TheJ.Natn.Sci.Foundation dairy industry in Sri Sri Lanka Lanka 2008 36 Special issue: 115-126 115 The dairy industry in Sri Lanka: current status and future directions for a greater role in national development B.M.A.O. Perera and M.C.N. Jayasuriya * 1 Faculty of Veterinary Medicine and Animal Science, University of Peradeniya, Peradeniya. 2 National Science Foundation, 47/5, Maitland Place, Colombo 07. Submitted: 28 August 2008 Abstract: The role of livestock in agriculture in Sri Lanka is less than 2 ha. Almost one third of these smallholdings complex and significantly different from that of industrialized have a mixture of crops and livestock. The area of farm nations. Although the livestock sub-sector has contributed only holdings with livestock is around 0.56 million ha, of around 1.2% to the national Gross Domestic Product (GDP), which 99% are categorised as smallholdings. The total it has been a crucial source of high quality protein, minerals number of farmers involved in livestock production is and vitamins to the population, by way of milk, meat and eggs. estimated at 700,000, and between 30-60% of gross farm For many rural smallholder farmers, livestock are a ‘living income is generated from livestock activities 1. bank’ that serves as a financial reserve for periods of economic distress. The agricultural sector contributes around 13% to the national Gross Domestic Product (GDP). It provides In a global context the current status of the dairy industry employment to about 33% of the labour force, surpassing in Sri Lanka is far below expectations, local production of milk the contribution of any other major sector. The livestock having been able to meet only 30% of the demand. Whilst there sub-sector contributes around 6% to the agricultural GDP have been many political, technical and socio-economic factors 2 contributing to the virtual stagnation of the dairy industry in the and around 1.2% to the national GDP . country, the very low farm gate price being one of the major contributors to this, it appears that the sector cannot continue Livestock play diverse roles in Sri Lankan to survive as a subsistence based activity, because it is only a agriculture. Primarily, they provide a crucial source of secondary source of income to the farming community. It is high quality protein by producing milk, meat and eggs. apparent that if dairy farming is to be a profitable venture, there In addition, cattle and buffalo are a primary source of is a need for the small holder farmers to consider dairying as a renewable and low cost draught power for a variety of commercial enterprise and at the same time link with the large agricultural operations and transport. Other subsidiary scale dairy farms. This would require major policy changes, products include hides, skins and manure. Livestock with a strong commitment and sustained implementation also serve as a ‘living bank’ for many small farmers, strategy by the government in partnership with the private cushioning the risks associated with crop production and sector . providing a financial reserve during periods of economic hardship. Keywords: Dairy, development, livestock, milk The population of ruminants (cattle, buffalo, goats and sheep) in Sri Lanka over the past eight years is given INTRODUCTION in Table 1 and the annual average per capita availability The land area under agriculture in Sri Lanka is around 2 of milk and milk products during the same period are million hectares, which is 30% of the country’s total area given in Table 2. The numbers of cattle and buffalo of 65,610 sq. km. Almost 75% of the agricultural land is during the 1980s were estimated to be around 1.6 million under smallholdings, and the number of such holdings is and 0.8 million, respectively. However, the last island- estimated at 1.8 million, with over 90% of them having wide census of agriculture conducted in 2002 showed *JournalCorresponding of the National author Science Foundation of Sri Lanka 36 Special Issue November 2008 116 B.M.A.O. Perera & M.C.N. Jayasuriya that the populations of the two species had declined to This situation is rather paradoxical, considering that 1.1 and 0.36 million, respectively. Since then there has successive governments have viewed the development been a gradual increase in both populations 3. of the livestock sector as an instrument for social and economic advancement of the rural poor, through The annual average per capita availability of milk employment, sustainable income and improved and milk products has also shown only a marginal nutrition. The development of this sector will not only increase over the past decade (Table 2). On the other help