Fresh milk thirsts for fairer price hike

Wednesday, 4 May 2011 00:17 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Curdling the milk somewhat, a local fresh dairy company yesterday called on the Government to have a level playing field when increasing prices so that local farmers could benefit.

Milco Chairman Sunil Wickramasinghe told the Daily FT that Rs. 20 for a 400g pack and Rs. 49 for a 1 kg pack for increase for powered milk effective from midnight 2 May did not give much benefit to the local farmers.

“The dairy industry in Sri Lanka needs incentive to improve. International milk powder prices are high and an increase was necessary,” he admitted, but pointed out that little of this was being funnelled to the local farmers at grass root level who are struggling to make ends meet.

He advocated a balanced policy by the Government that would give benefit to the local fresh milk producing companies and thereby create a trickledown effect that would give more profits to dairy farmers.

Milco under the brand ‘Highland’ is the largest milk collector in Sri Lanka and provides the cheapest milk powder on the market. Currently Milco has a basket of dairy products including cheese, yoghurt, ice cream and fresh milk.

“Even when the market price for 400g of milk powder was Rs. 244, we supplied at Rs. 210 because we care about the consumer. At present we have not increased prices and are first waiting to see how much of the recent increase can be passed onto the farmer. We consider the entire basket of dairy products that we manufacture when changing prices and so far we have been able to keep prices lower because we correspondingly increase prices of our other products.”

According to the Milco Chairman’s calculation, at least 60% of the final price should go to the farmer, but so far the Government has only given increases in the case of powdered milk, most of which is imported.

“If the Government really wants to develop the dairy industry in Sri Lanka, then policymakers have to give incentives to local fresh milk producing companies as well.”

Responding to questions on recent shortages of Highland milk powder, he observed that there were lean periods in the milk production cycle, one of which the industry was just emerging from. “Now that milk production is picking up again, we hope to increase our production to meet massive demand,” he noted.