B.H.W.M.U.S. Bandara
Department of Animal Production and Health
P.O. Box 13, Peradeniya, Sri Lanka
Background
Sri Lanka lies just off the south east tip of India. The surface land area of the country is 65,525 square kilometre including inland water bodies. In 1999 there was an estimated human population of 19.04 million with a population density of 304 persons per square kilometre; a modest population growth rate of 1.4%; 72.2% of the people lived in rural areas, 21% in urban areas and 6.8% in the estate sector; 91.8% of the population over five years of age was literate; and life expectancy at birth was 72.5 years. Gross National Product (GNP) per capita in 1999 was US$ 803, the average monthly income of an average household unit was US$ 124.9 and the monthly expenses of the average household unit in the same year were US$ 122.7 (Central Bank 2000). In the same year, 1999, average per capita expenditure on milk and milk products was generally low, particularly among the rural sector—the average expenditure on milk and milk products was 3.3% and on meat was 1.5% (MLDEI 2000). Under-nutrition (>30%), under-employment (>40%), unemployment (8.9%), inequity and food insecurity are serious economic issues. Therefore, there are serious economic issues that need to be addressed by any development programme, and the dairy industry is no exception.
The contribution of the agriculture sector to the Gross Domestic Product (GDP) was 20.7% in 1999 and the livestock sector contributed 8.0% to the agricultural GDP. The formal dairy sector contributed 11% of the livestock GDP and beef production another 15% (MLDEI 2000).
The dairy industry is important and has tremendous potential in developing the economy in the country. Milk production has been a traditional industry that has survived thousands of years. For many reasons milk, an important food item, needs to be available in the market with out any shortages. It plays a key role in infant feeding and alleviating nutritional poverty in all other age groups. Milk production is important not only because of the nutrition it provides to the people, but also due to the extensive employment opportunities the industry offers. For these reasons Government gives high priority to reaching self-sufficiency in milk production. While recognising the importance of active participation of the private sector in developing the dairy industry, the government has decided to play a leading role at the beginning and set the stage for rapid development (MLDRI 1995).
The last National Agricultural Census was carried out in 1982 (DCS 1982) and population figures available since then are estimates and projections. According to the 1982 Agricultural Census there were 275,790 cattle holdings and 56,140 buffalo holdings in the country. Hundreds of thousands of smallholders who operate at near subsistence levels dominate local milk production in these systems at present (MLDEI 2000). The 2.2 million cattle and 0.98 million buffalo in 1989 has reduced to 1.62 million and 0.73 million, respectively, by 1999. However, there is an increasing trend in the percentage of upgraded dairy animals, including dairy buffalo, in the country. The number of cows in milk has also increased from 265.6 thousand to 338.7 thousand in cattle, and from 112 thousand to 117.3 thousand in buffalo during this period.
Dairy farming is predominantly a smallholder mixed crop–livestock farming operation. They mostly feed their animals on natural grasses available in common lands such as on road sides, railway banks, fallow paddy fields, tank beds and other vacant lots, all maintained under rain fed conditions (Presidential Sub-Committee Report 1997). This production system in the country can be classified into four main sub-systems as shown in Table 1.
Table 1. Main dairy production systems in Sri Lanka.
| No | Production systems | Average daily milk production per cow (litres) | Popular management system |
| 1 | Hill country | 6–8 | Intensive |
| 2 | Mid country | 4–5 | Semi-intensive |
| 3 | Coconut triangle | 3–3.5 | Tethered |
| 4 | Low country dry zone | 1–1.5 | Extensive |
| 5 | Low country wet zone | 3–3.5 | Tethered |
Source: MLDRI (1995).
Some important topographical and climatic information regarding these systems are given in Table 2.
Table 2. Cattle and buffalo systems: Topography, climate and animal types.
| No | Production system | Rainfall (mm) | Temperature range (°C) | Animal species |
| 1 | Hill country | >2000 | 10–32 | Pure exotic and crosses |
| 2 | Mid country | >2000 | 10–32 | Pure exotic and crosses; some zebu crosses |
| 3 | Coconut triangle | 1500–2500 | 21–38 | Crosses of exotic breeds, zebu types, indigenous animals, buffalo |
| 4 | Low country dry zone | 1000–1750 | 21–38 | Zebu types, indigenous animals and their crosses, buffalo |
| 5 | Low country wet zone | 1875–2500 | 24–35 | Crosses of exotic breeds, zebu types, indigenous animals, buffalo |
Source: Ibrahim et al. (1999a and b).
However new sub-systems, such as peri-urban dairy buffalo, are also emerging. The breeds utilised, management system adopted, and agroclimatic conditions under which animals are being reared influence the particular production system (Bandara 2000).
