Milk Supply Chain Assessment Consultancy in Sri Lanka, Sri Lanka

Position Description

Milk Supply Chain Assessment Consultancy in Sri Lanka

Location Sri Lanka

Department Programs

Employment Type Consultant

Milk Supply Chain Assessment Consultancy in Sri Lanka

Program: Market-Oriented Dairy Project

Location of Assignment: Sri Lanka

Proposed Level of Effort: Phase I – 10 days and Phase II – 25 days

Anticipated Start Date: July 1, 2020 (tentative)

Anticipated End Date: September 30, 2020

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Objective of the Assignment

The objective of this assignment is for the consultant to do a general assessment of the milk supply chain in Sri Lanka, followed by the development of individual strategies to strengthen the supply chains of each participating MOD dairy processor, while highlighting opportunities for a collaborative approach between processors.

Background

IESC – the International Executive Service Corps – is a U.S.-based nonprofit that seeks private enterprise solutions to problems of poverty in developing countries and around the world. By providing a mix of technical assistance and volunteer expert support, IESC works with emerging industries, financial institutions, and governments to stabilize economic environments, increase opportunity, and promote growth.

Dairy is considered the most important sub-sector in the Sri Lankan livestock industry because of the need to address a growing demand for fresh milk and milk products and its potential influence on the rural economy. At present, just over 30 percent of Sri Lanka’s fresh milk demand is met locally. In addition to increasing production and productivity, it is imperative that the markets work for all stakeholders along the dairy value chain to ensure growth of the sector to meet national demand for fresh milk.

The 4.5-year Market-Oriented Dairy (MOD) project, funded by the U.S. Department of Agriculture’s Food for Progress program, supports farmers and enterprises to meet the increased demand for dairy and aims to catalyze sustainable growth in Sri Lanka’s dairy sector. The project will increase productivity and expand the trade of milk and milk products in Sri Lanka. In partnership with the private and public sector, the project will increase milk production of participating farmers and farms to 83,400 metric tons by 2022—an average annual growth of 18 percent, for a life of project growth of 127 percent. The project will ensure 80 percent of beneficiary farmers are earning a price premium due to milk quality.

At present, the national milk production is over one million liters per day. Annually, 270 million liters is supplied from the MOD target areas which are Northern, Eastern, North Central, Central, North Western (other than Putlam), and Uva provinces. This geographic area represents about 85% of the national fresh milk production.

The milk supply value chain in Sri Lanka is highly interdependent. Farmers make profits if processors purchase milk at reasonable prices, process and sell it. Processors make profits if they have access to sustainable quality milk supplies at reasonable prices. Farmer and processors need to be competitive in domestic and international markets through strong value chain relationships to compete with imports, grow, and sustain the industry.

A recent increase in the processing capacities of several dairy processing companies and a more than 20% increase in milk demand has put significant pressure on the fresh milk supply chain. This pressure has been further exacerbated due to a drop in milk production as a result of several recent externalities such as Foot and Mouth Disease, droughts, etc. Most milk processors have unfortunately chosen to react to this challenging situation by poaching each-other’s farmer milk supply groups.

To lure farmers to supply milk for them and not their competitor, the processors have embarked on a price war where milk purchase price at the farm gate has increased from Rs 65 to over Rs 80. This is good for the farmer, but it is concerning that these price increases come at the cost of milk quality in most instances, creating a very dangerous precedence. If milk is rejected by one company, another is there to purchase it. A company rejecting milk risks farmer(s) ending the supplier-buyer relationship with them and giving allegiance to another company.

This has also resulted in dairy processing companies’ reluctance to invest in farmers through farmer development. A high-producing farmer who has been invested in by a milk processor is susceptible to be poached much faster than otherwise.

This situation has disrupted the supply chains of all milk processing companies in Sri Lanka and companies are shying away from important farmer development. It is now critical to facilitate a dialog amongst dairy processing companies on how to strengthen the milk supply chain while maintaining healthy competition that benefits both the processor and the farmer.

