Producer of Foremost dairy products commits to high-quality supply chain

The focus on quality is set to strengthen the company to face the tougher competition when Thailand fully opens up the industry in 2025.
Under the Asean Free Trade Area scheme, import duties on ready-to-drink milk in all member countries were slashed to zero in 2010.
The World Trade Organisation has also called for developing countries to free up their markets by 2025, which is in eight years. 
Olarn Chowiwattana, corporate affairs director of FrieslandCampina (Thailand), said the key challenges for the dairy industry amid the free-trade environment were cost/pricing and quality. 
“Like many companies in the food sector, each product requires raw materials of certain specifications that can be sourced at a feasible cost. In short, manufacturers are not only looking for cheap materials but, more important, qualified raw materials. 
“The question to ask ourselves in the dairy sector, both companies and government agencies, is whether the price of raw fresh milk is competitive,” he said.
The purchase price of raw fresh milk in Thailand was set at a minimum Bt19 per kilogram by the Cabinet in November 2014 – higher than other countries such as Australia (Bt10.6), New Zealand (Bt7.8) and the United States (Bt11). Milk products are also on the government’s price control list. That means limited flexibility in growing the industry. 
Another question is whether Thailand can produce dairy raw materials, such as powdered skim and whole milk, to the “qualified” specifications demanded by international manufacturers.
“Adaptability and flexibility in production costs and marketing are the key winning factors. Thailand must be prepared gradually to relax the current fixed-pricing scheme – purchasing price and controlled selling price of finished milk products,” Olarn said.
The Thai dairy industry needs to be prepared on many fronts, he said. 
Local dairy management and operating procedures must be fine-tuned to global standards with pricing based on milk quality to pave the way for the expansion of Thai dairy exports to the global marketplace. 
Dairy processors and handlers must upgrade their production, transportation, distribution and marketing for efficiency and better quality. 
The public sector has a role to play in these new market dynamics, particularly through legislation and steering the dairy industry towards liberalised trade.
Compared with other countries in Asean, Thailand’s dairy industry has an advantage in higher production capabilities thanks to the continued support of the government.
FrieslandCampina (Thailand) had been investing in a dairy development programme for more than five years. 
“Our goal is to help train our farmers to manage their farms better, including improving factors that will eventually improve the quality of the raw milk sold to Foremost.” 
The firm has set aside more than Bt15 million to support the development of dairy farmers this year. The aim is to help increase the yield of members of the “Foremost Pracha Rath Programme for Development of Thai Dairy Farmers” from an average of 13 kilograms per cow per day to 18kg. This would bring farmers in the programme more than Bt45 million of additional income per year.
Thailand’s consumption of ready-to-drink milk totalled 1.05 million tonnes last year and is expected to grow by 1.7 per cent to 1.09 million tonnes this year. This shows that Thais drink only 18 litres of milk a year.