Dairy production plays a vital role in maintaining sustainability and crop yields in most smallholder mixed farming systems and has provided them with a source of regular daily income and a way of cushioning the risk of frequent crop and marketing failures. It also converts resources such as surplus green forage and crop residues available in and around household into cash products. These resources have limited alternative uses and the opportunity cost can be considered near zero (SAEC 1998).
During last few decades, significant changes have occurred in smallholder mixed crop–livestock farming systems, but little is known about the relative contribution of the agro-ecological, technological and socio-economic features affecting these changes. Discipline specific component research is more common in the dairy sector, and relatively little research work has been completed on the interactions between the dairy and other components in most of these mixed farming systems. Policies, and research and development programmes have so far not adequately recognised the strong linkage between crop and dairy production; the complexity of the system; the importance of understanding the rationale for the management systems that account for the striking variations that occur in these mixed farming systems; and the need for different interventions for different systems. As a result there are problems with smallholders utilising technologies and with policy interventions (SAEC 1998).
Recent negative growth rates of cattle population may become a serious constraint for future dairy development in the country (DAPH 1999). Cattle breeding has been recognised as a critical issue for the dairy sector (MLDRI 1995) with many programmes and schemes implemented during last few decades. Yet the expected improvements have not yet been seen. Consequently these issues need to be examined more carefully to see how these programmes can be made more effective (Ibrahim et al. 1999a and b).
Another area that has not been given adequate attention is buffalo development. Very few farmers (14%) milk their buffalo cows and there are too few breeding buffalo. Hardly any artificial breeding takes place; artificial insemination is constrained by difficulties in heat detection and present herd management systems. The National Livestock Development Board (NLDB) has also identified important institutional constraints (Ibrahim et al. 1999a and b).
There is a serious problem in exploiting the genetic potential of improved dairy animals due to the lack of good quality year round feed at the farm level. This is primarily the result of pressure on agricultural land and competing opportunities for labour. There is significant seasonality of fodder supplies and concentrate prices, especially in hill and mid country areas, which is where most of the upgraded dairy animals are found. Many of these upgraded dairy animals depend on bought-in concentrate feed even to meet some of their maintenance requirements during the driest months of the year. Management of common grasslands such as communal grazing land, public land, roadside etc. is also weak.
Hardly anything worthwhile has happened in the fodder development in the country. Land is not specifically allocated for forage, and grasses are not accepted as a ‘crop’, even though farmers do not fully utilise available local feed resources for many reasons (MLDEI 2000). As a result available local feed resources are being wasted in large quantities at present.
Compound cattle feed is not popular among most smallholders. Instead they use feed ingredients such as coconut cake and rice bran. Few large scale feed millers control the feed industry in the country at present. Rapid growth has been seen in the production of poultry feeds. However over 80% of the ingredients are imported and so production of compound feeds is an externally dependant system and vulnerable to changes in the world market.
Milk production and marketing The average producer price of milk is around US$ 0.12/litre. The average cost of production ranged from US$ 0.09/litre in hill country to US$ 0.05/litre in the dry zone. The average net revenue of milk is low and ranged from US$ 0.05/litre in hill country to US$ 0.07/litre in the dry zone. Average price of fresh milk has increased from 8 Indian rupees (Rs)/litre in 1994 to US$ 0.24/litre in the year 2000. Prices of powdered milk have increased by 50% during this period on an average (MLDEI 2000).
The growth rate of the local dairy industry over the last decade has been estimated to be around 2.5% per annum, in contrast to the projected market growth rate of 5.2%. During the same period average monthly milk production of cow milk has increased from 14.4 to 21.7 million litres and, for buffalo milk, from 5.4 to 6.9 million litres. Much of this productivity change has resulted from the proportion of upgraded animals and low disease challenges for these upgraded dairy animals. In 1998 the per capita availability of cow and buffalo milk was 8.15 kg and 3.60 kg respectively. Per capita consumption of milk increased from 13 kg in 1981 to 36 kg in 1999. However, the Medical Research Institute recommendation is to have a minimum 60 kg of milk and milk products per capita in the country (MLDEI 2000).
It is estimated that the formal milk processors used one-third of the domestic milk production with an equal percentage being used by the informal sector. Milk collecting organisations and private milk collectors play a key role in the formal milk collection network while small scale processors, restaurants, hotels, canteens, neighbouring consumers etc. are dominant in the informal milk market. The increase in domestic milk production has not been reflected in the formal milk market and most of the growth in the domestic production has gone to the informal milk market (Ibrahim et al. 1999a and b).
