In 2004, the pasteurized milk processing line of the Jaffna Dairy Development Cooperative, in business as Yarlco, sat idle. Land mines and unrest in the northern Sri Lankan province of Jaffna had disrupted the dairy sector, causing a reduction in farmers’ incomes and in the availability of dairy products for the marginalized and malnourished people of Jaffna. Under a USDA Food for Progress (FFP) awarded to the Humpty Dumpty Institute, Halo Trust now demines the land and Land O'Lakes International Development helps Sri Lankans revitalize their dairy industry.

The dairy development program provides technical assistance to over 1,300 dairy farmers in ten Jaffna divisions, along with organizational strengthening to key processing cooperatives such Yarlco and some select Livestock Breeders Cooperative Societies (Libcos). Land O'Lakes uses a vertically integrated approach with four main activity areas:

1. Dairy Market Orientation

2. Organization of Farmers Around Business Opportunities

3. Farm Management and Productivity Outreach

4. Mobilization of Investment in Value Adding and Marketing

In September 2007, Yarlco restarted their idle pasteurized milk processing line. Land O’Lakes brought in technical assistance for machinery operations, identified packaging problems now resolved with polyvinyl film, and helped create a newly designed brand identity and labels for yogurt, curd cups, paneer packs and pasteurized milk containers. During the first eight months of 2007, Yarlco processed only 4,230 liters of raw milk into value-added products such as yogurt, ice cream, and milk lollies. However, over just the first four months of the FFP program (September–December 2007), Yarlco processed and sold 9,373 liters of value-added products, including flavored pasteurized milk. Value-added production now accounts for 14 percent of all milk collected by Yarlco, up nearly 475 percent since July 2007.

The Yarlco pasteurized plant started in September 2007. The table below demonstrates the increase in collection and value-added production during the last three months of 2007.

Milk utilized for value-added products against the total

Since the start of the program in July 2007, Yarlco’s milk collection volumes increased by 41 percent compared to the same period in 2006. Milk collection increases have resulted in the opening of two new milk collection centers by Yarlco. Additionally, Yarlco is now producing 27,513 kg monthly of feed mash, which is a 122 percent increase.

Training at Yarlco’s dairy pasteurization plant

General management training for board members and senior staff

With funds and technical support from the FFP, ten Yarlco sales branches had been renovated and refurbished by the end of January 2008. The goals are to make the centers more presentable to consumers, make delivery and sales of milk easier and more hygienic, and test whether improved centers will increase sales volume.

Farmers have increased the supply of milk to collection centers by almost 12,000 liters since the start of the program. This occurred not only because of the technical assistance in dairy cattle management provided directly to the farmers, but also after Land O’Lakes helped negotiate an increase of 5 rupees/liter in the fixed farm-gate price for milk. Farmers producing a daily average of four to five liters increased their income between 20 to 25 rupees per day. This is a 6 to 7.5 percent increase in income based on a daily average of 333 rupees.

Extension agents trained farmers to formulate dairy cow rations using locally available feed supplies. By applying this new knowledge, farmers reduced the amount of prepared feed purchased by about one kilogram per day, thus lowering their cost of production and increasing revenue. The cows now receive the appropriate amount of feed per day, which will also increase milk yields.

While the project records quantitative data and the milestones to date are impressive, capacity building is another success. Capacity building is evident throughout the project, from training extension agents who then train farmers, to customizing technical assistance for the cooperatives so they improve operations and dairy product marketing. Institutional capacity building, coupled with the strengthening of relationships and linkages between the dairy industry players, is the hallmark of the program. This strengthening of human capital and partnerships is a critical aspect of the project’s legacy to the people of Jaffna and will ensure sustainability of program goals.

Dr. Leka trains Land O’Lakes extension agents on clean milk production

Farmer training by Extension Agent Sugunan at Karaveddy