Fonterra invests Rs. 1.2 b for yoghurt plant

Shanaaz Carina

Fonterra Brands Lanka has invested Rupees 1.2 billion on their new project to expand the yoghurt manufacturing capacity and treble its supply of raw milk.

"This investment is one of Fonterra's largest off shore investments. It underpins our confidence in the future of the market and opportunities to grow within the Sri Lankan dairy industry and the investment is funded from the capital within the business. We are planning to complete the project within six months," Managing Director of Fonterra Brands Lanka Achyut Reddy, said.

He further stated that the project will include Fonterra establishing new raw milk collection centres throughout the country to assist in processing the required increase in volume. Fonterra would also be seeking raw milk supply from up to 3000 dairy farmers so that we could help the farmers in Sri Lanka, helping the Sri Lankan economy growth, he said.

The Fonterra raw milk procurement team is currently working closely with dairy farmers to provide technical assistance on increasing production, pasture management, and breeding. They also assist the farmers by providing micro- finance loans, he added.

Reddy said the Sri Lankan yoghurt market has experienced double digit growth in the past five years and now consumers eat more than 12,000 metric tonnes of yoghurt annually and has a 27 per cent share of dairy milk products and Fonterra hopes that there will be better demand in the future.

The plant's production is estimated to be 52,000 liters of raw milk per day. Increasing the local milk supply allows Fonterra to have a buffer against the increasingly volatile international prices for milk powders and dairy products, and also 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, he said.

The manufacturing and milk supply investment is a key strategy in maintaining our projected growth. We hope to produce the best and most nutritious dairy products in Sri Lanka, Reddy said.