More investments needed to boost milk production

MANILA, Philippines - The local dairy industry needs more investments in milk production to enable processors to produce more dairy products for domestic consumption and make the prices of local dairy products competitive to imported goods, according to the National Dairy Authority (NDA).

In an interview yesterday, NDA administrator Grace Cenas said that in the dairy industry’s value chain, the production segment which comprises the breeding of dairy animals and milk harvesting is a priority investment area  because this would spur growth in the processing and marketing segments of the chain.

“With our need to increase milk output, the production segment needs investment inflows the most,” she said. “The market is becoming more demanding and the price of imported milk is cheaper than those produced locally.”

Raw milk production in 2012 rose 12 percent to 18.45 million liters from 16.45 million liters in 2011. Milk production has been growing at an average of seven percent annually in the last five years.

The growth in 2012 milk production exceeded the initial target of 10 percent. The NDA intends to keep the growth rate at 12 percent and above in the coming years.

Despite these gains, the local raw milk production provides for roughly one percent of the country’s total dairy product requirement of 1.8 billion kilograms. The balance of the demand is covered by imports coming from New Zealand, the USA, Australia and France.

Cenas said that local milk production currently satisfies 40 percent of domestic demand, both for processing and consumption.

The agency aims to raise the milk sufficiency level to 43 percent by 2016 and reach full sufficiency by around 2021. 

With increased milk production, processors would immediately increase the volume for processed cheese which enjoys a huge demand.

“This product requires a large amount of milk, with increased milk production, processors will automatically go here. There is a big demand. With the growing number of pizza restaurants, for instance, there is a huge demand for mozzarella cheese,” she said.

To increase raw milk production, the government is importing more breeding dairy animals this year to improve local stock.

More multiplier farms would also be established to increase the breeding stock.

The country has a current inventory of 40,696 dairy animals. To fully meet the country’s dairy demand and replace imports, one million dairy animals would be needed.

In 2012, the government imported 10 bulls and 2, 100 female cows for breeding. The offspring of these breeding stocks are redistributed to capable dairy farms. Cenas said the number of animals to be imported in 2013 would be determined after all the animals procured last year has been properly distributed. 

Cenas said dairy zones in the provinces of Batangas, Laguna, Quezon, Iloilo, Negros Occidental, and Cebu are being eyed as locations for new multiplier farms.

At least two large companies already recognize the potential in the milk production sector and are eyeing sites in Baguio, Tagaytay and Cebu for the establishment of dairy farms that could each accommodate 3,000 animals in a full confinement dairy production system.

Cenas said a local company with a foreign partner wants to take advantage of the favorable climate either in Tagaytay or Baguio and the proximity of the areas to Metro Manila, its target market.

Another company, a wellness company in Cebu with an Israeli partner, wants to be a major player in the provincial market.

The prospective farms would occupy 100 hectares each.

Both investors are attracted to the good farmgate price of raw milk which is currently placed at an average of P23 per liter.

The local dairy industry produces fresh milk, flavored milk, native cheese, processed cheese, candies, ice cream, and yogurt.

Cenas said that with an increased budget of P262 million this year from P172 million last year, the NDA would be able to provide greater technical assistance to dairy farmers.