Nestlé Lanka increases milk procurement in 1H 2012

By Cheranka Mendis

Sri Lanka’s largest private sector milk collector, Nestlé Lanka has increased local fresh milk procurement by a staggering 35% YTD of as June 2012 increasing their payments to dairy farmers by 58% YTD.

The company has also invested Rs. 3.2 billion within the past 18 months as part of a Rs. 10 billion five-year investment plan, of which Rs. 1.9 billion has been invested in the local manufacture of milk-based products.

With Nestlé purchasing milk from over 15,000 dairy farmers on a daily basis, Nestlé Lanka Managing Director Alois Hofbauer stated that a contribution of Rs. 3.7 billion has been made in 2011 to the rural community by direct purchase of milk, a 100% increase over last year’s contribution. This growth is expected to continue in 2012. He also noted that milk collection had increased by 30% during the first half of this year as well.

Fresh milk is collected from 15,000 farmers spread islandwide through 1,200 collection centres, which is then transferred to a network of 100 chilling centres, the largest chilling centre network in the country. The final stop is at the Kurunegala Milk Processing Plant, which is currently running at full capacity to maximise the fresh milk intake.

“We will continue to purchase as much milk as we can to support our local dairy farmers and will continue to operate at a maximum capacity with the fresh milk process,” he said.

Kurunegala Plant Dairy Development Head Asoka Kuruppu stated that much had been done to empower local dairy farmers and develop production to support their livelihood by the company in the recent past.

Focusing on three aspects of animal feeding, farmer education and animal health and breeding, the company has helped farmers plan structured dairy development, which has been able to increase the milk yield by up to 10% in most cases. High quality nutritious grass-shoots have been distributed to farmers who have trouble finding them along with advice on how well to plant them and obtain best results.

A team of 50 members, which includes veterinarians and agri experts, also provide free advice and services for the farmers. Through continuous farmer meetings, new technology and new methods to increase production have been introduced to the farmers while mobile clinics operational in rural areas provide them with free service. Interest free loans are also provided for deserving farmers to develop their farms with a repayment period of one year. In 2011, the total value of loans given under the program amounted to Rs.3.5 million.

“We will continually support the rural dairy farming community through investment and research and development,” Hofbauer said. “We believe the country can be self-sufficient in milk in the future.” Assuring commitment, he noted that the company was among the prime movers to enter the north post-war, to give commercial opportunities to the farmers there.

The company is also present in the powder milk market, having established a 16% market share in the total milk powder category.  

Nestlé has within the 2011/2012 period invested heavily to expand its production in the country. Starting with a Malt Beverage Plant in 2011 at an investment of Rs. 560 million, the company further invested Rs. 1.2 million in a new noodle manufacturing plant early this year followed by a Rs. 750 million UHT Milk Plant to manufacture products such as Milo in March.  The company is also the biggest purchaser of coconuts in the country, with a network of 5,000 families for direct purchase.

 – Pix by Daminda Harsha Perera