Thailand - Powdered milk importers must also buy local raw supply

Private companies will be allowed to manage the country's import quota of skimmed powdered milk this year as long as they agree to first purchase local raw milk at a ratio of 6:1 to imports. The plan aims to protect the local dairy industry which is threatened by the lower cost of powdered milk compared to raw milk, said Yukol Limlaemthong, director-general of the Livestock Development Department. According to Mr Yukol, Thailand has set an import quota for skimmed powdered milk under an agreement with the World Trade Organisation at 57,200 tonnes this year. Imports under the quota are subject to a 5% tariff while those over the quota are taxed at 216%. A total of 2,200 tonnes will be imported under the quota from Australia, in accordance with the Thailand-Australia Free Trade Area agreement that took effect on Jan 1. Mr Yukol said the Thai Dairy Products Association would work out quota allocations with its members, which are mainly producers of ready-to-drink milk, baked goods and ice-cream. Members that agree to adhere to the rules on skimmed milk imports must buy their milk from dairy farm co-operatives at 12.50 baht per kilogramme. Producing skimmed milk from powder costs only 8-9 baht per kilogramme. Mr Yukol said he was confident this method would help eliminate the surplus of raw milk and put an end to the frequent protests by farmers, who have often poured milk out onto roads. The association must submit its purchasing plans to the National Livestock Policy Committee today. The committee also is requiring that ready-to-drink milk producers buy raw milk in order to be able to participate in the school milk programme, in a ratio of 2:1 to the amount sold for the programme. Thailand has about 30,000 dairy farm households that raise 400,000 dairy cows and provide about 800,000 tonnes of raw milk a year, far short of the annual demand of one million tonnes. Mr Yukol said that even though there was a supply shortage, dairy farmers still faced problems selling their output, leading to the protests. ``In general, the raw milk goes mainly to the state school milk programme and a surplus normally appears during school holidays,'' he said. The programme, which is subsidised by the government, provides free milk to six million students in grades one to four. Mr Yukol noted that while the ready-to-drink milk market had been growing over the past five years, mostly of it has been in the yoghurt segment, which uses skimmed powdered milk as a raw material. To help the dairy business, the Industry Ministry is also asking food manufacturers to adjust their production lines to allow more use of raw milk. The local food industry imports 70,000 tonnes of skimmed powdered milk a year. The bulk of it comes from New Zealand (45%) and Australia (25%).