Kotmale and Sri Lankan Dairy

Kotmale has become one of Sri Lanka’s national dairy brands contributing to the nourishment of the country and strengthening the local dairy farming community. As a fully owned subsidiary of leading food company Cargills (Ceylon) PLC, Kotmale is a 100% Sri Lankan company. By sourcing fresh milk from over 17,000 local dairy farmers, Kotmale generated over Rs. 5.2bn of direct income for the Sri Lankan dairy farming community in 2020. Today, Kotmale has established itself as Sri Lanka’s largest private sector collector of fresh milk, collecting 180,000 liters on a daily basis.

Sri Lanka’s dairy industry

A proud Sri Lankan dairy farmer

Sri Lanka imports about 60% of its milk requirement. That amounts to about USD 320 Mn (or LKR 64bn) of foreign exchange leaving the country every year. Though Sri Lanka has always had a milk deficit (local supply is less than local demand), regional peers like India are self-sufficient in dairy. Low milk production in Sri Lanka stems from two issues: 1) low and declining number of milking cows, and 2) low yield per cow compared to global levels which has led to decreasing profitability for farmers.

Sri Lanka’s milking cow population has fallen quite drastically in recent times. From 596,000 in 2015 to 444,000 in 2019, the milking cow population has dropped 25% within a span of four years. This is an alarming statistic that needs immediate addressing from all stakeholders involved. Secondly, Sri Lanka’s milk production per cow remains low at around 3 liters per day, whereas the average global yield is around 7 liters per day and the yield in neighboring India is 8 liters per day. Low yield and low profitability have forced many farmers away from dairy farming which has further weakened local milk production.

Why is dairy important?
Dairy is a key component of a balanced, nutritional diet for both children and adults. Fresh milk contains important nutrients like calcium, phosphorus, B vitamins, potassium and vitamin D. Unfortunately, however, Sri Lanka’s per capita consumption of dairy is below globally recommended levels. One of the main reasons for this is the affordability factor. By increasing local production of fresh milk, Sri Lanka can not only reduce its dependence on imported milk but also improve the affordability of milk for local consumers, which will increase per capita consumption of fresh milk.

Kotmale and Cargills contribution
Over the years, Cargills has made significant investments to improve dairy production and support the smallholder dairy farming community in Sri Lanka. Cargills has provided both technical and financial support to dairy farmers to enhance capacity while providing a guaranteed marketplace. Cargills also ensured uninterrupted collection of milk during the COVID19 lockdowns. In addition to guaranteeing the best price for the farmer’s milk, Cargills contributes 50 cents for every liter of milk collected into a fund. This money is not reduced from the price paid to the farmer but is a direct contribution from Cargills, as a thank you for the dedicated service of our farmers to the country. These funds are used to provide educational scholarships to children of dairy farmers and support community development projects.

Cargills remains committed to the Sri Lankan Government’s vision of achieving self-sufficiency in dairy. To further support this national goal, Cargills started a dairy modernization program in partnership with 500 dairy farmers. As part of this project, Cargills established dairy model farms during 2020, providing farmers with assistance in improving the breeding stock, feeding systems including grass and fodder cultivation, improved cattle sheds, along with better nutrition and care for the animals. Farmers are also supported with land preparation and the necessary seeds for fodder cultivation. The Company hopes that the success of the dairy model farm project will encourage more farmers to emulate such a program and adopt similar practices, which will eventually lead to increased fresh milk production. By doubling the milk yield across the farmer network, Kotmale will be able to improve the incomes of farmers and further support the sustainability of the dairy industry. Given that smallholder dairy farmers form the backbone of the Sri Lankan dairy industry, making up more than 80% of local milk production, it is imperative that any future project to reach self-sufficiency and increase domestic milk production keeps the small dairy farmer at the center of it.

Kotmale supply chain and manufacturing

The Kotmale manufacturing facility in Banduragoda

The Kotmale dairy supply chain from grass-to-glass is an extensive one with stringent quality checks to ensure the customer receives the highest quality products. The farmer network of over 17,000 smallholder dairy farmers bring their milk to the Cargills milk collection centers spread across the country. Once the quality of the milk is assessed, the milk is taken to a milk chilling center where the quality of the milk is assessed once more. Currently, there are 33 Cargills owned milk chilling centers around the country. The milk then makes its way to one of the four Cargills dairy processing facilities located in Banduragoda, Hatton Bogahawatta, Kelanimulla, and Kilinochchi where a third and final quality check is carried out.

At the state-of the-art dairy processing facility, expert teams manufacture dairy products ranging from UHT milk, pasteurized milk, yoghurt, cheese, butter, curd and dairy ice cream. The processing facility in Banduragoda is the largest integrated dairy facility in the Sri Lanka and has been approved for international-grade manufacturing.

Kotmale products

The Kotmale product range, made from 100% Sri Lankan Fresh Milk

Kotmale products offer round the clock nutrition for the family with the largest portfolio of dairy products in Sri Lanka. The Kotmale fresh milk comes in three different options – Full Cream, Low Fat, and Zero-Fat – meeting the needs of a range of customers across different demographic profiles. Kotmale has invested significantly in product innovation to bring healthier options for the customer. The recently launched Kotmale Milk with Oats is one such example, which provides wholesome nutrition of oats combined with fresh milk. The Kotmale jelly-yoghurt is another new innovation, combining the nourishment of yoghurt with the great taste of jelly at an affordable price to the consumer.

The Cargills philosophy
The Cargills philosophy of sourcing from local smallholder farmers and manufacturing value added dairy products that compete with international brands has proven to be a great success. It provides affordable nutrition for the consumer while increasing incomes for the Sri Lankan dairy farming community. The Company’s fresh milk sourcing alone saved over USD 28 Mn in foreign exchange for the country in 2020, while directing this income towards Sri Lankan farmers. As a food company focused on providing affordable nutrition, Cargills will continue to invest in uplifting local dairy farmers while bringing the best quality products to local consumers.