Tuesday, 20 August 2013 00:00
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IN the wake of yet another contamination scandal in Fonterra products, this time from China, Sri Lanka’s Cabinet appointed subcommittee will meet today to make sense of this udder-mess.
Needless to say, they have a tough task ahead. When news of the high nitrate milk products hit the local public, the already high confusion could hit panic levels. Already, there is a shortage of local milk in certain shops, which will be exacerbated with the new find.
The Mahinda Chinthana has outlined plans to make Sri Lanka self-sufficient in liquid milk by 2020. To this end, policymakers have increased taxes on powdered milk imports, creating challenges for urban consumers but also funnelling funds into importing thousands of dairy cows for breeding purposes. But a few loopholes remain.
The Government in 2011 pledged Rs. 1.4 billion to develop three National Livestock Development Board (NLDB) farms, importing 4,500 dairy cows from Australia at what analysts said were suspiciously high prices and rejuvenated the industry in the east after it was decimated by the war. But productivity issues still remain, with over 60% of milk requirements being imported. In fact, Sri Lanka is the fifth largest buyer of Fonterra products in the world!
Experts have opined that infrastructure, including vet and nutritional services, needs to be provided more consistently. Instead of giving handouts, the Government also needs to provide a reliable method for liquid milk to reach homes. Steps are also needed to make alternative products such as cheese cost-effective but high in quality as the currently available brands are neither.
Interestingly, Fonterra Sri Lanka buys milk from 4,000 odd local farmers for their yogurt factory that processes half a million cups each day. While this is no doubt profitable for them, getting the same volume to market could be more difficult. Even though milk powder prices are high, in May 2012, farmers in Nuwara Eliya dumped their milk on the streets to protest low prices. While the issue was subsequently resolved, at least partially, it shows what strong market chain gaps the industry has to battle with. Larger private sector buyers have also highlighted the lack of capacity, particularly storage capacity, to meet the increase in supply brought about by the production drive.
Industry commentators have also identified that a shift from powdered milk to liquid milk requires not only an increase in the availability of liquid milk but also an attitudinal change amongst consumers who are accustomed to powdered milk. Therefore, the overall success of the policies relating to local liquid-milk production will be reliant on addressing both the supply chain issues and the nature of consumer demand.
Multinational milk companies have all the glitter of rampant advertising behind them. After two decades of brainwashing, it will be difficult for consumers to shift their taste. Clearly, the situation needs a multi-pronged approach. The Government and the private sector have to work together to resolve capacity and supply chain issues while consumers need to make themselves more aware of nutritional requirements, such as feeding infants breast milk and taking a balanced diet as an adult to be healthy sans milk powder.
Implementing, funding and fast tracking comprehensive dairy policies will hopefully be the long term goal of the Cabinet subcommittee.
