July 13, 2011
The Philippine dairy industry: Out of the doldrums soon?

An eFeedLink Exclusive

Despite its nutritional significance, milk consumption in the Philippines has been lacklustre, but the country is planning a roadmap to put its dairy industry on track to a significant sufficiency level.

According to the latest records from the Food and Nutrition Research Institute of the Philippines, the country's per capita consumption of milk is roughly 19 kilogrammes, lagging behind the world recommended dietary allowance of 56 kilogrammes per capita.

This is because milk is considered a luxury for an impoverished nation that is now struggling to afford three basic meals a day. Moreover, domestic production remains insufficient, hence the industry's heavy reliance on imports.  According to the National Dairy Authority (NDA), 99% of country's milk and dairy products in 2008 were imported, as the country can only produce 1% of the local requirement from its 30,000 heads of all dairy cattle, buffaloes, and goats combined.

Yet, good things are brewing for the industry. In a 20-page document, the NDA has drafted the Philippine Dairy Roadmap, a six-year medium-term development plan for the dairy sector. According to the NDA, the roadmap serves as the blueprint to achieve the industry's ultimate goal of providing affordable milk and dairy products that will come from local dairy farmers.

The roadmap's main objective is to gain significant sufficiency level in the Ready to Drink (RTD) milk market, from the present 19% to 43%, or more than double, by 2016.

What makes this roadmap different from the previous programmes is the collective effort to highlight the marketing development aspect. NDA Director Grace Cenas admits that knowledge of marketing among milk farmers is still limited, especially compared to competing multinationals. Thus, the plan does not only enable farmers to simply raise dairy animals, but also to have a sure market. The roadmap hopes to encourage more people to get into milk farming and improve the local dairy industry.

Dairy numbers

Figures from the Bureau of Agricultural Statistics show that as of January 1, 2011, total dairy animal population was 33,482 heads, 4.48% higher than last year's headcount, due to an increase in the number of dairy goats by 12.91% in 2010, compared to the previous year's record.

In 2010, BAS data showed that fresh milk production was 15.9 million litres, 11.16% higher than the previous year's level of 14.3 million litres. Of this total, 9.8 million litres or 62% were cow's milk, 5.8 million litres or 36.6% were carabao's milk, and 0.22 million litres or 1.4% were goat's milk.

On the other hand, last year's volume of dairy imports was 2,015 tonnes, or 12.59% higher than the 2009 level of 1,789.7 thousand tonnes. According to BAS, there was an increase of about 56.2% in the value of dairy imports, from the 2009 level of US$466.7 million to US$729 million in 2010. Of the total milk imports, around 88.4% were classified under milk and cream, with the rest butter, cheese and curd. USA and New Zealand were the leading sources, exporting a total of 1,228.36 tonnes or 60.96% of the country's total dairy imports.

The total supply of milk in 2010 was 2,030.72 million litres, with more than 99% of this imported. In 2010, the net domestic supply of milk was 1,775.74 million litres, 10.69% higher than last year's supply. The derived per capita consumption of milk was 18.89 kilogrammes per year, 8.50% higher than the previous year's per capita consumption.

Farmgate prices of raw milk from dairy cattle in 2010 were 8.75% higher at PHP21.75 (US$0.50) per litre than the 2009 level of PHP20.00 (US$0.46) per litre. However, farmgate prices of raw milk from dairy carabao were down by 2.17%, PHP45 (US$1.03), in contrast to the previous year's PHP20.00 (US$0.46), and prices of raw milk from dairy goat were down by 2.78% at PHP36 (US$0.83) from PHP35 (US$0.80) in 2009.

Despite the lower prices, the increased production numbers indicate that the industry may be on the right track.

Roadmap strategies

The roadmap has nine other objectives, which range from the reduction of the RTD milk- demand supply gap to a single digit level, to the creation of about 22,000 rural jobs and families in crop dairy systems and dairy related enterprises.
To attain these goals, the NDA hopes to increase the milking herd by 10,000 dairy animals within the next five years, to about 55,000 heads of cattle, buffalo, and goat. The milking herd will produce 47 million litres of milk by 2016, capturing 43% of the liquid milk market.

The agency also aims to upgrade efforts to follow the Dairy Genetic Programme, in collaboration with local government units.

The plan also aims to establish dairy breeding farms as a public-private endeavour, where the land and dairy animals will be provided by the government while the private partner will provide for the management and operating expenses. The government will coordinate with active private associations like the Philippine Chamber of Commerce and Industries to help establish processing facilities, marketing systems, and the operation of viable dairy businesses.

A special credit window will be created to augment the existing dairy fund. The existing dairy credit facility, which now stands at PHP50 million (US$1.1 million), will be increased to PHP300 million (US$6.9 million) for postharvest and market facilities, as well as a buy back assurance of dairy animals from upgrading programmes and local breeding farms.

The roadmap plans to put up dairy zones, by distributing 300 dairy animals to about 100 farmers, mostly household-based dairy producers located within a 30-kilometre radius of an urban centre. They will be linked by a milk collection system, as well as an enterprise that handles the processing and marketing of milk and milk-based products.

In order to encourage investment in production, processing, marketing, and distribution, the roadmap will help to actively promote the consumption of locally-produced milk and premium milk products to help sustain the economic contribution of the dairy industry to rural and national development.

The NDA also plans to buy milking cows which farmers want to dispose, as farmers often sell their dairy cattle when in dire need of money, and the cattle end up in slaughterhouses, preventing them from producing better offspring and more milk, according to NDA director Cenas. A proposed moratorium to halt the slaughter of milking cows is hoped to help increase production.

If these goals are achieved, NDA says about US$1 billion will be saved yearly, with the increase in domestic production resulting in a drastic reduction of milk imports.

Tie-up with Thailand

Thailand first learned the tricks of dairy farming from the Philippines during the late 1950s, but the "tutor" is now twenty years behind its "ward", and Thailand has since become one of Asia's success stories in dairy production.

In gratitude, Thailand is willing to share the knowledge that it learned from the Philippines more than sixty years ago. In a recent visit by a Philippine delegation to Thailand, the two countries have agreed to a bilateral cooperation, including a technology exchange programme wherein Filipino farmers will learn first-hand from their Thai counterparts in managing dairy farms and strengthening dairy cooperatives.

Already achieving 60% of milk self-sufficiency, Thailand's technologies will help improve the Philippines industry, which hopes to establish more artificial insemination (AI) centres in strategic parts of the country, which will quickly allow the timely insemination of a dairy cattle in-heat on the island archipelago.

When Thailand started the AI programme in the 1950s, research and development received government funding, bearing fruit thirty years later when Thailand came up with the Holstein-native breed that produces 15 litres to 18 litres of milk a day without compromising the dairy cattle's health. Through a massive AI programme, Thailand was able to multiply its stock of superior breeds of cattle both for meat and milk that have adapted to its tropical climate. Local experts are hoping to achieve a similar feat by continuous R&D, particularly in genetics.

Cesar Sevilla, director of the Animal and Dairy Sciences Cluster of the University of the Philippines - Los Baños, emphasized the need to parallel the R&D as well as the nutrition and feeding system of Chokchai Farm--one of the most progressive dairy farms in Southeast Asia. Aside from being mobile and fully-equipped, Sevilla urged that Filipino technicians, like those employed in Chokchai farm, should be able to artificially inseminate in-heat cattle on time, as failure to do so would result in a 21-day delay of pregnancy. A budget is therefore necessary for the storage of collected semen, particularly for the acquisition of liquid nitrogen.

The goals might seem improbable, but with right policy moves and a strong will to revolutionize the dairy sector, they may not be so far-fetched.

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