to achieve food security, import substitution or hand, as evident from Table 3, the annual average per even self sufficiency in animal products but also prevent capita consumption of meat as well as milk has increased the migration of rural poor to urban areas in search of markedly since the early 1990s. The greatest increase supposed economic benefits. In order to fulfill this in consumption has been in chicken meat and milk role, however, it is clear that the dairy sub-sector in powder. particular needs to become more efficient and business- oriented. The operations at production level as well as The monthly average expenditure on livestock the post-production value-chain involving processing products by households in different sectors during 2006 and marketing need to be horizontally integrated, so is given in Table 4. As expected, the urban sector spends that the farmers receive an economically attractive price more on livestock products than either the rural or estate for their products. This would provide the incentive sectors. for medium- and large-scale entrepreneurs to enter the field and make further investments that are necessary to From the forgoing it is apparent that although make the national livestock industry more efficient and consumer demand for livestock products has increased, modernized. neither the numbers of livestock nor their productivity (with the exception of the poultry sector, which is not Current status of the dairy industry covered here), has shown any significant increase. The dairy sub-sector in particular has been stagnant over National milk consumption, national production and the past two decades, while imported milk powder has imports filled the gap between demand and local production. An important reason for this is that the majority of holdings As shown in Table 5, the current milk consumption in in this sector continue to operate as a subsistence-based Sri Lanka is around 700 million litres per annum, which activity, being only a source of secondary income to the amounts to a per capita consumption of 35 litres per majority of livestock owners. annum. The current national milk production of 220 Table 1: The population of ruminants in Sri Lanka, 2000 - 2007 Animal Type Number (x 1,000 heads) 2000 2001 2002 2003 2004 2005 2006 2007 Neat cattle 1,147 1,153 1,112 1,138 1,160 1,185 1,214 1,222 Buffalo 304 290 282 280 301 307 314 318 Sheep/Goats 506 504 360 423 416 405 395 405 Source: Dept. of Census and Statistics, Sri Lanka 3. Table 2: Annual average per capita availability of milk and milk products, 2000 – 2006 Product 2000 2001 2002 2003 2004 2005 2006 Cow milk (L) 3.58 3.54 3.68 4.14 4.01 4.04 4.06 Buffalo milk (L) 1.38 1.36 1.35 1.33 1.33 1.38 1.27 Milk power (kg) 3.73 3.64 3.94 4.10 3.46 3.63 4.21 Condensed milk (kg) 0.25 0.24 0.25 0.24 0.27 0.27 - Other milk foods (kg) 0.08 0.10 0.11 0.13 0.15 0.14 0.15 Source: Dept. of Census and Statistics, Sri Lanka 3. November 2008 Journal of the National Science Foundation of Sri Lanka 36 Special Issue The dairy industry in Sri Lanka 117 million litres comprises of 120 million litres (approx. the formal and informal milk markets, thus reducing the 300,000 litres per day) collected by the formal market and proportion of imported milk from the current level of 100 million litres sold through the informal market. The 70% to 35% (Table 5). shortfall of 480 million litres is met by imports, mostly in powder form. Thus, locally produced milk meets only Contribution to national production from cattle, buffaloes 30% of the current demand for national consumption. and goats As stated previously, the populations of cattle and buffalo In a global context, Sri Lanka produces a mere 0.22 have shown a very slow rate of increase over the past million metric tons (mmt) of milk per year, out of the decade (Table 1). The trend in annual milk production total world production of around 600 mmt (FAO, 2007). from cattle and buffalo and the amounts collected by the The major producers are India (80 mmt), USA (76 mmt), formal milk collection systems over the same period, Germany (30 mmt), New Zealand (12 mmt) and the given in Table 6, show a similar slow growth. Netherlands (10 mmt). The majority of cattle in the country are of the cross- The current Government of Sri Lanka has given bred type, comprising mainly of crosses between the high priority for dairy development, with a policy target indigenous Bos indicus (Zebu) cattle and improved Zebu of attaining 50% self-sufficiency by 2015. The medium- breeds from the Indian sub-continent, or between Zebu term goal of the Ministry of Livestock Development is and Bos taurus (European/American) dairy breeds.