Towards Sustainability of the Dairy Industry in Thailand

Towards Sustainability of the Dairy Industry in Thailand

Published: 2022.07.13
Accepted: 2022.07.13
426
Dairy extension officer
Department of Livestock Development, Bangkok, Thailand
Dairy extension specialist
The Animal Husbandry Association of Thailand, Bangkok, Thailand
President
Thai Holstein Friesian Association, Thai Holstein Friesian Association, Saraburi, Thailand
Advisor
Thai Dairy Industries Association, Thai Dairy Industries Association, Bangkok, Thailand
Associate Professor
Department of Veterinary Medicine, Faculty of Veterinary Science, Chulalongkorn University, Bangkok, Thailand

ABSTRACT

This article reviews the Thai dairy industry in the perspective of its history, current situation, and the trend for its future development. The data from the Thai Milk Board is used to illustrate the industry situation in the past and present. The prospective viewpoint is depicted from the available data, policies, plans, and projects by the authors who are the experienced sector-representatives. Over the past 60 years, the Thai dairy farmers have been evolving and are currently under transformation towards a big-scale farm as globally forcing by the increasing cost of milk production and the trend of less government support. Like other countries in Southeast Asia, the sectors under the Thai dairy value chain consist of dairy farmers, milk collecting centers, and milk processing plants. School milk programme is also established as found in other developing countries, but with a high-priority policy which distributes to around 30 % of the national consumption. An average of 17% growth per year of the export market during 2010 to 2020 indicates the opportunity of Thailand’s dairy industry. Considering the global trend and situation of the dairy industry, policies to further support its development is towards sustainability which is needed to build on the basics of good farm management. To reach the full concept of sustainability, all 3 dimensions of sustainability must be covered which are environmental, social, and economic dimensions. Sustainability of the industry is emphasized through the development of farm management and dairy value chain in this paper.

Keywords: dairy value chain, dairy production, policy

INTRODUCTION

Sustainability is crucial for all agriculture industries because the world population keeps on increasing while resources gradually decline (Couwenberg, 2022). Using resources efficiently and economically is not just only elevating the sustainable aspect but also the competitiveness aspect which could be realized as a major concern of the dairy industry in Thailand. The limited land use and increased milking cows per farm indicate the necessity of this sustainable aspect. Meanwhile, the approach of Free Trade Area and the opportunity for export market illustrate the importance of strengthening farmers and producers for the competitiveness.

Dairy production in Thailand has been of concern for 60 years. During this period, the government policies determine a higher support relative to other livestock. The price control is found for raw milk. In the future, however, the industry development may be in need of different strategies to deal with new challenges, such as limited resources. Using the available data from the Thai Milk Board, together with experiences from the authors who are the sector representatives could help revise the industry from its history to its current state. The strengths and defects therefore pointed out its future development.

DAIRY INDUSTRY IN THAILAND: PAST AND PRESENT

Thailand is a hot-humid country located at latitude 15.87 and longitude 100.99. With this climate, heat stress is a challenge to cows’ gene expression in production traits. The development of dairy production in Thailand, however, has been of interest to the government. Initiated by King Bhumibol Adulyadej in 1962, the dairy industry is given great attention to the government since then. Table 1 shows some information illustrating the overview of dairy production development. The number of dairy cows has increased from 13,700 to 358,247 cows over 40 years, whereas the amount of milk production has increased from 27,240 to 1,272,390 tons per years (Murphy and Tisdell, 1996; Department of Livestock Development, 2022). The amount of milk yield per cow has increased gradually. The average amount is around 12 kg per cow per day.

The dairy industry in Thailand has some common characteristics with other countries in Southeast Asia (Wouters, 2010) such as small farm size, and imported skim milk powder for processing milk products. The dairy value chain is similar among the countries as well. The dairy value chain in Thailand consists of three major sectors which are dairy farms, milk collecting centers, and milk processing plants. Currently, there are 24,145 dairy farms, 162 milk collecting centers, and 130 milk processing plants (Department of Livestock Development, 2022; Milk board, 2022). Most dairy farms deliver raw milk to the milk collecting centers nearby. A few numbers of dairy farms process their own dairy products. The national consumption is for the school milk program produced by both small scale and big scale processing plants, whereas most of the commercial dairy products are manufactured by a big scale processing plant. Of the overall production, around 85% is for national consumption; the rest goes to the export market.

