Watawala to start commercial dairy operations later this year

Watawala Plantations PLC (WATA), a subsidiary of Sunshine Holdings PLC, will begin commercial dairy operations during the latter half of the 2018 financial year, a top official said.

“Increasing the scale of the dairy farming project is a key deliverable in the coming year as we commence commercial operations in the 2nd half of FY 2017/18,” WATA Chairman Sunil Wijesinha said.

The firm started investing in a US$ 11.5 million dairy farm last year in a joint venture with PADC Holdings, which is a subsidiary of global dairy industry investor,duxton Asset Management.

WATA owns 68 percent of the shares in the joint venture, Watawala Dairy Limited.

So far, WATA has invested Rs.626.50 million in the project which is still under construction at Lonarch Estate, which is now unviable for tea planting.

The current 167 cows in the farm (82 of which are milking cows) most of which are present from an earlier pilot project, had produced 1,143 litres of milk daily in the 2017 financial year, generating Rs. 32.6 million in revenue, but a Rs.13.6 million loss in operating profits. “The dairy project is expected to generate a bottom line of 40 percent and will contribute considerably towards the groups future profitability,” the WATA annual report said. According to WATA, national milk production grew by 2.6 percent year-on-year to 384 million litres in 2016, which was able to meet only 42 percent of total local demand.

Milk powder imports, which captured the remaining 58 percent of the market, were 94,011 metric tonnes in the year, valued at Rs. 33.6 billion, growing 15 percent year-on-year. The WATA farm, once fully operational, will produce 30,000 litres of milk daily with a herd of 1,700 cows, of which 1,000 will be milking cows.