Foremost Says Thai Farmers Need to Adjust before 2021 FTA as Foreign Milk Cost is Lower

FrieslandCampina (Thailand) Public Company Limited, a manufacturer and distributor of ready-to-drink milk under the brand “Foremost” has predicted the import of milk and dairy products from Australia – New Zealand after the Thailand-Australia-New Zealand trade liberalisation (TAFTA – TNZFTA) during 2021 – 2025. According to data from January to July 2020, Thailand imported milk and products from New Zealand totaled more than 7.9 billion baht and from Australia more than 1.9 billion baht. In order to protect and improve Thai dairy farming, the company has continued to support the project of developing dairy farming and milk quality through the activity “Farmers to Farmers” to transfer knowledge and expertise from Dutch dairy farmers and prepare Thai dairy farmers to increase efficiency as to produce quality milk in competitive prices in the world market, more than 14,000 farmers have participated. The global dairy industry in 2019 had seen the production of 522 million tonnes of milk, about 187 million tonnes for direct consumption. At present, Thais tend to drink little milk, approximately 18 litres per person per year or two glasses a week. The milk market is worth about 50 billion baht, and the number tends to grow.

 

Dr. Olarn Chowiwattana, Corporate Affairs Director of FrieslandCampina (Thailand) Public Company Limited, the brand “Foremost” revealed that regarding Thailand-Australia Free Trade Agreement (TAFTA) and Thailand-New Zealand Free Trade Agreement (TNZFTA) Thailand has prepared to set import tariffs as zero and abolish import quota restrictions for milk powder products containing more than 1.5% fat, products containing milk, whey, butter, anhydrous milk fat (AMF) and cheese in 2021, and for dairy products, creams, milk flavoured beverages and skimmed milk powder in 2025. According to the data from January to July 2020, Thailand imported milk and dairy products from New Zealand worth 7.9 billion baht and from Australia worth over 1.9 billion baht, consisting of cheese, skimmed milk powder, whole milk powder, butter, converted milk, milk powder, whey powder, ready-to-drink yogurt, skimmed milk powder and creams. According to the data, the cost of raw milk production in Australia and New Zealand is currently 35-50% cheaper than that in Thailand at 11 – 13 baht per kg., while in Thailand the price is 17.50 baht per kg. It is expected that after Thailand sets import tariffs as zero and abolishes restrictions on imported raw materials and certain dairy products starting in 2021, there will be an increase in milk and dairy imports from Australia and New Zealand.

 

The above data suggest that Thailand imports a large percentage of its milk and dairy products from Australia and New Zealand. Such free trade, if completed, will directly affect the Thai dairy industry. Therefore, Thailand must be prepared to drive the dairy industry improving the supply chain. The dairy farming sector needs to adjust and develop its production to be more efficient by encouraging dairy farmers to compete in quality and cost, as well as encouraging farmers to develop their potential to compete in the world market effectively. As for the manufacturing sector, the production standards, transportation, as well as marketing and distribution need to be improved in order to increase product quality and efficiency in line with the changing market mechanisms and consumer behavior. Also the government should have measures supporting free trade in terms of price mechanisms allowing the industry to adjust itself accordingly and be ready for the free trade. The government should also enhance the competitiveness of dairy farmers, industry and entrepreneurs in an integrated manner in order to ensure that all concerned sectors will receive sustainable benefits.

Dr. Olarn continued that the global dairy industry report of 2019 from the US Department of Agriculture (USDA), 522 million tons of milk, approximately 187 million tons, were produced, and the global average of milk consumption was 113 liters of milk per year. In Asia, people consumed 66 liters of milk per year on average, while Thais had a very low milk consumption rate on average, only about 18 liters of milk per year, or 2 glasses a week. Data from the Cooperative Promotion Department and AC Nielsen in 2019 suggest the Thai milk market is worth 50 billion baht which is divided into 1) UHT ready-to-drink milk and sterilized milk worth 24 billion baht, 2) ready-to-drink pasteurized curd milk worth 9.5 billion baht, 3) pasteurized ready-to-drink milk worth 9.1 billion baht and 4) UHT ready-to-drink milk worth 5.2 billion baht. There were 1.23 billion liters of ready-to-drink milk from domestic farmers and 1.22 billion liters of imported ready-to-drink milk. In terms of export, Thailand has exported many types of dairy products, but most of them came from dairy products already imported to produce types of dairy products before exporting. The main export products are ready-to-drink milk, curd milk, yoghurt, butter from milk and sweetened condensed milk, etc. The products are mainly exported to ASEAN countries such as Cambodia, Myanmar, Lao PDR, Malaysia, Singapore and the Philippines. According to the Thai Customs Department, Thailand had exported three hundred and twenty four thousand tons of dairy products worth 1.2 billion baht.

 

Foremost has been in business in Thailand for 64 years and one of the major buyers of raw milk from Thai dairy farmers with a total value over 2 billion baht per year or more than 98 million litres per year. To increase the competitiveness of Thai dairy farmers amid the free trade competition Foremost continues to improve its quality by applying the expertise of the Dutch parent company that has been passed down to the FrieslandCampina (Thailand) under the principle of “Nourishing by Nature” to create sustainable growth of Thai dairy farmers, along with providing good health and nutrition to consumers in the country by continuing to support the dairy development program through the activity “Farmers to Farmers”. The aim is to transfer knowledge, experience and expertise in dairy farming to Thai farmers so that they can strive to raise the quality in all dimensions of Thai dairy farmers to meet the standards with 7 key approaches to produce excellent quality milk according to the Netherlands standards which include:

 

1) Good food and water for cattle – food and water must be balanced and suitable for digestion of gut microbes, and clean water must be provided for cattle throughout the day. 2) Good cattle are the key – cattle must be fed with high-quality colostrum immediately after birth followed by milk, concentrated food, rough food and clean water while monitoring the growth of the calves. 3) Perfect breed – the cows will give milk after birth while the female calves will be brought up to be healthy to replace the old cows or to expand the herd. 4) Correct milking – cleanliness in milking is paramount. The breast must be sanitised. A milk quality check performed, and each cow examined for mastitis. The milk extruder is inspected and soaked in an antiseptic solution after every milking. 5) Hoof – the cow’s hooves must be cared for by feeding them with a balanced diet, and the hooves must be trimmed regularly. 6) Farm house design – the cow sheds must be clean and safe for cattle and farmers. In addition, it must have good ventilation, and the area must be allocated for the number of cattle. 7) Farm-specific data system – farm data must be completely recorded and available which include income, production, as well as important information about dairy cattle.

 

“Foremost continues its vision of providing 100% quality cow milk to consumers, while supporting Thai dairy farmers for a sustainable quality of life.”

 

Foremost is committed to support Thai dairy farmers to gain full knowledge and be ready to sustain themselves in the face of changing situations. Recently, 14,000 farmers participated in the project, and the total value expected to increase by 20 million baht per year. Foremost also encourages the dairy industry to compete with the global dairy industry in the future, as well as producing quality ready-to-drink milk and dairy products to meet the diverse needs of consumers, Dr. Olarn concludes.