The school milk program started in 1992 to support students’ health-- a nutritional diet so they are the focus of the study. The program provides pasteurized and UHT milk for students under grade 6. The market share of the school milk program has increased by 20 % for over 30 years (Office of the Permanent Secretary). The export amount of milk products account for 15% of total production (Ministry of Commerce, 2022; Office of Argicultural Economics, 2022a). The dairy products are milk and cream, skim milk powder, and other dairy products such as flavored milk.

The dairy industry in Thailand is recognized as a high-priority policy (Chungsiriwat and Panapol, 2009). The crucial part pushing this industry forward is the Milk Board. The Milk Board is an important corporation gathering all sectors in the dairy value chain. The board aims at administering the pricing policy, school milk program, imported dairy products, and dairy industry development strategy (Chungsiriwat and Panapol, 2009). The contract partnership between milk collecting centers and milk processing plants is another regulation launched by the Milk Board. The contract was established in 2008 when the Milk Board was set up. The partners support each other to create stability in the market for dairy farmers as well as resource security for the milk processing plants to produce dairy products nationwide and worldwide. The overview of the dairy market is shown in Figure 1.  

The history of Thai dairy production and its current situation reflects both of the industry’s strengths and challenges. Nevertheless, there is an opportunity to promote a drinking milk campaign in the overall regions of Thailand. The knowledge of making new products is supported by the Department of Livestock Development (DLD), as well as the international trade for the producers who are ready for the bigger scale. Table 1 demonstrates another challenge of the high cost of production which is generally from feed price and fuel price. The cost of production in 2022 is monitored by the Milk Board. The issues of production cost and milk quality were discussed earlier by Phi (2017) in respect of enhancing competitiveness in the future. Essentially, Thai farmers need to focus on reducing production cost and improving quality. A small growth rate of national consumption is another challenge for expanding the national demand. Despite lactose intolerance, Thai foods rarely use milk as an ingredient. The growth of national consumption is therefore based on the commercial milk and dairy products.  

DAIRY INDUSTRY IN THAILAND: INTO THE FUTURE

Thailand has its national strategy, and the 13th master plan for national economic and social development running from 2023 to 2027. This plan aims to develop the country in four aspects which are self-sufficiency, resilience, sustainable development, and Bio-Circular-Green (BCG) economy model. There is also a National strategic action plan for dairy production development (Figure 2) which corresponds to the master plan for national economic and social development in all aspects. The action plan aims to elevate the dairy industry to the global standard which is partly related to the definition of sustainability. The action plan proposes through the value chain including farms, milk collecting certers, and milk plants. In detail, each part of the action plan specifies the crucial tasks that need to be accomplished. The information summary regarding the conflict between Ukraine and the Russian are noted by the FAO (FAO, 2022). Accordingly, the recent additional plans for supporting the producers launched by Thai government are emphasized on promoting dairy markets and promoting high value milk products.

Sustainability indicators in the dairy industry were reviewed by Wouters (2010) and Feil et al. (2020). The indicators were related to environmental, social, and economic dimensions. Development of farm management and dairy value chain is the important practices leading to the environmental and social dimensions. The efficiency of those practices is then distributed to the economic dimension (Wouters, 2010). From the past and the present perspective of the dairy industry in Thailand, on the one hand, there are challenges from the high production cost and lower growth rate of national consumption compared to the export market (Tables 1 and 2). On the other hand, one of the national targets of the dairy industry development is to be the leader in the ASEAN region (Figure 2). With this current situation and prospective target, the ongoing and prospective projects for the development of farm management and dairy value chain are discussed in this topic.

Sustainability on farms – Development of farm managament

The original farm model in Thailand has been established in 1962 when the first official demonstration farm was initiated. The recommended model at that time was for five cows. Despite the area being limited partly due to the original model since the beginning, the land unavailability which is the country nature generally explains the restricted dairy farm area in Thailand. From then to now, dairy farming in Thailand has been dispersed nationwide. The greater density is found in the central, northern, and western regions. The average number of cows keeps increasing under the land availability constraint. The demography of dairy farmers has evolved towards greater diversity such as age, dairy farming knowledge and skills, and accessibility to technology and loan. The revised farm model therefore should be considered in respect of farm sustainability.