The MOD Project is proposing to initiate a discussion amongst milk processing companies on challenges in the dairy supply chain and to identify how to address them in order to strengthen the supply chain. MOD hopes to address the following topics through this assignment:

• Effectiveness of milk supply chain information systems
• Effectiveness of cold chain system
• Traceability and quality related issues
• Addressing seasonality of milk production
• Integration and collaboration
• Increasing milk supply through farmer development and extension

Approach

MOD proposes to take a two phased approach in implementing the scope of this assignment.

Phase I: The consultant will do a general assessment of the dairy supply chain in Sri Lanka in consultation with participating MOD dairy processing partners.

Phase II: Based on the findings of the general assessment completed in Phase I, the consultant will work with individual dairy processing companies to develop appropriate strategies to strengthen their respective supply chains.

Tasks

Phase I

• Visit with MOD dairy processing partners to perform the initial assessment of supply chain challenges
• Meet other actors in the supply chain such as the Department of Animal Production and Health (DAPH) and value-chain actors as/if needed
• Form a working group representing dairy processing company decision makers (senior management) for the purpose of discussing, sharing, and obtaining greater buy-in for the proposed strategic framework and to serve as a counterpart group to work with in Phase II
• Develop an outline of a recommended general approach to address priority challenges in the dairy supply chain
• Present findings and the recommended general approach or strategic framework to addressing supply chain challenges to each participating company and the working group.
• Gauge milk processing partners’ interest in working with MOD in Phase II to develop a strategy to strengthen fresh milk supply chain for dairy processing companies
• Present next steps to MOD and obtain approval to commence Phase II of the assignment

Phase II

• Strengthen the working group if needed by including additional processors representatives
• In consultation with the milk processor working group, develop a strategy to address supply chain challenges
• Present strategy to participating companies and discuss implementation and timelines
• Assess opportunities for participating processors to take a collaborative approach in developing the supply chain as a whole, leading to dairy processors taking a more proactive role in dairy farmer development while securing their respective fresh milk supply chain requirementseGoGQ9i R6xE8
• Work with participating dairy processing companies to customize the general strategy developed as needed to respective company requirements
• Debrief MOD on findings, conclusions, and way forward

Deliverables

Phase I

• Create a Power point presentation on supply chain general assessment findings and way forward (day 6)
• Conduct a general seminar to participating MOD dairy processing partners on the proposed supply chain strategic framework (day 7)
• Develop a report on initial findings on challenges, suggested solution framework to addressing them. (day 9)
• If Phase II is applicable, develop a suggested approach to Phase II (day 9)
• Compile a list of persons met as an annex to the report (day 9)

Phase II

• Power point presentation on the strategy addressing supply chain issues of dairy processing companies (day 8)
• Conduct a seminar for working group and other processor representatives (day 9)
• Attendance sheet for the seminar/discussion to present strategy (day 9)
• Develop customized company level strategies based on the general strategy developed and agreed on – no more than five strategies to be developed (day 10 – 20)
• Compile a list of persons met as an annex to the report (day 24)
• Submit a final report clearly articulating the agreed upon general strategy and timeline for implementation (day 24)
• Meeting minutes and attendance sheet of processor working group (day 24)

Reporting Relationship

The Milk Supply Chain Consultant will report to the Deputy Project Director of the MOD Project and will work closely with MOD’s Business and Value Chain Director.

Administration and Logistics

The MOD project will book and pay for hotel reservations for the consultant while outside the home residence. The MOD office will be responsible for scheduling all meetings and seminars. The consultant must use his/her own computer for the assignment and all reports need to be submitted as Microsoft Office documents. The consultant will be paid a daily rate for up to a maximum of 35 workdays and will be paid a per diem based on IESC per diem policy.

Qualifications

• Extensive experience in supply chain management and developing strategies for improved supply chains in the private sector both internationally and locally preferred.
• Prior experience working in the dairy sector
• Must have a degree in Business Administration, Management, Finance or Economics
• A minimum of 20 years’ experience working in supply chain management.
• Must have excellent written and verbal communication and presentation skills, including the ability to write high quality reports in English
• Consultant must be local host country national.

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