Within the next five years domestic milk production will cover only 25% of the requirements of the formal milk market, and the balance will be imported from overseas. The import bill to import 429 thousand tonnes of infant milk powder and another 54 thousand tonnes was US$ 107 million in 1999. There is a rising trend for the amount of milk imports. However, there is no significant change in the percentage (45%) covered by the imports to the total milk available in the country during last two decades (Ibrahim et al. 1999a and b).
Opportunities
Assuming a 4% rate of real GDP growth, income and population growth alone will generate an increase in aggregate demand for dairy products of slightly over 14 million tonnes by 2010. This increased demand provides important opportunities for domestic producers to increase their production (NDDB 1998).
Imports of dairy products remain vulnerable to macro-economic factors. Changes in prices of the world milk powder market and local exchange rates (with the recent introduction of free floating Indian rupees against foreign currencies) will challenge the competitiveness of the imported dairy products in the future.
Unlike milk powder, the consumption of fresh milk appears to increase with income suggesting that as incomes increase over time demand could shift toward liquid milk. This will present good opportunities for smallholders who are involved in domestic dairy production. Domestic producers have a comparative advantage in the liquid milk market as reconstituted milk is not a good substitute. Therefore, the means to increase the market for such sales need to be considered (Ibrahim et al. 1999a and b).
The informal milk market plays a larger role than many have assumed. This is an important outlet for many smallholders. It provides much valuable income generating opportunities for small entrepreneurs. Further, the informal market is crucial for ensuring the economic viability of dairy production for many producers as it typically provides higher prices (Ibrahim et al. 1999a and b).
In spite of the fact that the Medical Research Institute recommends a consumption level of 60–65 kg/person per year, per capita availability is only about 36 kg/person per year. Therefore Sri Lanka has the lowest milk-consumption in South Asia at present (MLDEI 2000).
Powdered milk is more popular among consumers mainly due to the fact that it guarantees quality, convenience in handling and has the possibility of storing under room temperature for several weeks. Because of this popularity, large-scale processors are compelled to convert liquid milk in to powdered milk and incur heavy costs for transport of liquid milk from rural areas to their processing factories (MLDEI 2000).
Pricing systems prevailing in the country are biased towards satisfying millions of consumers rather than the producers. Relatively, the high opportunity cost of labour relative to the farm gate price of milk discourages farmers from being involved with intensive dairy farming. A rough estimate of farm gate price of milk to wage ratio is 1:13 at present. Then the value of one litre of milk sold at farm gate is only 1/13th of a daily casual wage. As a result farmers are unwilling to spend time on activities related to intensive dairy farming (Ibrahim et al. 1999a and b).
As the profit margin is very low there have not been adequate incentives offered to the producers to invest in dairy herds. Adequate recognition has not been given in the past to the important role played by smallholders despite the difficulties they experience in operating at near subsistence level. As they have very limited economic opportunities many of them will continue to remain in the dairy farming for many more years to come (SLVA 1995).
The intense advertising efforts by importers of milk powder extolling the virtue of imported milk have weaned the consumer away from the consumption of local milk. Finding effective alternatives for highly promoted, heavily subsidised, cheap imported milk powder can be considered as one of the biggest challenges any dairy development programme has to face at present (MLDEI 2000).
Unhealthy competition among milk collectors at the grass roots level has created another set of problems for the quality of milk collected and to the viability of running a collection programme. The lack of satisfactory milk testing facilities at village level milk collecting centres has added further to the deteriorating situation.
Most farmers produce buffalo curd under very poor hygienic conditions. As a result the quality of these product is questionable and poor. Many pathogenic microbes such as E. coli, Staphylococcus aureus, fungi and mould species at levels way above safety levels have been found in many curd samples obtained from the market (Bandara 2000).
There is no responsible regulatory system in place to ensure the quality of milk collected and marketed in the country (MLDEI 2000).
Institutional infrastructure and livestock services The institutional support is provided both by public sector as well as private sector institutions. The public sector is mainly engaged in providing public goods and supply of inputs whilst the provision of necessary marketing facilities is mainly handled by the private sector.
Current status
The Ministry of Livestock Development and Estate Infrastructure (MLDEI), provincial ministries responsible for livestock development in the provinces, Department of Animal Production and Health coming under the central Government (DAPH), the Provincial Departments of Animal Production and Health (PDAPH), National Livestock Development Board (NLDB) and Kiriya Milk Industries of Lanka Organisations are the main public sector organisations responsible of dairy development. However, many other government institutions including the Ministry of Agriculture, Ministry of Land and Environment, Central Environment Authority, Mahaweli Authority, Coconut Research Institute, Department of Agriculture, universities etc. all have direct involvement in developing the livestock sector in the country (Ibrahim et al. 1999a and b).