The sectors in the dairy value chain have their rules on the development of farm management. The government sector has a primary role in supporting the fundamental resources for farmers. The Department of Livestock Development (DLD) is the main department working on several tasks to develop the farm management. The major responsibilities of DLD in dairy farming are roughage management, genetics and breeding, reproduction management, milk quality control, disease control and veterinary services, and training programs for dairy farmers and dairy extension officers. Examples of the ongoing projects supporting sustainable farming in Thailand administrated by DLD are the establishment of the young dairy farmer network, the establishment of feed centers, and the development of a vaccine for lumpy skin disease. Other sectors which are universities, dairy farmer organizations, and milk processing plants also support the farm management development. Operated by Chulalongkorn University, the research center for technology transfer is set up in the central part of Thailand. Genomic evaluation in dairy cows has been operated by Kasetsart University and Dairy Farming Promotion Organization of Thailand (DPO). Dairy farmer organizations also have an important role in supporting farming management skills. Thai Holstein-Friesian Association is the representative of dairy farmer organizations that attends the crucial meeting and holds the informative seminars for dairy farmers. These sectors collaborate on strengthening farmers’ performance including better management skills. Smart and precise farming draws attention to the global dairy industry in a situation that the population growth and resource availability are opposite. In Thailand, this farming concept needs to build on the basics of good farm management which has been continued under the ongoing projects mentioned above.

In the beginning, the smart dairy farming in Thailand intends to be a learning center for dairy farming technology, the Thai-Denmark Smart Dairy Farm operated by DPO is built in 2019. The technologies used on the farm are for example barcode scanning for collecting dairy cows' data, a pipline milking, and feeding system that regulates feeding based on animal welfare considerations (THE NATION, 2019). Dairy Cattle Research and Development Center has been nominated to be a smart dairy farm of DLD. A pipline milking with an automatic data collecting system turns the farm to a smart demonstration farm. The academic institute of Chulalongkorn University, the Center for Research and Technological Transfer for the Development of Dairy Farming in Humid Tropical Zones, is set up in Saraburi. The facility is outfitted with new equipment capable of evaluating large quantities of raw milk at once and providing immediate findings. The research center's ultimate goal is to turn Thai dairy farming into "Smart Farming" by "Smart Farmers" through the training of up to six-months courses (Kanitha, 2019). Other large dairy farms have high technologies such as a rotary milking.

In the meantime, there are research ideas that propose the promotion of smart and precise farming. The analysis of production efficiency and cost-benefit before promoting using new technology for each farm is crucial, especially in Thailand where there is a lot of diversity among dairy farms. Other research could be conducted to support the dairy farmers who are ready to shift to smart and precise farming. Those research areas could be for example an appropriate farm benchmark, traceability for food safety, and environmental impact from dairy production. As declared in the 13th national economic and social development plan, the BCG economy is committed to promoting a sustainable economy by using technology and innovation. As such, research on optimizing resources used per unit of milk production is necessary for an environmental impact declaration including carbon footprint. Disease prevention is essential to sustainability in all aspects and is considered as the basics of good farm management. The economic aspect of diseases of Thai dairy production was earlier investigated (Murphy and Tisdell, 1996). The issues of disease outbreaks and prevention of the sustainability of dairy farming in Thailand could be further discussed.

Market sustainability – Development of dairy value chain

Sustainability of the dairy value chain in Thailand is needed for the collaboration among sectors on value chain administration. A milk processing plant or dairy producer is another important section in the dairy value chain that influences the operation both at the farm and milk collection center. Being a middle person between dairy farmers and customers, a dairy producer is under the price control of raw milk and therefore has to compromise between the production cost of milk and consumer satisfaction. Likely, the price control of raw milk in Thailand controls the process of the national market. Since 2008, the dairy farmer organization called for a two-baht higher raw milk price to compensate for the higher cost of production (Chungsiriwat and Panapol, 2009). This scheme could protect farmers’ revenue from unfair trading with milk collecting centers or processing plants. The downward of this pricing scheme however could be found when the production cost increases, especially when the world crisis causes the increased production cost. Releasing the freedom of market and price mechanism is in attention partly due to the world dairy trends which are towards less market protection and less government support (Wouters, 2010). The price control results in the sanction of marketing mechanisms from the government subsidies. Accordingly, this pricing scheme may need to be revised to support the sustainability of the dairy market under the world’s current circumstances.

