Quality and Price Variation in the Dairy Value Chian: A Case Study in Monaragala District, Sri Lanka

Abstract

Low value addition, quality and price variations have been recognized as common problems of value chains in developing countries. Objective of the present study was to examine the quality and price variations throughout the dairy value chain in a less developed region in Sri Lanka. Wellawaya divisional secretariat of Monaragala district was purposively selected as the study area. Primary data were collected by using pre-tested, structured questionnaires. Laboratory tests of milk and curd samples were carried out to check the quality variation using standard methods. Milk samples were collected from three levels including farmer (10), processor (10 from each, milk and curd) and retailer (10) to determine the quality variation. According to the results, price of curd and yoghurt at consumer level was increased by 36% and 77% compared to the farm gate price. Farmer received the highest profit per liter of milk (68.00 LKR) in the shortest value chain (D) out of four main chains identified. The markets’ margin was estimated at 36%. Farmer had the largest share of 64% followed by processor (20%), retailer (8%), collector (4%), and wholesaler (4%). It was evident that farmers received fair profit through all four dairy value chains. However, solid non-fat percentage, specific gravity and pH of analyzed samples through the value chain were not comply with the standards. In conclusion, the prices of dairy products have increased while deteriorating the quality along the chain. It is therefore important to educate and train actors throughout the dairy value chain on quality management.