With the establishment of provincial councils in 1988 the smallholder dairy sector is supported by a state sponsored service delivery system provided by the PDAPH in the provinces. They provide these services through 212 government veterinary offices established all over the country. Each veterinary office is manned with a veterinary surgeon and three livestock development instructors on an average. They are further supported by 87 private artificial insemination technicians especially in the wet zone to implement AI programmes more effectively (DAPH 1999).
The investment in the agriculture sector, including livestock, as a share of the public sector has declined from 18% in 1989 to 10% by 1999. One of the notable reasons for not adequately improving the dairy industry in the country has been the lack of substantial investment both by public and private sectors (MLDEI 2000).
Concessions have been given to the private sector under the Board of Investment (BOI) programme to use local milk and promote local dairy industry and local milk collection. However, almost all of the private sector imports almost all its requirements and so give an additional problem to local dairy industry. It seems that most collectors and processors are not much worried about problems of local producers (MLDEI 2000).
Current status
The Ministry of Livestock Development and Estate Infrastructure (MLDEI) and the provincial ministries are responsible for livestock development in the provinces and for developing necessary policies, and for finding and channelling funds coming through the public sector to implementing organisations and monitoring the dairy industry in the country (MLDRI 1995).
Present responsibilities of the DAPH include assisting ministries in policy planning and monitoring, man power training, backstopping provincial extension activities, managing the animal quarantine activities, production and distribution of vaccines, undertaking research into the problems of the livestock industry, administration of legislation related to livestock and co-ordination of special livestock development programmes.
All public sector field programmes are implemented through the field staff of the PDAPH and they are responsible for preventive and curative health care, artificial insemination and follow-up services, farmer education and training while participating in the implementation of special target oriented livestock development projects (MLDRI 1995).
NLDB has been principally involved in the operation and maintenance of livestock farms and issue of breeding materials including planting materials to the field programmes.
Except in the areas where farmers are being organised under the co-operative umbrella, the majority of smallholders are the suppliers to the collection network operated by the Kiriya Milk Industries of Lanka Limited and Nestles Lanka Limited. These two processing establishments account for 75% of formal milk collection. The farmer co-operative organisations like Coconut Triangle Milk Union (CTMU), Mid Country Milk Union (MIDCOMUL) and a few others convert a small percentage of milk produced into value added products. Apart from two main processors there are a few other organisations like Araliyakelle milk processors, Kotmale dairy processors, New Lanka Dairies Ltd. etc. that have recently ventured into the milk processing market. The area served by these new processors is limited in extent (Ibrahim et al. 1999a and b).
According to the present cost of living a minimum of US$ 3 is needed for an average smallholder family to meet their minimum day-to-day requirements. This is one of the decisive factors in selecting suitable economic activities for their living. Therefore any smallholder oriented dairy development programme must have the capability of ensuring a reasonable contribution to relieve their economic burden within a short period of time.
Reasonably productive and healthy animals, quality feed in adequate quantities year round at affordable prices, dependable and fair marketing facilities, good cattle sheds with an adequate waste disposal system are some of the important essentials for smallholders to remain in the dairy industry.
There are programmes of varying magnitude to address most of these components. Most of these programmes are being implemented independently by different organisations or some time by separate divisions of the same organisation. As a result smallholder farmers do not have the opportunity to maximise the use of their resources and to exploit the complementary effects of these different programmes.
Disease constraints to dairy productivity are associated with the delivery of quality veterinary services, especially for prevention purposes. Though there are many new veterinary offices and alternative arrangements such as mobile veterinary clinics in place, the majority of farmers still find difficulty in getting prompt veterinary service especially in emergencies (MLDEI 2000).
High calf mortality rate (>25%) is a problem among upgraded animals. Calf diarrhoea, worm infestations and infectious diseases are the most common cause of these deaths. Poor calf management, inadequate calf salvaging and health care programmes also contribute to the situation (MLDEI 2000).
Restricted cattle movements and conflicts between crop farmers and buffalo owners have continued for a long time and trespassing by animals and the consequent crop damage frequently cause severe social problems.
Although the development of forages is essential, there are no strong institutional arrangements to spearhead a useful programme for this purpose (Ibrahim et al. 1999a and b).
Many organisations are involved in dairy development in the country. They do research, supply necessary inputs and services, formulate and implement policies, strategies and development plans. However, understanding, interaction and co-ordination among them is still weak (MLDEI 2000).
According to the cost of living and cost of milk production provided earlier in this paper a minimum of 15 litres daily production is needed to earn a reasonable income from dairy farming at the smallholder level. Three cow equivalents of upgraded dairy animals with an adequate cattle shed and a fodder plot of over twenty perches are needed to allow a smallholder to make this profit.
