February 9, 2012

 

 

A plan to capture more of the market for lucrative milk products at home and boost overseas sales under the coming Asean Economic Community (AEC) single market in 2015 is being worked out by the Dairy Farming Promotion Organisation of Thailand (DPO), a newspaper reports.

 

With the state-run enterprise forced by regional liberalisation to ply its trade in a tougher environment, the business plan has been designed to strengthen its competitiveness not only in manufacturing but also in flexible management to generate more profit.

 

The DPO plans to increase its sales from an estimated THB6.5 billion (US$211 million) this year to THB10 billion (US$325 million) within the next five years, after the AEC has been implemented.

 

It aims to double or triple its export value in the same period from the current level of between THB200-250 million (US$6.5-8.1 million). The organisation's sales revenue is targeted to grow by 7-8% this year. It reported a net profit of THB470 million (US$15.3 million) last year.

 

Deputy director Noppadol Tunvichian said on February 7 that the plan would focus on four key strategies: expanding new business channels; launching new products; managing more direct selling; and selling more cattle-farm products and know-how.

 

In addition, it will encourage the DPO to concentrate on creating new products, including pasteurised and fermented milk. Its main product currently is ultra-high-temperature-processed (UHT) products. The organisation will this year launch its first prototype kiosks and shops for the sale of milk and related products such as ice cream, Noppadol said. The two business channels aim to capture different markets, with the kiosks focused more on schools, universities and other educational institutions, while the milk shops will focus on other buildings and modern-trade channels.

 

The kiosks are expected to generate income of THB300 million (US$9.8 million) in the first year of operation, rising to THB1 billion (US$32.5 million) annually within five years. To facilitate the new business channels, the DPO will invest more than THB10 million (US$325,000) on machinery to ensure the quality production of pasteurised milk and related products.

 

Pasteurised and fermented milk will be launched this year, while direct selling will also be introduced to maintain close service to customers, he added. Finally, with its decades-long experience in cattle-farming development, it also plans to sell more management and other services and equipment to farms in the areas of machinery and know-how. For instance, the DPO is in talks with a private farm as well as Wang Nam Yen Dairy Cooperatives to provide such services.

 

"We have long experience in farm development over 50 years, which is our strength in exporting parent animals and machines," said the executive.

 

The organisation has established business in Laos and Cambodia by selling milk products through its trading partners in those countries. Exports to Burma are currently focused on border trade and it is looking for a local partner there, he said.

 

Moreover, Vietnam also has high export potential as its government is promoting the dairy business to meet rising demand to serve the 80-million population. Vietnam currently farms some 100,000 cows, compared with the 500,000 raised in Thailand to feed 65 million people. Thailand's total raw-milk production is 980,000 tonnes per year, but this serves only 60% of demand and 57,000 tonnes of powdered milk needs to be imported each year.

 

Noppadol said the local market for milk products still had room to grow from the current value of nearly THB100 billion (US$3.3 billion) per year. UHT milk, fermented milk and soy milk account for THB20 billion (US$650 million) each, and pasteurised milk for THB10 billion (US$325 million) of the total.

 

In addition, the DPO will soon propose that the Cabinet extend its school-milk contract for another three years when the current one expires next year, he said.