The government of Thailand has called a meeting with dairy industry leaders after reports of a massive raw milk surplus of more than 200 tonnes per day, leaving many farmers unable to sell their milk despite existing supply agreements.
The crisis has drawn attention to deeper structural problems in the country’s dairy sector rather than just temporary overproduction.
What Caused the Milk Glut?
1. Rising Milk Production
Milk production increased significantly in 2025, but market demand and processing capacity have not expanded at the same pace, leading to excess milk.
2. Lack of Data in the Dairy Sector
Industry insiders have criticized the Ministry of Agriculture and Cooperatives for lacking reliable sector data.
According to critics:
- Authorities cannot clearly identify where the reported 211-tonne daily surplus exists.
- There is no comprehensive “Big Data” system to track production, procurement, and inventories.
Without accurate data, it becomes difficult to manage supply chains or design corrective policies.
Role of the School Milk Programme
The long-running National School Milk Programme has also been blamed for distorting the dairy market.
Key issues highlighted by experts:
- The government purchases milk for only 260 days per year (school days).
- However, payments and production planning assume 365 days of supply.
This mismatch creates excess milk during school holidays, which farmers struggle to sell.
Industry experts say attributing the surplus solely to school holidays is economically misleading, as the system itself creates artificial demand patterns.
Proposed Reforms for the Dairy Sector
1. Decentralising the School Milk Programme
Some experts suggest ending the centralized procurement monopoly by allowing:
- Provincial governors and schools to choose suppliers
- Parents to pay extra for premium milk brands or flavoured milk
This could encourage competition and improve product quality.
2. Strengthening Dairy Cooperatives
Another proposal is to empower dairy cooperatives to develop their own commercial brands and compete in retail markets rather than relying heavily on government procurement.
Read More: Mandatory Food Safety and Standards Authority of India Registration for Local Dairy Sellers
3. Export Expansion Through G2G Deals
Industry leaders are urging the Ministry of Commerce to negotiate Government-to-Government (G2G) export agreements for Thai pasteurised milk with neighbouring countries.
This strategy could help absorb surplus milk instead of trying to reverse existing Free Trade Agreements.
What This Reveals About Dairy Economics
The Thai dairy crisis illustrates an important industry lesson:
Milk oversupply is often a policy and market coordination problem—not just a production problem.
Even moderate surpluses can cause major disruptions when:
- Procurement systems are rigid
- Market demand is concentrated in government programmes
- Export channels are weak
- Data on production and supply chains is missing
Industry insight:
Countries with strong dairy sectors (like cooperative-driven systems) typically rely on real-time production data, diversified markets, and flexible procurement models to prevent milk gluts.
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I do my best to share reliable and well-researched insights but occasional errors or omissions may slip through. Please view all content as informational.
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