However, the majority of smallholders do not have these minimum requirements. There is a need to improve their dairy farms. On average a minimum of US$ 500 of new investment is needed for each smallholder. However this is beyond their capacity at present due to their subsistence living conditions. Credit programmes are available in commercial banks. However, farmers have to pay back these loans within 3–4 years with an annual interest of 18–20%. More concessionary credit programmes are needed that take into account the prevailing returns and profit margins of smallholder farmers.
Manpower available in the public sector is grossly inadequate to cater to the service needs of the dairy sector. Inadequate participation of the private and co-operative sectors in the delivery of these services is a weakness of the industry at present (MLDEI 2000).
Co-operative development in the dairy sector has been occurring for a number of years particularly during the past three decades. Yet today only about 16% of the farmers are members of such co-operatives. There is a possibility of implementing certain components of the public sector development programmes through these organisations. However, the lack of trained staff, questionable accountability, transparency and financial discipline of some of these organisations have a negative effect of entrusting them with such responsibilities at present.
Most of the private sector institutions that are involved with milk collection and processing have not shown much interest in delivering other services to their suppliers. Also public sector institutions have not tried to develop their programmes with the ultimate objective of handing over those programmes to the private sector within a specified time period, or to implement joint programme with the private sector keeping similar objectives in mind (MLDEI 2000).
Researchers in many areas have developed beneficial technologies. However, due to the absence of demand and farmer-driven research–extension–farmer linkages, the benefits of these innovations have not been fully exploited (MLDEI 2000).
The lack of focus on measurable performance indicators, other than supporting large unconnected aspects of dairy development, and the absence of a regular monitoring programme to assess the impact of dairy development is another serious obstacle to present development efforts (MLDEI 2000).
The Council for Agricultural Research Policy (CARP) is the principal organisation that finally decides research policy and priority areas for research activities in the agriculture sector including livestock. The Veterinary Research Institute (VRI) has leadership role for animal health research related to the dairy sector. The VRI has also undertaken many collaborative research programmes with other national and international agriculture research institutions and academics. They identify research needs mainly by interacting with staff of the DAPH and PDAPH who are involved with field programmes. The existing field network in the PDAPH is used for technology transfer.
Policy issues
The policy framework for dairy development has been designed in accordance with the macro-economic policies of the government. Accordingly, the main objective of the policies is to provide public goods by the state and to allow the private sector to cater to the provision of private goods. Hence the Government is keen to facilitate the activities of the farmers and private sector agencies in dairy production, marketing, and to create a competitive industry structure for the dairy sector. The promotion of liquid milk consumption is also a major objective of the present policy framework. Because of the current economies of scale the state is obliged to continue to provide some services to dairy farmers (MLDEI 2000).
The Government has adopted open market policy in trading dairy products. However, there is a 10% duty rate and 5.5% defence levy in addition to the 2.5% of stamp duty on imports of dairy products at present. With the implementation of international trade agreements such as the World Trade Organization (WTO), the South Asian Association for Regional Co-operation (SAARC) Preferential Trading Arrangement (SAPTA) and the South Asia Free Trade Area (SAFTA), it is likely that the international prices of dairy products will increase in the world market. Therefore, the present effective rate of taxation of dairy products at nearly 19% may be sufficient to give the required protection for the domestic dairy industry unless market conditions change (Ibrahim et al. 1999a and b).
The government policy on animal feed is to promote a competitive animal feed industry. Accordingly the government has allowed free trading of animal feed ingredients except maize and by-products of animal origin for the manufacture of livestock feed. However, the use of manufactured cattle feed has remained at a negligible level. One contributing factor to this is the Goods and Services Tax (GST) charged at 12.5% on the value addition. However, because milk is not subject to GST, farmers do not have the opportunity to obtain a credit for the GST charged for the manufactured feed they use (Ibrahim et al. 1999a and b).
Dairying is not the main source of income for most of the smallholders and, in most instances, it is not the activity of the husband of the family. In fact housewives do most of the dairy related activities while also attending to their other family obligations. Although nearly 40% of the members of registered dairy co-operatives are women they are rarely represented in the management or executive committees of these organisations. However, when housewives do have a role in managing household dairy activities and their dairy co-operative a substantial improvement can be seen in the economy of the family and the organisation.
Dairying is generally a component of a partially closed mixed farming system at the smallholder level. Some of the waste of the dairy unit such as dung, urine and wasted feeding materials are used as manure for crop farming and some of crops and crop wastes are fed to the animals. In addition the cultivation of forages has helped to control soil erosion and improve soil fertility. Hence dairying at smallholder level is an environmentally friendly activity when it is properly managed within the farming system (SAEC 1998).
