The Foreign Trade Department aims to strengthen the local dairy industry so that it can compete with more imported products when market liberalisation under the free trade agreements eliminates import tariffs on powdered milk in 2015.

Supported by the FTA fund, the department employed Chula Unisearch to conduct marketing research. It found that to build sustainable growth for the local milk industry, dairy products must be produced from all-natural raw materials with signs indicating 100 percent fresh milk to guarantee the quality.

Nopporat Runguthaisiri, leader of the research team, said at a recent seminar that farmers had to comply with necessary production standards to improve product quality and enable origin traceability for raw milk, including the cattle, location or farm owners.

A logo to guarantee product quality could be an effective marketing tool to promote products. To achieve this, the research team created two trademarks. One is a golden ribbon logo to ensure drinking milk is made from 100% natural raw milk without any powder.

The Smile Milk logo is awarded to any dairy products such as ice cream or yoghurt that is produced with all-natural ingredients. Both trademarks have been registered with the Intellectual Property Department.

The researcher expects the programme could secure a stronger future for Thailand's 60-billion-baht dairy industry, which involves 23,000 farm households that produced a total of 862,495 tonnes of raw milk in 2010.

That volume lags demand of 937,672 tonnes of milk, resulting in imports of powdered milk, whey and processed products such as cheese and butter.

The research also suggests dairy producers could make cheese and butter locally.

The lack of tariffs will encourage milk companies to use more whey and powdered milk for lower costs, it added.