Success Story

Photographer: Lank O'Lakes Land O'Lakes staff

In 2004, the pasteurized milk processing line of the Jaffna Dairy Development Cooperative, or Yarlco, sat idle. Land mines and unrest stretching back to the 1980s 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) grant awarded to the Humpty Dumpty Institute (HDI), the New York-based humanitarian organization teamed up with two partners to execute this program. Under HDI’s overall management and administration, HALO Trust demines land in Jaffna, and Land O'Lakes, Inc. helps Sri Lankans revitalize their dairy industry.

The dairy development program provides technical assistance to over 1,300 dairy farmers in ten Jaffna divisions. It also strengthens key processing cooperatives such as Yarlco and some select Livestock Breeders Cooperative Societies (Libcos). Land O'Lakes focuses on four main 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 pasteurized milk processing line. Land O’Lakes brought in technical assistance for machinery operations, solved packaging problems using polyvinyl film, and helped create new brand identities 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, during the four month period from September to 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.

Since the start of the dairy 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.

With funds and technical support from the FFP grant, ten Yarlco sales branches were renovated and refurbished by the end of January 2008. With the centers more presentable to consumers, delivery and sale of milk became easier and more hygienic, testing whether improved centers would in fact 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.