Bandara B.H.W.M.U.S. 2000. Current status of buffalo production in Sri Lanka. In: The Proceedings of the third Asian buffalo congress, held in Kandy, Sri Lanka, 27–31 March 2000.
Central Bank of Sri Lanka. 2000. Sri Lanka socio-economic data 1982–2000.
DCS (Department of Census and Statistics). 1982. Agriculture census and statistics.
DAPH (Department of Animal Production and Health). 1999. Livestock Data 1999. Livestock Planning & Economic Unit, DAPH, Colombo, Sri Lanka.
Ibrahim M.N.M., Staal S.J., Daniel S.L.A. and Thorpe W. 1999a. Appraisal of the Sri Lanka dairy sector. Volume 1. Synthesis report. Department of Animal Science, University of Peradeniya; ILRI (International Livestock Research Institute), Nairobi, Kenya; and Ministry of Livestock Development and Estate Infrastructure, Colombo, Sri Lanka. Ibrahim M.N.M., Staal S.J., Daniel S.L.A. and Thorpe W. 1999b. Appraisal of the Sri Lanka dairy sector. Volume 2. Main report. Department of Animal Science, University of Peradeniya; ILRI (International Livestock Research Institute), Nairobi, Kenya; and Ministry of Livestock Development and Estate Infrastructure, Colombo, Sri Lanka. MLDEI (Ministry of Livestock Development and Estate Infrastructure). 2000. Policy strategy for dairy industry. Ministry of Livestock Development and Estate Infrastructure, Colombo, Sri Lanka.
MLDRI (Ministry of Livestock Development and Rural Industry). 1995. Policy and programmes. Ministry of Livestock Development and Rural Industry, Colombo, Sri Lanka.
NDDB (National Dairy Development Board). 1998. An investment proposal for the dairy development project in Sri Lanka. NDDB, Anand 388001, India.
Presidential Sub-Committee Report. 1997. Dairy industry in Sri Lanka: Status, limitations and suggestions for revival. Presidential Sub-Committee on Animal Production and Health Sector, Colombo, Sri Lanka.
SAEC (South Asia Eco-regional Consortium). 1998. Increasing livestock productivity in mixed crop–livestock farming systems in South Asia. SAEC, New Delhi, India.
SLVA (Sri Lanka Veterinary Association). 1995. Strategies for revitalizing the dairy industry. SLVA, Colombo, Sri Lanka. 48 pp.
The Canadian Dairy Industry at a Glance
…Overview
Canadian milk and dairy products are world-renowned for their excellence. Enforcement of strict quality standards on dairy farms and in processing plants adds to this international reputation.
The Canadian dairy sector functions under a supply management system, based on planned domestic production, administered pricing and dairy product import controls.
In 2008, dairy production in Canada generated total net farm receipts of $5.3 billion and generated sales of $13.1 billion, representing 15% of the Canadian food and beverage sector. The dairy industry ranks third in terms of value in the Canadian agricultural sector following grains, and red meats.
About 81% of Canadian dairy farms are located in Ontario and Quebec, 13.5% in the western provinces and 5.5% in the Atlantic Provinces. There are 459 dairy processing plants (including 275 federally-inspected) contributing to more than 22,730 jobs across Canada.
Approximately 75% of the milk processed in Canada is distributed between three large companies / cooperative. Small specialized cheese makers are also present producing a wide range of high quality specialty cheeses.
As of January 1st 2009, the Canadian dairy cattle population totalled 1.4 million head, 978,400 of which were dairy cows. The typical Canadian dairy farm counts 70 cows.
…Genetics
The Canadian dairy industry is famous for the superior genetic quality of its cattle herd. Canada’s largest markets for dairy genetic material are countries in North America, the European Union and other European countries, and the Asia/Pacific region.
The Holstein breed is the most common dairy breed (93% of the dairy herd); Ayrshire, Canadienne, Guernsey, Jersey, Milking Shorthorn and Brown Swiss breeds are also found on Canadian farms.
In 2008, Canadian cows enrolled in official milk recording programs produced on average 9,642 kg of milk per lactation (305 days) with an average content of 3.78% fat and 3.23% of protein.
Canada is at the forefront of new and innovative research into dairy genetics. Through genotyping, geneticists are able to determine an animal's DNA profile and are currently estimating genomic evaluations for over 60 different traits. Starting in August 2009, the Canadian Dairy Network (CDN) is publishing genomic evaluations which will combine an animal’s Direct Genomic Value (DGV) with its traditional genetic evaluation.
