Suppliers will be hit by decision

An increase in the UHT ratio to 70 per cent from 30 per cent would have a major impact on more than 50 of the country's 71 pasteurised-milk suppliers, Dairy Farming Promotion Organisation of Thailand (DPO) board of committees chairman Amnat Teerawanit said.

Major dairy suppliers would have to adjust their production capacities, including the DPO, which is running at full capacity, he said.

"DPO does not see this as an opportunity, though. The government should end the bidding system to choose milk suppliers, as the system is causing all the problems," he said.

As suppliers collude to keep bid prices low, they tend to use low-quality milk, Amnat said. Then, given the poor state of the country's supply chain, the product does not last long and is spoiled by the time it reaches students, he said.

Last week, in an effort to solve the spoiled-milk problem, which has affected more than 40 schools nationwide, relevant ministries agreed to reverse the ratio of UHT to pasteurised milk from 30:70 to 70:30.

Amnat admitted that pasteurised milk producers would lose revenue under the new ratio.

"The government should cancel the bidding system to prevent the collusion problem. Seeking the lowest bid price opens the door to poor-quality milk," he said.

Moreover, he proposed that state agencies impose a system to monitor the dairy manufacturing and logistics system to prevent spoiled milk from reaching schools.

A dairy farmer at Muak Lek Dairy Cooperative, a school-milk supplier, said only 12 of 71 suppliers selected by the National Dairy Committee and the Interior Ministry's Local Administration Department would gain an advantage from the new ratio because they have UHT production lines.

UHT manufacturers include the DPO, Nongpho Dairy Cooperative, Ratchaburi (under the patronage of His Majesty the King), Wangnamyen Dairy Cooperative, Thai Dairy Industry and Country Fresh Dairy.

Though UHT milk is easier to store and distribute, it is more expensive than its pasteurised cousin, the farmer said, because it is packaged in boxes, rather than bags, so the government's school-milk budget would increase.

The government budget for the free school-milk programme is currently Bt8 billion a year.

The Muak Lek dairy farmer said it would be wiser for the government to focus on revamping the transportation and storage process. Pasteurised milk tends to spoil quickly, and must be stored at below 2 degrees Celsius.

 "The problems stem from the transportation and storage process, not the manufacturing process," he said.

An officer at Nongpho Dairy, one of the suppliers with a UHT production line, said UHT also had a lower nutritional value than pasteurised milk, as it was processed at a higher temperature.

"Yes, UHT's manufacturing costs are higher than pasteurised milk, and this also entails pricier packaging. According to our calculations, the government may need to increase the per-head school-milk budget from Bt6 to Bt7 [a year]," the officer said.