Discourage powdered milk import to ensure domestic production

Eon Bio Science has started a high-tech dairy farm recently with advanced technology. The company came into the limelight after importing 225 cows by air from Australia. They have also launched a milk brand named Baqarah. Momin Ud Dowlah, managing director of Eon Bio Science, talked with The Business Standard about the dairy industry.

It is time to set up a local powdered milk-producing company for the development of the country's dairy industry. However, it will never be possible by continuing the import of powdered milk. Because the import duty on powdered milk is much lower in our country but there is much more VAT and tax on domestic powdered milk production.

Therefore, no entrepreneur will come forward to build a powdered milk-producing company unless a business-friendly environment is created in the country. So, investment-friendly policies for the development of the powdered milk industry are essential.

Besides liquid milk, people consume large quantities of dairy products (sweets, yoghurt, cheese, ghee, butter, etc). There is a huge demand for milk in the tea shops. At present, only 25-30 percent of the demand can be met with the amount of milk produced in the country. The rest of the demand is met by imported milk.

Traders import powdered milk worth Tk3,000-4,000 crore every year. Despite being of low quality, the import of powdered milk is gradually increasing in the country. As a result, a huge amount of foreign exchange is being spent every year.

According to Bangladesh Dairy Farmers Association, in 2013-14 FY, Bangladesh imported 71,000 tonnes of which increased to 120,000 tonnes in 2016-17 FY. If we continue to depend on imports, every stakeholder in this sector will be threatened. That is why we have to increase the production of powdered milk domestically.

Every year the import duty on powdered milk is reduced in the budget. As a result, the domestic dairy industry is facing problems to survive in the market. The government must formulate a sustainable investment-friendly policy for the development of the powdered milk industry of this country.

For this, the government should withdraw import tax and duty on all types of equipment used for powdered milk production. VAT and tax should be exempted for the import of raw material for powdered milk production and at the consumer level for the next 20 years. VAT and tax should also be exempted in case of the marketing of locally produced powdered milk in the domestic market.

It is very important to adopt and implement medium- and long-term plans to build the powdered milk production industry in the country. The government should provide long-term low-interest loans on easy terms for powdered milk producers. Necessary steps should be taken for medicine import, providing insurance facilities to commercial farmers, training programmes for skilled manpower and providing various incentives for the economic safety of the dairy farmers.

If we can ensure that a lot of entrepreneurs will be created at the local level. The more entrepreneurs are created in the country, the more dairy farms will be set up. As a result, farmers will be able to sell their milk to producers at a fair price.

On the one hand, this will encourage farmers to produce more milk and the companies will be able to supply milk to consumers at lower prices. It will secure the interests of the farmer, producer and consumer. This will boost the rural economy as well as increase milk production and national income in the country.

Momin Ud Dowlah is the Chairman and Managing Director of EON Group

Follow us on Google News