Fonterra Brands invests Rs. 1.2 b to boost milk production

Fonterra Brands Lanka will invest Rs. 1.2 billion to significantly expand its yoghurt manufacturing capacity and treble its supply of raw milk, said Fonterra Brands Lanka Managing Director Achyut Reddy. He was addressing a ceremony after laying the foundation stone at the company’s Biyagama site.

Minister of Livestock Development, C. B. Ratnayake was present.

Reddy said the project, to be phased over the next three years, reflects the importance of the Sri Lanka market in Fonterra’s global operations.

“This is one of Fonterra’s largest off-shore investments and underpins our confidence in the future of the market and the opportunities to grow in tandem with the Sri Lanka dairy industry.”

Reddy said the investment to be funded from capital within the business, will more than double the plant’s production capacity requiring an estimated 52,000 litres of raw milk per day.

“The project will include Fonterra establishing new raw milk collection centres throughout the country to assist in processing the required increases in volume.”

He said Fonterra would be seeking increased raw milk supply from up to 3,000 dairy farmers.

“Fonterra’s raw milk procurement team is currently working closely with dairy farmers to provide technical assistance on increasing production, pasture management, and breeding. We are also assisting farmers by providing micro-finance loans.

“Increasing our local milk supply allows Fonterra to have a buffer against the increasingly volatile international prices for milk powders and dairy products and allows Fonterra to use its on-farm expertise developed through more than 100 years of dairy farming to play an active role in enhancing the capabilities of local farmers.”

Reddy said the increase in supply and manufacturing expansion was required to meet the rapidly growing demand for yoghurt products by consumers.

“The Sri Lankan yoghurt market has experienced double digit growth in the past five years and consumers now eat more than 12,000 metric tonnes of yoghurt annually.

“We have a leading position in the market through our Anchor Newdale brand and see long-term opportunities for future growth, while also developing and expanding our Ratthi brand.”

“The manufacturing and milk supply investment is a key strategy in maintaining our projected growth,” Reddy said.