Canadian dairy genetic exports reached $177.8 million in 2008, representing an increase of 73% over the previous year. This increase is largely due to the reopening of Canadian markets for cattle. In 2008, there were shipments of dairy breeding cattle to Mexico, Russia, Serbia, Croatia, Cuba, United States and many more.
…Processing of dairy products
The dairy processing sector is relatively concentrated. Today, 14% of Canadian plants are owned by the three largest processors in the country (Saputo, Agropur and Parmalat), processing approximately 75% of the milk produced in Canada.
The fluid milk market (table milk and fresh cream) represents 38.9% of milk production or 29.5 million hectolitres, while the market for manufactured dairy products such as butter, cheese, yogurt and ice cream accounts for 61.1% of production or 46.2 million hectolitres of milk.
Faced with increased competition and rapid advances in technology, the dairy industry has had to adapt to remain competitive and find new opportunities. Canadian dairy innovation is built on the industry's expertise in research and development. Canada's scientists are leaders in developing and transferring new dairy technologies. An example of Canadian dairy innovation is the development of a robust line of functional dairy products. Already several products have been developed, such as probiotic yogurts, ultra filtered milk, and dairy products containing Omega-3 fatty acids. Canadians searching for healthy and nutritional products will continue to have access to an ever expanding range of quality Canadian dairy products that will meet their health conscious needs.
Production of organic milk is steadily increasing in Canada. It reached 62.2 million litres in 2007/08, which represents less than 1% of total dairy output. Production of goat and ewe milk is also developing.
Canada's dairy products are as diverse as its land and people. From aged cheddar cheese to specialty cheeses, ice cream and dairy drinks, the selection is vast and varied. For example, in Canada, there are 665 varieties of cheese (goat, ewe, and cow). Many of these cheeses are recognized the world over for their quality and taste. Out of these 665 distinct varieties of Canadian cheese:
· 477 varieties are produced in Quebec (71.7%)
· 125 varieties are produced in Ontario (18.8%)
· 63 varieties are produced in other Canadian provinces (9.5%)
…Dairy trade
In 2008, Canadian dairy exports were valued at $255 million, while imports amounted to $678 million of dairy products. The main products exported by Canada in 2008 were cheese (mainly cheddar type) and ice cream which represented a total of 27% and 19% of the exports share, respectively. Top dairy imports included various kinds of cheeses (39%) followed by casein products (19%). Canada’s largest trading partners are the United States and the European Union (EU27).
Canada imports an assorted array of specialty cheeses from around the world most importantly from Italy and France.
…Quality and safety
Strict quality standards applied throughout Canada’s production and processing chain contribute to the excellent reputation of Canadian dairy products. A significant number of dairy plants are HACCP and/or ISO certified.
The on-farm food safety program “Canadian Quality Milk” is a HACCP-based program developed by Dairy Farmers of Canada and certified by the Canadian Food Inspection Agency (CFIA).
CFIA is responsible for setting standards for dairy products, for inspecting plants, and for regulating packaging and labelling. CFIA also enforces veterinary health programs and ensures the safety of dairy products.
Thanks to the strict standards in place, several serious cattle diseases have been eradicated from Canadian dairy herds. The CFIA’s National Health of Animals Program ensures the maintenance of national eradication programs and also ensures the mandatory control and monitoring in accordance with international agreements, particularly OIE agreements, protecting Canadian livestock from serious diseases that could restrict trade or pose a risk to human health.
The National Livestock Identification for Dairy (NLID) system coordinates the identification of all dairy animals in Canada. This means all newborn animals, male and female, are tagged with the same system. For each set of tags, the animal’s unique national identification number can be read three ways; RFID (Radio Frequency ID), bar code, and visual.
…Associations and organizations related to the dairy sector
Government and various partners in industry work in close cooperation to coordinate the movement of milk from the farm to the consumer.
The Dairy Farmers of Canada (DFC), the Dairy Processors Association of Canada (DPAC), the Canadian Dairy Commission (CDC), provincial marketing boards and Agriculture and Agri-Food Canada (AAFC) work as partners to ensure a strong and dynamic Canadian dairy industry.
The CDC supports the industry by implementing national policies for dairy production, by assessing changes in demand for milk and dairy products and production of milk, and by coordinating the pooling of milk revenue and the market-sharing systems.
Research and development of new dairy products are the result of strategic alliances among producers, processors, universities, and federal and provincial research centres.
As a world leader in food safety, Canada strives to be an international leader in innovation and environmental protection. High standards in these fields contribute to the quality of Canadian milk and dairy products, and meet the demands of consumers in Canada and abroad.
Pierre Doyle, P.Ag.
