Dairy development in Northern Sri Lanka

experiences of a PPP approach

Carola von Morstein GIZ GmbH, Germany

15th IAGD Meeting Seattle,
17th September 2014

Divison Rural Development and Agriculture Page 1

 Dairy Development Project Northern Province

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 Develop Public Private Partnership (DPPP)
What are the common goals and synergies?

Goals of
Corporate international
goals DPPP cooperation

market entry, market expansion,

improving local economic,
integration into markets in
environmental and social
developing and emerging
conditions
economies
integrating local population into
improving quality and productivity
economic processes
Corporate Social Responsibility
(CSR)
Creation of win-win situations for companies and development cooperation.
Common goals can be achieved faster and more sustainable.

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 Project information (1)

Location: Northern Province of Sri Lanka

Duration: 03/2013 08/2015 (30 months)

(extension under discussion)
Partners involved: TetraPak
Cargills Ceylon PLC
GIZ

Volumen: Total: 512.000

TetraPak: 200.000
Cargills PLC: 119.000
GIZ (DPP): 193.000

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 Project information (2)
Objective: is to guarantee a better supply with dairy products in the
Chavakachcheri and Mannar districts of Sri Lanka.

Indicators:
1. Milk yields among the 400 smallholder dairy farmers have
increased in average by at least 50%

2. The average income from milk among the 400 smallholder dairy
farmers to increase by at least 50%

3. Total bacteria count to decrease with at least 50% for the milk
produced by the 400 smallholder dairy farmers

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 Background (1)
Sensitive post conflict area with a great number of repatriates
The substantial increase of the national milk production is a high
priority of the government in order to achieve at least 50% self-
sufficiency by 2015
The dairy industry has potential to contribute considerably to Sri
Lankas economic development
Estimated up to 80% of the produced milk in the North is
transported to the South and a large amount is converted into milk
powder
There is a promising regional market for milk. Since safe cool
chains are not always available UHT milk is an adequate
opportunity with easy storage requirements and long shelf life

Divison Rural Development and Agriculture Page 6

 Background (2)
The majority of livestock are reared in small-scale operations
difficult and expensive to service
There is a considerable potential for improvement on the production
side, in the fields of animal breeding, animal health, animal nutrition

Population is about 71.387 with 21.308 families (2012)

In total 4.448 farmers,
2.085 farmer own < 5 cattle
2.061 farmer own 5 10 cattle
250 Farmer own 16 -25 cattle
Cattle population(2013) is 15,342.
Total milk production (annual) is 738,372.5 liter
No of AI is around 2460 with low success rate (31%)

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 Background (3)
Semi intensive cattle management system mainly (tethering with
afternoon free grazing)
Cattle are milked once a day (morning)
Feeding mostly based on paddy straw plus rice residues
Commercial feeds and crop residues are available in market.
Low milk yield and short lactation duration
Lack of knowledge in dairy production
Lack of market access, milk is sold to informal market and tea
shops
Lack of fair and transparent market prices
Lack of knowledge and access to financing structures
Insufficient government structures (veterinary + extension services)

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 Challenges (1)
Transfer of small-scale dairy farmer to market-oriented producer in
order to improve their income
Create job opportunities for young people in the dairy value chain
Improve the operating AI program and veterinary services
Implementation of a number of milk collection centres in the five
districts with stationary cooling tanks and cooling tankers for the
transport of the milk from the collecting points to the milk factories
Production and storage / conservation of fodder crops
Promotion the improved usage of available by-products and / or
investigate opportunities to provide high quality feeds (ingredients)
at a reasonable price to the farmer
Implementation of a Milk Factory (UHT) in the Northern Region

Divison Rural Development and Agriculture Page 9

 Project activities (1)

Set up a dairy hub

50 to 60 villages located within a 20 to 25 kilometers radius.

