I just read in yesterdays news online from SL newspapers about Fonterra (anchor brand) opening of an expansion of their yogurt making facility in Biyagama. This will increase production by 4million yogurt cups a month to over 10 million a month as Sri Lanka's yogurt market is rising at over a 20% annual rate accounting for over 30% of the total fresh milk product consumption. The plant expansion cost Rs1.2B
If I read this rightly, and you wizards at Fonterra correct me if I am wrong, the 5 year payback on this investment at today's borrowing rates in SL means that 500M a year needs to be allocated to the providers of capital over the 5 year period.
So on full production which is unlikely, this amounts to an extra 50 million cups a year of which Rs10 per cup goes to the capital providers. On a Rs 25 cup of yogurt, when it leaves the factory Rs20 goes to Fonterra, half goes for the investment. I wonder how much will go to the milk farmer for milk.My guess is not more than ONE RUPEE on the basis of paying the farmer about Rs 25 ltr for milk.
While this is touted as a great boost to dairy farmers, it is a greater boost to the investors, namely Fonterra (new zealand dairy farmers) and the funding banks. Are they overseas banks or SL banks?
Remember surplus(unsellable) milk in NZ is made into milk powder and sold to us in Sri Lanka. Sri Lanka is Fonterra's largest investment outside of China and so they are not doing it for any love of Sri Lanka, just for their benefit, and hopefully some crumbs may fall to us.
I as a dairy farmer is pleading for a decent price for my milk. I lose money as I sell milk to the board at less than Rs25 a litre while a bottle of water of the same size is Rs40.
Someone out there take up the story and lay bare the facts please. Mawbima are trying a different angle of poisonous milk powder and are being stopped by the courts. We just need some facts.