Dutch Mill eyes green Asean pastures

Dutch Mill eyes green Asean pastures

Myanmar, Philippines factories ahead of AEC

Dutch Mill Co, the country's largest dairy producer, is building factories in Myanmar and the Philippines to cash in on rising demand ahead of Asean's integration in 2016.

‘‘If we’re not serious about a systematic upgrade of our dairy production and management, then we’ll be left behind,’’ says Mr Vorathep.

Construction of the Myanmar plant will be completed next year, to be followed by the facility in the Philippines.

Managing director Vorathep Rangchaikul did not reveal the investment cost but said the company will look for more opportunities in the region once the Asean Economic Community (AEC) is formed in 2016.

The new plants will serve demand in both domestic and international markets.

Asean's dairy market is worth US$15 billion, with total volume of 10 billion litres. The market volume grew by 4.6% last year.

"It's vital for Thailand to prepare itself for the AEC, as we're the largest dairy-producing nation," Mr Vorathep said.

"While we expand our business to neighbouring countries, many dairy producers in neighbouring countries also want to enter Thailand, where the 60-billion-baht market is the largest in Asean."

To cope with intensifying competition at home in the next two years, Dutch Mill needs to improve milk quality and standards.

Among members in Asean, Vietnam is the most formidable competitor.

"If we're not serious about a systematic upgrade of our dairy production and management, then we'll be left behind," he said.

The upgrade involves adopting Good Agricultural Practices and Good Manufacturing Practices on farming, developing dairy cattle breeds, producing more raw milk and using technology to improve production and cost management.

He said Dutch Mill already competes with Vinamilk, the Vietnamese yoghurt brand, in Cambodia.

Vinamilk became the top brand in the Cambodian market only one year after its entry thanks to prices that are 20-40% lower than Dutch Mill's.

Full support from the Vietnamese government has played a big part in its rise.

To help Thai companies compete better, the government can combine small dairy farm cooperatives into a big one, giving them all access to proper cattle feeds which result in higher yield.

Mr Vorathep said the daily yield of raw milk per cow of Dutch Mill's contracted farm is 15 kilogrammes.

It will increase to 18 kg soon, closer to Vietnam's productivity level of 22-23 kg.

In terms of quality, the level of microorganism contamination for raw milk at Dutch Mill declined to 300,000 colonies per cubic centimetre compared with 800,000 on average in Thailand.

Sales of Dutch Mill in Thailand totalled 17 billion baht last year.

They are projected to rise by 23.5% this year to 21 billion baht before reaching 30 billion baht in 2015.

Last week, Mr Vorathep joined the Milk Forum hosted by the Milk Board and the Milk for Thais Club, which represent operators and the public sector.

The meeting was aimed at exploring methods to improve milk quality across the production chain.

It sought ways to enhance Thailand's dairy production capability and competitiveness as well as product quality.

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