Sri Lanka buys up local milk to spare the farmers' tears
- 10 May 2012
- From the section Business
A few days ago the streets of the hill town of Hatton were dramatically, though briefly, turned white.
Dairy farmers from the surrounding highlands came to town and let loose 12,000 litres of fresh milk.
As it streamed out of their containers one man even took a bath in it.
At a demonstration they angrily complained that they could not sell their product because private milk companies, which work through collection agents, had suspended their purchases.
Companies were quoted as saying they would not buy any more as their stocks were full, though there have been reports that the same companies also find it more convenient to use foreign products.
Alarmed at the wastage, the government has ordered the state-owned milk company, Milco, to buy all the farmers' unsold milk to bolster moves towards national self-sufficiency.
"We are committed to encourage dairy farmers in this country to produce milk," Milco's chairman Sunil Wickramasinghe told the BBC in Colombo. "And we are committed to buy that milk."
Milco imports nothing and all its milk and milk products, including ice cream and yoghurt, are Sri Lankan.
The plan is now to buy the milk directly through the 2,000 dairy farmers' societies in the hills and the formerly war-torn east of the island. That means Milco is now purchasing about 210,000 litres a day - an increase of 10,000 - and this will continue indefinitely.
Milco says if it ends up with too much it will start a daily milk scheme for schoolchildren.
But the government has gone further. After the big milk spillage it announced a big new tax on imported powdered milk, effectively raising the price by 25%.
It says Sri Lankans must wean themselves off it and drink fresh local milk.
"We spend nearly $400m [per year] to import the milk in foreign exchange," says Mr Wickramasinghe. "On the other side, technically we can produce all the milk that we require in this country, so why not?"
Production has indeed gone up in the last few years but one problem is that collection and storage facilities in this tropical country do not appear to have kept up.
Milco says its 77 chilling centres hold 325,000 litres and its 52 bowsers can transport 350,000 litres, while silos in its factories hold another 270,000.
But two years ago the government's own manifesto said the formal dairy-processing industry was still only collecting 50-60% of the milk produced and that in most areas it was collected only once daily "due to the lack of a proper cold chain".
"The milk marketing and processing [needs] to be developed through establishing proper cold chains with the support of the private sector and private-public partnerships."
The other problem is that many consumers cling to their preference for powdered milk, as the BBC found out at a market in the Colombo suburbs.
"I don't have any faith in the fresh milk," a retired shopper, Derna de Silva, said.
"The simple reason is - you place it in the fridge. However you might want to preserve it, in a day or two it's gone bad so you have to trash it. The milk powder, you're sure of the milk powder."
She is not happy about the raised price but can afford it and will continue buying it.
Shopkeeper P A Chaminda says that even with powder, he sells 10 times more of the foreign brands than the local ones. But he would like to market far more Sri Lankan products if he can.
Milk is the latest foodstuff for which the government has deliberately increased duties on foreign products in a bid to get the people to buy local.
The price of wheat has also been raised steeply as the authorities said Sri Lankans should switch their carbohydrate diet even more completely over to rice, which is locally produced.
The cost of bread - which is extremely popular here - has soared and many people are not happy.
So it is with the milk, as so many are used to foreign milk powder which does not spoil.
"Earlier in private sector offices, the employees were given milk tea thrice a day - now they get only plain [black] tea," a private sector worker was quoted as saying in the Sunday Times newspaper.