Train, advise and empower the dairy farmers
Improve profitability for the small scale dairy farmers by introducing
modern production techniques.
Improve the milk collection system net work.
Establish and shorten the supply chain
Provision of morning and evening milk collection
Introduction of fair and transparent prices
Improvement of milk quality quality pays off
The dairy hub is managed and the chilling center is owned by
Cargills

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 Project activities (2)
Training and advisory services

Training of female and male project extension worker

Elaboration of training material based
Elaboration of extension material
Elaboration of gender-sensitive extension approaches
Improvement of IA services

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 Project activities (3)

Strengthening of rural producers' milk societies

Support the Milk Society formation and function
Provision of milk cans for leasing
Provision of services either free of charge or at a reasonable cost to
its members (CO3 fodder plants, veterinary services, AI, advisory
services)
To build up small rural milk collection points / centers
to improve the access to financing instruments and credits
To increase their voice and visibility
To strengthen/empower the position of female famers
Facilitate the supply for commercially available feeding and
secured storage facilities at center

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 1 L Collected milk per month 3.068,5 9.369,0 11.974 15.467 29.118 42.343 44.337 35.610
2 L Cow/day, average 2,3 2,4 2,7 2,8 2,7 2,8 2,8 2,575
3 Collection Cost, Rps/L 3,6 10,8 9,0 6,8 4,5 4,1 4
4 Bacteria, TPC (cfu/ml)
5 Somatic Cells No/ml

6 Net income, farm/month Rp S/L(Average)

1.789 1.872 2.073 2.182 2.384 2.338 2.802 2134,3
7 Average farm size 22 3 3 4 4 4 4 4
8 No of Farmers in the MC area
9 No Cargills registered farmers 40 126 150 216 240 310 332 451
10 No of delivering farmers 32 132 164 184 200 395 381 346
11 Dairy as Primary Business 4 12 24 28 32 35 35
12 Model Farms 1 1 2 2 3 4 4
13 Progressive Farmers
14 Total no of cattle (registered farmers) 56 186 614 1129 1183 1.571 1.782 1.836

15 No of producing cows (registered farmers)

26 69 104 108 116 145 159 460
16 No of farmers trained 8 20 28 36 8 6 77 246
17 No of trainings 4 4 4 4 4 2 5 7
18 No of female farmers trained/training 8 12 42 20 16 18 18 23
19 No of farmers cultivating CO3 grass 4 8 40 124 140 127 122 138
20 Extent of cultivation (ac)
21 No of farmers making silage
22 Amount of silage (kg)
23 No of farm visits 132 144 160 160 140 152 150 166
No of Farmers taking Cargills/GIZ
24 facilitated loans
8
25 Amount of credit, Rps

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 Experiences and lessons learned (1)
Short project duration versus livestock projects reproduction cycle

Farmer and cooperative level

Hesitation to invest in dairy intensification
Change of traditional habits take time
Insufficient smallholder market orientation
Missing of regional best practices
Women farmer are very enthusiastic and reliable

Government level
Little transparency - competition with international NGO
Government controlled AI services and breeding programs

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 Experiences and lessons learned (2)
Commercial partner level

A constant dialogue with the partners to create trust and confidence

is needed
Have a very technical focus regarding training and extension
Training of advisors and farmer requires investments
and needs time !!
Little gender orientation
Aim at fast return of investments
Cargills is very enthusiastic to expand immediately on a rather large
scale with focus on small, medium and large scale farmer

Different speed and vision of sustainable development

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 Chilling center -
Chavakachcheri

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Divison Rural Development and Agriculture Page 17
 Rural milk collection point

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Divison Rural Development and Agriculture Page 19
 Farmers training at Madduvil

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Divison Rural Development and Agriculture Page 21
Divison Rural Development and Agriculture Page 22
Divison Rural Development and Agriculture Page 23
Divison Rural Development and Agriculture Page 24
Divison Rural Development and Agriculture Page 25
 Thank you for your attention!

Carola von Morstein, carola.morstein-von@giz.de

T +49 (0) 6196-79 2156

Deutsche Gesellschaft fr Internationale

Zusammenarbeit (GIZ) GmbH
Sector Project Sustainable Agriculture

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