The data from Table 2 indicates the opportunity for sustainable growth in milk consumption for both national and export markets. The national dairy market expansion may be impeded by imported dairy products. To sustainably promote national milk consumption, the concept of high-quality milk products its one of the strategies. School milk program, premium quality fresh milk, and local brand is the current practice operating by the dairy producers. Additionally, the average growth of the national dairy market from 2010 to 2020 is 1.2% per year whereas the average growth of the export market during the same period is 17% (Table 2). The market growth data of the export market indicates the opportunity for the dairy producers. The data from the Department of Trade Negotiations (2020) demonstrates that the majority of the exported dairy product is recombined milk. This information spotlights the development of the whole value chain in respect to the increased volume as well as the quantity of the national milk production. This development may include cooling milk from pipeline and cooling tank system, as well as the traceability system for food safety and environmental impact declaration. By supporting technology development for enhancing milk production efficiency and building a sincere partnership between farmers and producers, the surplus national milk production that its quality is qualified for the exported product could be offered as a raw material for producing the exported dairy products.

CONCLUSION

The data illustrates the gradual development of the Thai dairy industry in the past and the present. Currently, the industry is experiencing higher cost of production, and greater growth of export markets. The future perspective is challenging from the global trend and situation. Regarding this future viewpoint, the development of farm management that is suitable for the current circumstance is essential. With this aspect, the ongoing and prospective projects are well collaborated among sections. Towards the sustainability on farms, focusing on smart and precision farming regarding the BCG economy is of interest. The price control may need to be revised in order to allow the flexibility of the marketing mechanism. At the end of the chain, both national and export market draw attention to develop farm production efficiency for both quantity and quality aspects.

REFERENCES

Couwenberg Wim. (2022, May 5). Sustainability and population growth as a global problem. https://www.overpopulationawareness.org/en/articles/sustainability-and-p....

Chungsiriwat P., and V. Panapol. (2009). Thailand: An industry shaped by government support. Smallholder dairy development: Lessons learned in Asia. The Food and Agriculture Organization of the United Nations (FAO).

Department of Trade Negotiations. (2020). สินค้าโคนมและผลิตภัณฑ์นม.

Department of Livestock Development. (2022, March 4). ระบบเอกสารเผยแพร่กรมปศุสัตว์. Information and Communication Technology center. http://docimage.dld.go.th/dldform2/Home5e/mainfrm.asp?m=bf.

FAO. (2022). Information Note The importance of Ukraine and the Russian Federation for global agricultural markets and the risks associated with the current conflict. https://www.fao.org/fileadmin/user_upload/faoweb/2022/Info-Note-Ukraine-....

Feil A. A., D. Schreiber, C. Haetinger, A. M. Haberkamp, J. I. Kist, C. Rempel, A. E. Maehler, M. C. Gomes, G. R. da Silva. (2020). Sustainability in the dairy industry: a systematic literature review. Environmental Science and Pollution Research 27:33527–33542. https://doi.org/10.1007/s11356-020-09316-9.

Kanitha Chancharern. (2019). Smart Farming for Thai Dairy Producers. CU Around. September 2019, Vol.62, Issue 9, Page 4-5. https://www.chula.ac.th/wp-content/uploads/2019/09/CU-AROUNDSEP2019_1new.pdf.

Milk board. 2022. The meeting summary.

Ministry of Commerce. (2022, March 10). https://ietrade.moc.go.th/.

Murphy T. D., and C. Tisdell. (1996). An overview of trends and development in the Thai dairy industry. Research papers and reports in animal health economics. Working Paper No. 17. 

Office of Agricultural Economics. (2022a, February 18). Dairy products import and export statistics. http://impexp.oae.go.th/service/.

Office of Agricultural Economics. (2022b, February 18). เอกสารเผยแพร่ (E-Book). https://www.oae.go.th/view/1/%E0%B9%80%E0%B8%AD%E0%B8%81%E0%B8%AA%E0%B8%....

Office of the Permanent Secretary. (2022, April 19). Number of students in the formal school system in public and private institutions by level of education and grade: Academic Year 2015 - 2020. Ministry of Commerce. (2022). ระบบรายชื่อผู้ส่งออก-นำเข้า. https://ietrade.moc.go.th/User/ex_re.aspx.

THE NATION. (2019). Govt Approves Loan For New Smart Dairy Farm. https://www.nationthailand.com/in-focus/30378797.

Phi D. Z. (2017). Dairy production and trade in Thailand. FFTC Agricultural Policy Platform.

Wouters B. (2010). Competitive dairy value chains in South East Asia, Dairy expert roundtable meeting. 

 

Comment