July 30, 2026
 

Thailand moves to overhaul dairy sector as state milk agency accumulates 68 million-carton stockpile

A special task force is proposing reforms to raw-milk pricing and quota allocations to stop the Dairy Farming Promotion Organization from purchasing more milk than it can process and sell, as the agency's losses mount and trade liberalisation with Australia and New Zealand approaches.

Thailand's Agriculture and Cooperatives Ministry is preparing a structural overhaul of the country's dairy industry after the state-run Dairy Farming Promotion Organization (DPO) accumulated more than 68 million cartons - equivalent to approximately 1.9 million cases - of unsold milk, straining the organisation's liquidity and adding to its accumulated losses.

Deputy Agriculture and Cooperatives Minister Watcharaphon Khaokham said the root cause of the DPO's losses was purchasing more raw milk than could be processed and sold. "Restructuring the quota and pricing systems will create fairness for private companies, cooperatives and the DPO, and help end the cycle of milk surpluses in the long term," Watcharaphon said. A special task force was due to present its full reform package on 27 July, with changes to raw-milk prices and purchasing quotas expected to form the core of the restructuring plan. The proposed reforms would rebalance allocations among private processors, dairy cooperatives and the DPO to reflect current market conditions.

To reduce the immediate surplus, the ministry is pursuing a proposal to expand the school milk programme from primary-school pupils to students through Mathayom 3 level. The expansion could absorb up to 90 tonnes of raw milk per day. Officials also plan to request an increase in the DPO's allocation under the existing school milk programme, currently set at 10% of total supply. The Social Development and Human Security Ministry and the Education Ministry have agreed to support the clearance effort by purchasing DPO products for distribution to groups under their supervision.

The task force is also discussing partnerships with private companies to distribute DPO milk through retail outlets and explore export opportunities. Longer-term, the ministry is looking at higher-value products to reduce dependence on the competitive ready-to-drink milk market. One initiative involves extracting nutrients and proteins from raw milk for use in cosmetics and cosmeceuticals, with the first products expected in August. A separate project in collaboration with Kasetsart University is developing lactose-free milk for pets, targeting the fast-growing pet-care market as an additional outlet for surplus raw milk.

The overhaul comes as Thailand's dairy industry prepares for wider trade liberalisation under its free trade agreements with Australia and New Zealand, adding urgency to efforts to improve the sector's structural competitiveness before import competition intensifies.

- The Nation