October 16, 2020
Thailand's Wangnamyen strengthens dairy investment
Wangnamyen Dairy Cooperative, owner of Wangnamyen and Q-Life brands, strengthened its investment in preparation for higher competition of imported products from Australia and New Zealand, with tariffs on dairy products under the Thailand-Australia Free Trade Agreement (TAFTA) set to be eliminated in 2025.
Atthasit Surakul, senior manager of Wangnamyen Dairy Cooperative, said: "The cooperative has invested about ฿1billion (US$32,061,558) over the last few years to upgrade its powdered milk factory and expand the factory's production capacity."
Wangnamyen Dairy Cooperative is the first in Asia to produce DHA-Omega 3 powdered milk for export to China and Europe under its partnership with an Australian company. It was founded in 1987 and is located in Wang Somboon district, Sa Kaeo, Thailand.
The cooperative's shareholders are mainly dairy farmers in the province. It has 750 members with 40,000 dairy cows.
Wangnamyen focuses largely on buying raw milk from members and milk processing. It now buys 200 tonnes of raw milk per day from farmer members. It also owns raw milk purchasing centres and a dairy feed mill.
"We have been busy strengthening our business over the last few years ahead of the dairy market's liberalisation. The factory helps the cooperative to effectively manage raw materials, particularly during oversupply. Value-added products also increase the cooperative's revenue and income for dairy farmers," said Surakul.
The cooperative produces 500 million boxes of UHT milk a year, with most UHT milk products exported to neighbouring countries.
Surakul added that the cooperative is in talks with a Chinese business operator to produce powdered milk under an original equipment manufacturer (OEM) contract for export to Cambodia, Laos, Myanmar and Vietnam.
The cooperative now produces OEM milk products for many international brands such as Dumex and Ovaltine.
Surakul said the upgrading of Wangnamyen's factory provides a good opportunity to export more Thai milk products during the COVID-19 pandemic to China and Europe.
Wangnamyen reported fetching total revenue of ฿3.5billion (US$112,179,515) last year.
"With the market fully open to Australian and New Zealand dairy products in 2025 under the free trade pact, we remain worried about small-scale farmers and their competitiveness against imported products," Surakul said.
"The Thai raw milk price is ฿19 (US$0.61) per kilogramme, while the Australia and New Zealand price is ฿12 (US$0.61) per kilogramme. With zero import tariffs, we're afraid that imported products from Australia and New Zealand may be dumped into the domestic market."
Surakul said Thai farmers have invested more into expanding their farm size, increasing the number of dairy cows, applying automation and raising animal health standards to improve their competitiveness.
He also called on the government to raise awareness among farmers over the impact of a potential deluge of imported dairy products and provide incentives and know-how to empower local farmers and operators to stay competitive once Thailand's market is fully open.
Australia and New Zealand eliminated import tariffs for all items from Thailand in 2015. Thailand agreed to cut tariffs on imported goods from New Zealand on a gradual basis and waived tariff for sensitive products such as tea, coffee and milk from 2025 onwards.
- Bangkok Post