Facilitating Business Linkages

To increase milk yield and assure year-round milking for dairy farmers, feed is identified as the most indispensable and basic input with fodder being a major component. Presently, very few farmers grow quality pasture and fodder to feed their animals, instead depending mostly on natural grasses growing on road sides and uncultivated public and private lands, which is highly inadequate in meeting the nutritional needs of dairy cows. Only a very small percentage of dairy farmers adopt fodder conservation methods such as making silage for better yields. This limited availability of quality pasture and fodder, shortage of land in some areas for grass cultivation and managed cultivation, lack of knowledge on usage of silage, together with the seasonal variations in supply, creates a significant bottleneck in dairy production impacting all types of farms, such as small and large-scale farms including mega farms. Further, the scarcity of feed increases the feed costs for dairy farmers.

To address this need, the project's interventions are designed in a holistic manner by educating farmers on the need for quality feed year-round to increase yield and by creating awareness amongst stakeholders on the business opportunities around growing, conserving and selling fodder to potential cultivators to assure year-round supply of feed. Both the dairy farmers and the fodder cultivators are encouraged to think as entrepreneurs. Their skills are enhanced by providing training, enhancing technical knowledge on latest techniques and quality planting material and methodologies which are adaptable to local conditions as well as business planning.

To encourage entrepreneurs to join the dairy sector or expand existing production, dairy farmers need increased access to financial services. Generating new investment will help to fill in the gaps in the value chain and to reach “critical mass,” the point at which the dairy industry will have enough players all along the value chain to become self-sustaining. MOD works directly with partner financial institutions to help them understand the needs of the sector and develop packages or promote existing packages to encourage lending to the dairy sector in general as well as work with the project beneficiaries to improve their business planning and eligibility to apply for required loans.

There is further need to make available additional types of financial products that meet the needs of dairy sector investors and to complement it with technical assistance. To stimulate investment and transform Sri Lanka’s dairy sector, a greater range of products needs to be available, as well as loans that offer favorable payback terms.

The types of investments MOD will stimulate include investments in collection centers, chilling tanks, milking equipment, cattle sheds, milk testing equipment, and other investments that improve productivity and the quality and safety of milk in the project’s target areas.