Sri Lankan herds generally produce about less than seven litres of milk per day and high yield European breeds do not thrive in Sri Lanka except at high altitudes, leading to low yields, though Australian breeds have been imported recently.
Lack of high quality feed also adds to low yields. State backed 'guaranteed prices' have also made liquid milk expensive, discouraging its use, critics say.
"Sri Lanka wants to improve domestic milk production," Lubartus Velema head of Velema Holdings said.
"We can set up a turnkey dairy farm and processing facility to make dairy products, if 1,500 hactares of land is made available."
Velema was part of a business delegation from the Netherlands who arrived in the country with a television crew from the Dutch business channel, led by Sri Lanka's ambassador Buddhi Athauda.
Athauda says The Netherlands has an advanced dairy industry where cows are bred for different climates and are exported to warm weather areas such as Southern United States.
Velema said three farms of 500 cows each and a processing facility could be set up for about 20 million US dollars, with a cow costing about 1000 dollars.
Problems with heat stroke and climate could be countered with mid-country location and also climate control techniques such as misting, he said.
"We can use wind-power and solar cells to run farms," Velema said. "The technology is available."
He says Dutch cows can produce up to 40 litres of milk a day, but depending on climate and feed it may be possible to produce 25 litres of milk per cow at least in Sri Lanka and increase it as expertise is built up.
In general stall fed cows produce more milk than grazing cows, due to energy wasted in walking about. Stall fed cows in Europe and the US for example produce three to four times the milk of grazing New Zealand cows.
Velema says only land with a clean supply of water is needed and he could mobilize both technology and the investment.The Dutch business delegation met Sri Lanka's Board of Investment and Velema said the agency had been positive about finding land for the project.