MILCO now a profit making venture, says Chairman

• Says the company restored farmers’ and employees’ trust as first step
• Company during pandemic injected Rs.500 mn into rural economy purchasing milk
• Notes recent monthly sales remained around Rs.1000 mn
• Chairman says country lacks livestock development instructors

By Kelum Bandara
MILCO (Pvt) Ltd, a State–owned business engaged in dairy production, has started to make profits after suffering annual losses for the past three years, its Chairman Lasantha Wickramasinghe said.

Sharing his thoughts on the success story, Wickramasinghe said the company restored its trust with the dairy farmers and among its employees as its first priority was to develop it as a profiteering venture.

“We identified that there was an issue concerning trust between the institution and dairy farmers.  First, we restored it. It was the first priority. Farmers had not got money for their supplies on time.  We corrected that.  We took steps to improve their income.  We gave a bonus of Rs.5 per liter to farmers from the additional income we got by   increasing the price of Yoghurt by five rupees.    We kept farmers with us in that way.

“We worked out our corporate plan and started monitoring its implementation.    When monitoring, we observed whether there was any variance between our target and turnout on a daily basis. We strived hard to minimize this variance.  We looked for reasons for any variance and took management measures to correct it.  We made the institute transparent.    Then, the employees started living up to the target given to them.  We minimised the downtime of machines. We identified the reason for machine downtime,” he said.  

Asserting that measures were taken to improve machine efficiency without constant breakdowns, he said milk collection was done successfully even during the corona period.  

“Even during the corona lockdown period, we collected milk. We injected Rs.500 million into the rural economy by purchasing milk at that time.  It was helpful in building trust with farmers. Milk is a perishable item. It has to be collected immediately. Then, we showed that we could compete with the private sector. We, as a government –owned business undertaking, purchased milk and manufactured dairy products during that trying time.

“Our monthly sales during recent times remained around Rs.1000 million. In August, we received the highest value of Rs.1138 million. By January, we bought 120,000 litres of milk per day. Now, we buy 240,000 litres a month.  Accordingly, we have increased production leading to unit cost reduction at the end,” he stressed.  

Outlining the monthly profit margins, he said the company recorded Rs.60 million in May and it remained the same in June.

“Yet, it was reduced to Rs.55 million in July since we increased farmers’ payment,” he said.
Asked about his company’s market share, he said it accounts for  about 25-30 percent of the overall dairy products market.  

Commenting on the need for improving the breeding and feeding sectors, he said the milk production could be doubled if it was done.

“Breeding is mainly done through artificial insemination. It is done through the Veterinary Offices.  Cows should be artificially inseminated when their fertility peaks. We lack livestock development instructors.  Cows seen on heat should be inseminated. Livestock Development Officers are not available at the time   farmers see their cows on heat.  

We cannot tie the timing of insemination to observe heat. When cows are found to be on heat on public holidays, artificial insemination never happens.  Cow’s fertility peaks again in six months’ time.  Even when inseminated, the success rate is about 30 percent. Impacted by both these factors, we don’t get sufficient offspring. As the company, we have decided to train livestock farmers on artificial insemination to address this problem.

There are plans to develop the feeding sector.  Processing grass for this purpose is done. We purchase grass,” he added.