Assistant Director, Dairy Section, Animal Industry Division
Agriculture and Agri-Food Canada
1341 Baseline Road, T5-2-353
Ottawa, Ontario K1A 0C5
Tel.: (613) 773-0235
Fax: (613) 773-0200
E-mail: cdicinfo@agr.gc.ca Or
Chantal Paul
Chief, Communication Services
Canadian Dairy Commission
960 Carling Avenue, Building No.55
Ottawa, Ontario
K1A 0Z2
Tel.: (613) 792-2040
Fax: (613) 792-2009
E-mail: cdc-ccl@agr.gc.ca
National Dairy FARM Program demonstrates high animal care, quality assurance standards
August 24th, 2009
Washington, DC – An animal well-being program designed to bolster consumer confidence in the U.S. dairy industry is being launched by the National Milk Producers Federation (NMPF) and Dairy Management Inc.™ (DMI). The new National Dairy FARM Program: Farmers Assuring Responsible Management will demonstrate producers’ commitment to the highest level of animal care and quality assurance.
The new National Dairy FARM Program: Farmers Assuring Responsible Management will demonstrate producers’ commitment to the highest level of animal care and quality assurance.
“The dairy industry has an excellent track record of responsible management practices,” said Jerry Kozak, president and chief executive officer of NMPF. “The National Dairy FARM Program will enhance current operations and instill a sense of confidence in consumers who, more now than ever, want to know that animals are well cared for and that the dairy products they consume are safe, wholesome and nutritious.”The program, which will become available in the fall of 2009, is voluntary and available to all producers. NMPF is managing the production and dissemination of technical animal care manuals, producer education and training, on-farm evaluation, and third-party verification.
DMI is assisting with producer and industry outreach, and market chain and consumer relations.
“Dairy farmers have been committed to caring for their cows for generations. It’s important for consumers to understand that commitment so they can continue to have confidence that dairy farmers are doing the right thing in their animal care practices,” said Tom Gallagher, DMI chief executive officer.
At the heart of the program is NMPF’s revised “Caring for Dairy Animals” manual, which details best management practices for a variety of animal care issues, including animal health, facilities and housing, animal nutrition, equipment and milking procedures, and transportation and handling. The content of the manual is consistent with the principles and guidelines of the National Dairy Animal Well-Being Initiative, which was introduced in 2008. NMPF is working with dairy animal care experts to assure that the document reflects current practices, animal health concerns, innovations and advances in technology.
Training and informational DVDs will be made available to producers, co-ops and others interested in dairy animal care. A National Dairy FARM Program Web site will include producer education and training.
Once producers have completed the educational component, the next step is an on-farm evaluation by a trained veterinarian, extension agent or co-op field staff member, Kozak said. The producer then receives a status report and, if necessary, an action plan for improvement.
“To protect the integrity of Dairy FARM, we are also developing a third-party verification program,” Kozak said. “We want quantifiable, objective verification that the dairy industry is providing appropriate care for animals. It’s important to remember that the goal of verification is to validate the program, not judge individual producers.”
On-farm evaluations will begin in 2010 and third-party verification will start in 2011. Co-ops and processors may choose to participate in the program to bring consistency to dairy animal care nationwide.
Additional Dairy FARM modules designed to assure the quality, safety and wholesomeness of dairy products will be introduced in the future.
“Our organization whole-heartedly supports Dairy FARM,” said M. Gatz Riddell, Jr., DVM, executive vice president of the American Association of Bovine Practitioners. “The program demonstrates that producers consider proper care for dairy animals a moral imperative. It also provides a credible, verifiable framework for producers to demonstrate that commitment to consumers.”
NMPF has assembled an advisory panel to provide guidance on Dairy FARM. The panel is comprised of dairy experts and industry professionals representing many facets of the industry. Members include Stan Andre, California Milk Advisory Board; Marguerite Copel, Dean Foods; John Frey, Pennsylvania Center for Dairy Excellence; Virginia Littlefield, Safeway Inc.; John Kennedy, Kraft Foods; Shelly Mayer, Professional Dairy Producers of Wisconsin; Dr. M. Gatz Riddell, American Association of Bovine Practitioners; Allen Sayler, International Dairy Foods Association; and Lynne Schmoe, Washington Dairy Products Commission.
For more information on the National Dairy FARM Program, contact Betsy Flores at 703-243-6111 or log on to www.nationaldairyfarm.com.
The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of more than 40,000 dairy producers on Capitol Hill and with government agencies.
Dairy Management Inc. (DMI), based in Rosemont, IL, is the domestic and international planning and management organization that builds demand for dairy products on behalf of America’s 60,000-plus dairy producers. DMI works with state and regional dairy promotion organizations to integrate marketing, promotion, advertising, public relations, nutrition education, and nutrition, product and technology research programs. Visit their website at www.dairycheckoff.com.
