domestic demand.

The interviewee is the Managing Director of Pelwatte Dairy Industries