The power of cooperatives in the Thai dairy industry

MANILA, Philippines - In the Thai dairy industry, milk cooperatives reign supreme.

These sturdy little cooperatives, formed by small dairy farmers who own an average of 15 to 20 lactating cows, supply the daily milk requirements of the government school milk feeding program as well as the raw milk requirements of manufacturers of milk products.

Milk cooperatives in Thailand are formed through long-term startup loans granted to farmers. The milk cooperatives, in turn, form the cooperative managed  by the Dairy Farming Promotion Organization (DPO), a state-controlled enterprise mandated to promote the growth of the industry.

The milk cooperatives vary in size and processing activities, but primarily serve as milk collection facilities. Some cooperatives only treat milk for direct consumption, while some also engage in the processing of milk products such as flavored milk, and produce  yogurt and cheese.

The cooperative is a vital structure to the Thai dairy industry. Through the cooperatives, milk is procured from farmers at a guaranteed price, then refrigerated and processed.

The small cooperatives produce products that compete with other products on supermarket shelves or for use in the school milk feeding program.

The daily pickup and refrigeration service provided by cooperatives to farmers has enabled small family-owned farms to become a vital part of the industry without the need for them to invest in expensive production equipment.

Because of this, the Thai dairy industry flourished in provinces located far-away from the capital, providing for the basic needs of small farmers or supplementing their income from other low-earning agricultural activities.

Over the years, established cooperatives, large ones in particular, have also found ways to expand their sources of income.

Successful cooperatives have become sources of extension services such as artificial insemination, veterinary services and farm management knowledge.

Small dairy farmers can also purchase farm and milking tools as well as concentrate feed from cooperatives.

The larger cooperatives may offer dairy farming classes that teach aspiring farmers the basics of breeding milking cattle, feeding, forage production, milking management, milking cattle common diseases as well as milk handling, collecting and processing.

Thailand now has more than 97 milk cooperatives, the largest of which is the Nongpho Ratchaburi Dairy Cooperative located in Ratchaburi province.

Start of Thai dairy industry

Fifty years ago, it was believed that dairy farming was not possible in Thailand with its tropical climate and traditional use of cattle as draft animals and sources of meat.

To date, however, dairy farming in this neighboring Southeast Asian nation has been developed into a profitable venture for Thai farmers.

Thailand has a relatively short history of dairy farming, having only started in the “60s after a royal visit of King Bhumibol Adulyadej and Queen Sirikit to Denmark in 1960.

Seeing for themselves how a dairy industry can potentially spur growth in the countryside, the Thai government sought technical assistance from Denmark for the establishment of a fledgling Thai dairy industry.

In 1962, the Thai-Danish Farm began operations as the first dairy cooperative in Thailand through a royal grant. In 1972, it was handed over to the Ministry of Agriculture and Cooperatives and became the state-controlled enterprise now known as the DPO.

The DPO manufactures the Thai-Danish milk brand that is used in the government school milk feeding program.

The DPO operates now as it did back then. It provides training for farmers on dairy farming techniques, cross breeds milk cattle suited for the Thai climate, produces dairy products from raw milk, and promotes milk consumption in Thailand.

Thailand’s Department of Livestock and Development also established artificial insemination centers where Thai Friesian cows are crossed with purebred Holstein Friesian cows.

School milk feeding program

To provide a long-term market for Thai dairy farmers, the DPO initiated the school milk feeding program among children under 12 years old.

The program introduces milk to the diet of Thai children and develops in them a lifelong milk-consumption habit.

The milk feeding program receives funding of around $205 million annually from the Thai government and is managed by the Milk Board. 

Processors supplying the school milk are only allowed to use locally-produced raw milk to produce pasteurized or UHT milk.

The government is thus the largest consumer of locally-produced milk, absorbing around 275,000 tons per year from the total domestic production.

The Thai dairy industry currently produces more than 900,000 tons of raw milk annually because of the rising number of dairy  animals and increased yield.

Skimmed milk, which is used in condensed milk and snack items, is also produced by small cooperatives but Thailand continues to import the balance of demand. The country still imports around 50,000 tons of powder milk annually.

Thailand currently exports milk products such as sweetened condensed milk, sterilized drinking milk and evaporated milk to Cambodia, Indonesia, Philippines, Malaysia, Myanmar and other neighboring countries.

Dairy cooperatives in Thailand to date remain concentrated in provinces located several hours away from Bangkok – such as Nakornatchasima, Saraburi and Ratchaburi provinces.

The meat industry, on the other hand, is concentrated nearer the capital.

Over the years, these milk cooperatives have brought regular income and credit lines to farmers, therefore reducing migration of workers to cities.