Revista Internacional de Economia e Ciências de Gestão

Identification of Value Chain Gaps and Suggestions for the Dairy Development

Abstract

HMSJM Hitihamu*, HACB Karunarathna

The main aim of this study was to identify key actors in inbound logistics, their positions in dairy value chain and asses the actors in primary and support activities according to Portor’s Value chain approach. The study was conducted in Nuwara- Eliya, Kandy, Gampaha, Anuradhapura Kurunagala and Jaffna district to represent six dairy farming systems of Hill country, Mid country, Low country wet, Low country dry, Coconut triangle and Jaffna Peninsula. Cost of production of one litre of milk including family labour cost was RS.59.63, whereas excluding family labour Rs.29.78. The labour cost accounts for 50% and feed cost account for 46% of total cost. The main value chain actors under the inbound logistics are input supply such as feed, water, labour, veterinary services and animal breeding. MILCO, NESTLE, YALCO, LIBCO, CIC, Pelwatta, Cargills and Rich Life dairies play a major role in milk collection, storage, processing and distribution. To enhance the dairy value chain efficiency, concentrate feed cost should be reducing and need to increase quality grass in diet. Further, increasing infrastructure, support services, promotion of local products and convert small scale produces in to economic units, establishing quality management system and introducing an appropriate milk distribution mechanism will enhance the dairy value chain efficiencies.