Milk processing capacity outstrips supply | Daily News
Milco operating profitably

Milk processing capacity outstrips supply

Chairman Milco Lasantha Wickramasinghe. Picture by Dinesh Perera.
Chairman Milco Lasantha Wickramasinghe. Picture by Dinesh Perera.

The milk processing capacity of the country is currently much larger than the milk output of the local livestock. The Milk Corporation (Milco) under the Ministry of Agriculture is currently operating profitably after reforms at the company following new management in 2020.

Milco made a profit of Rs 441 million in 2020 as opposed to a loss of Rs 619 million in 2019. The corporation was last profit-making in 2016 where it made a profit of Rs 339 million.

Chairman Milco Lasantha Wickramasinghe said that Milco had revised the policy of offering the lowest possible price to both farmer and customer and begun a policy of offering better prices to the farmer with a moderate price to the consumer. The corporation has increased the price paid to farmers by 15%. Wickramasinghe was speaking to Daily News at the Milco Headquarters yesterday.

Milco has historically faced problems retaining farmers due to the low prices paid and the lack of certainty in payment. Under the new ‘Agile Management’ system the company has ensured that the industry is more viable for all stakeholders. The corporation is confident of contributing to the government’s goal of having self-sufficiency in milk and milk by-product production.

Under the agile management system, bottom-up discussions have begun with the workforce. Through suggestions alone and with no capital expenditure the Milco Corporation has been able to increase yoghurt production by 10% in the Naraheinpita facility.

Milco monthly revenue has exceeded Rs 1 billion for the last 6 months of 2020. The company has reduced milk output to the ministry of education under the advice of health professionals who feel excessive consumption of milk is harmful.

Milco is aiming to pay down longstanding debts with recent profitability. The company is also focusing on creating an ecosystem for increased dairy production.

The company has invested in the backbone infrastructure for cattle feeding, breeding, sharing of best practice, and networking. The company has shared feed production techniques with local farmers and also created large purchase orders through its network.

The company is also bringing techniques of artificial insemination to the local livestock. The company plans to invest in 10 more chilling centres, 103 more milk collection centres, and 200 more farmer societies.

The company looks to spend Rs 8.5 million for bringing about recognition of best practice.

Wickramasinghe said the issue of cattle diseases though present was not as big as the media was making it out to be. Milco pays out Rs 500 million a month to local farmers. Wickcramasinghe said there was scope to make milk production a more lucrative enterprise than certain office jobs.