Milk production quadruples in a decade
Despite production boom, milk powder still being import-dependent is an obstacle
Milk production in the country more than quadrupled to reach one crore tonnes in the fiscal year 2019-20 mainly because of a big boom in the number of dairy farms since 2000.
There are now more than 20 lakh dairy farms in the country and 65,554 of them are registered with the government. Dairy firms flourished due to the increase in the number of commercial milk producers and a thriving sweetmeat business.
Milk producers say the highest amount of milk produced is used in making sweetmeats all over the country now. At present, sweetmeat business has exceeded Tk20,000 crore annually.
Since 2007, milk processing increased from 3.84 lakh litres to 7.5 lakh litres now, according to government data. At present, 2.58% of the total milk production is processed by companies.
Government officials and milk producers say more than half the entrepreneurs working in milk production have higher education and several lakh people have found jobs due to milk's commercialisation. Local entrepreneurs meet about two-thirds of the domestic demand for milk, but the milk powder market still depends on imports due to unequal tariff policy.
Former director of the Department of Livestock Services Arobindo Dhar told The Business Standard the number of milk producers had risen sharply since early 90s as semen sequencing of cows had increased milk production.
"At the end of the 90s, the government imposed tax on milk powder imports and also offered duty-free facilities for agri machinery imports. This helped milk farming take off."
This played a major role in milk's commercialisation as entrepreneurs started setting up milk processing facilities. Apart from ultra-high temperature milk, pasteurised milk, and milk powder, different dairy products, such as ghee, butter, cheese, lassi, curd, mattha, and labang, are sold in the market. Companies market these products in high-quality, food-grade foil packs.
Shah Emran, general secretary of Bangladesh Dairy Farmers Association, said educated and rich people had started investing in the dairy sector when cows of improved breed and veterinary medicine had become available.
"Farmers would rear both bulls and cows. They would collect milk from cows and sell it to manage costs needed to fatten bulls as well as their daily family expenses. This practice still prevails," he added.
Kamruzzaman Kamal, director (marketing) of Pran Group, said private entrepreneurs are to be credited for Bangladesh's success in milk production but they lag in milk powder and baby food production.
He said official policy support is needed to change this situation, such as increasing import duty on milk powder and easing setting up factories.
Evolution of dairy industry
National Nutrition Company, a private dairy company, was set up in Sirajganj in 1946. That was the first initiative to build a dairy factory in the country towards the end of the British period. After it faced repeated shutdowns and financial crisis, the government started Milk Vita in 1973.
Milk Vita had two objectives – to ensure fair prices of milk for farmers and the availability of milk across the country. The company not only fulfilled the objectives over the decades but also transformed the dairy industry.
It now controls the majority share of the local liquid milk market. It collects, processes, and markets about 3.5 lakh litres of liquid milk every day.
A year after Milk Vita was founded, the government started another dairy project called Savar Dairy. Its initial milk processing capacity was 3,000 litres per day, and the figure has not increased much now.
Private entrepreneurs played a key role in developing the dairy industry after the 1990s. There are several big brands now, including Dairy Fresh, Igloo, Farm Fresh, Aftab Milk, Ultra Milk, Arang Dairy, and Pran Dairy.
Entrepreneurs said three companies set up new milk processing plants in 2007. In 2007, companies would collect and process 3.5-3.85 lakh litres of milk per day from dairy farmers, which now is 10-12 lakh litres.
SAM Anwarul Haque, former general manager of Milk Vita, wrote in an International Monetary Fund paper that milk processors would collect just 1% of the total milk production of 1.5 million tonnes (30,000 litres per day) in 1990.
The livestock department says the country produced 106.8 lakh tonnes of milk in the 2019-20 fiscal year. Entrepreneurs think this was less than the demand.
Kamal said according to the World Health Organisation, per capita daily milk consumption standard is 250ml. Thus the demand for liquid milk in the country should have been over 1.5 crore tonnes.
Milk powder still import-dependent
The dairy industry's expansion could create many jobs, but entrepreneurs say milk powder still being import-dependent is an obstacle.
They say the country imported milk powder worth Tk3,600 crore in 2020 but the sales of local brands were only several hundred crores of taka. They also say the situation is not changing due to low tariffs on foreign milk imports and the lack of incentives to set up factories here.
Umme Kulsum Smriti, president of Bangladesh Dairy Development Forum, said the biggest challenge the dairy industry faces is unequal competition with imported milk powder. Milk powder is subsidised and hence much cheaper. Local producers cannot compete with it.
She proposed a change in the tariff level, saying import duty on milk powder in Bangladesh is 10% as opposed to over 50% in other Asian countries.
Lack of large firms, pastures big hurdles
Entrepreneurs say the lack of pastures and milk powder being import-dependent are big obstacles to the local dairy industry's growth. They also say corporates are unable to take big initiatives due to land unavailability and the lack of adequate cattle feed.
Mohammad Anisur Rahman, director of Aarong Dairy, said it is difficult to procure milk from factories as there are no large farms here. "Even if we set up big farms, there are no pastures. The land needed to set up a grazing farm is not feasible for our country."
He said the operating cost is higher even if a factory is set up with 2,000-2,500 cows in a steel feeding farm and hence it is not economically feasible.
Apart from the lack of pastures, Kamal sees the local cattle's low production capacity as an obstacle to the sector's development.
Misinformation another obstacle
Those selling non-packaged milk have been alleged to mix water with it while corporations also face adulteration allegations. Milk processing companies have lost market shares due to unhygienic factory conditions, but producers say they have suffered more because of flawed research and misinformation spread by milk powder importers.
Amar Chan Banik, managing director of Milk Vita, said a wrong study by an organisation in 2019 reported cadmium's presence in pasteurised milk, halting the dairy industry's ongoing growth. The government later proved the study wrong, but the fear in people's minds did not disappear.
He said people in developed countries do not consume milk without processing, but Bangladeshis still feel more comfortable drinking milk collected traditionally from cows, buffaloes, or goats.
Farms concentrated in northern districts
Almost all commercial farms and dairy processing plants have been set up in the northern districts of Sirajganj, Pabna, Natore, Rajshahi, and Rangpur. Eon Group recently built a farm and a factory in Rangpur with more than 300 Australian cows.
Its Managing Director Momin Ud Daula said entrepreneurs set up factories in northern districts because of pastures' availability and favourable climate.
He said milk is produced in different ways across the country, but it is used to meet region-based demands.
The government in 2015 took an initiative to provide loans for cattle farmers at 4% interest under a refinancing scheme, but farmers claim they do not get this credit.
Fisheries and livestock ministry sources said they have an ongoing livestock and dairy development project to meet the local demand for meat, eggs, and milk. The Tk4,280 crore project started in January 2019, but there has been no notable progress, except for buying cars, building offices, and recruiting manpower.
The project is being implemented in 61 districts, except for the three hilly ones. Its objectives include sustainable growth in the livestock sector in designated areas by increasing private entrepreneurs' capacity, producing safe animal feed, and creating market linkages and value chains.
Fisheries and Livestock Minister SM Rezaul Karim recently inaugurated a dairy processing factory in Rangpur and said the government would provide all kinds of assistance if anyone sets up a dairy farm or a processing plant.
He also said initiatives would be taken to reduce tariffs on capital machinery needed to build factories.
Follow us on Google News