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CIC invests Rs. 500m in dairy venture

Leases two 3600 acre farms in Eastern Province:

Buoyed by the investment opportunities in the Eastern Province, Agriculture rich blue chip Chemical Industries Colombo PLC, through its subsidiary CIC Agribusiness (Pvt) Ltd, has embarked on two ambitious Rs. 500 million milk processing facilities at Welikanda and Punani.

“The Rs. 500 million investment, a joint venture between CIC Agribusiness and State owned limited liability company Mahaweli Livestock Enterprises (Pvt) Ltd has started this project, where CIC Agribusiness has invested the funds. The State company’s contribution will be the land and the cattle, CIC Group Chief Operating Officer Samantha Ranatunga told Daily News Business yesterday.

He explained that of the Rs. 500 million, Rs. 300 million will go into the purchase of the milk processing equipment while Rs. 100 million will go into purchase of livestock and the final Rs. 100 million will go into further infrastructure such as reefer containers, cold rooms, collection centres and other affiliated investments such as training of outgrowers The joint venture company has been offered 2300 acres in Punani in the Batticaloa District and a further 1300 acres at Welikanda.

The company’s farm land which is currently producing 600 litres of milk per day, will be expanded to 25,000 litres by the end of three years, which will also have a network of 5000 outgrowers by that time. The attraction of these two farm lands is that there are very conducive areas for cattle grazing and subsidiary crop cultivation and development, Ranatunga explained.

The prospects for Sri Lanka’s milk production is very positive with current annual consumption being a billion litres where the local production is a mere 20% while the remaining 80% is imported.

CIC Agribusiness Managing Director Keerthi Kotagama said that the company will also be using the farm infrastructure to grow maize and soya bean which will be converted to animal feed and the surplus will be sold in the local market. “This is a public/private sector partnership and the State company has been offered 51% of the equity in the joint venture,” he said.

The venture manufacturing of curd on a limited basis which is around 1000 pots to 1200 pots per day, will be expanded by 25% by June 2009, he said.

The venture will also be expanding into a wide variety of dairy related products such as yoghurt which will be in three forms - drinking yoghurt, flavoured yoghurt and low fat yoghurt, ice creams, sterilized and pasteurized milk, cheese and a host of others, Kotagama said.

Responding to a question as to how the company hopes to survive in a market that has four stiff competitors- Anchor, Newdale, MILCO and Nestle he said that the products will be targeted at the upper end of the market and will be in Colombo and the rest of the Western Province along with the metropolitan cities such as Kandy, Galle, Matara, Kurunegala and Ratnapura.

CIC Agribusiness will also invest another Rs. 30 million in an Agricultural Academy at Pelwehera in the Dambulla District to train farmers and investors in agricultural practices.

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