Over the years, Bangladesh has experienced steady and healthy economic growth. The sustained growth rate has been a result of growing internal demand from an expanding base of middle income earners, a flourishing private sector, and a supportive government.
While many industries have established themselves as key contributors to sustained economic growth, many others are growing into potential drivers of further economic growth.
The dairy industry, undoubtedly, boasts a position in the latter category.
At a roundtable organised late last year at a major Bangladesh daily, it was mentioned that the daily production of milk in Bangladesh currently stands at around 18 million litres. Moreover, according to Compassion in World Farming (CIWF), Bangladesh currently stands 15th in terms of dairy cow population in the world.
According to a report published in 2015, milk consumption in Bangladesh is significantly lower than neighbouring India and Pakistan. While annual per capita milk consumption in India and Pakistan stood at 90 kg and 190 kg respectively, it was a meagre 18kg in Bangladesh.
Moreover, according to a report by IFCN Dairy Research Centre, the rate of growth of milk consumption in Bangladesh has surpassed the rate of growth in supply. While meeting the growing demand is a challenge for the dairy industry, it should also be seen as an opportunity for growth.
A wide procurement network that taps into milk production sources even in the deepest reaches of Bangladesh can help the dairy industry keep pace with the growing demand.
A vast majority of dairy farmers are located in the rural areas of the country. A large proportion of them lack adequate knowledge on the best production, preservation, and distribution methods of milk.
As a result, they often fail to extract the maximum value out of their livestock resources. Because market linkage is poor, less than 10% of the total produce is sold by farmers to packaging companies, while the rest is sold in the local markets.
While meeting the growing demand is a challenge for the dairy industry, it should also be seen as an opportunity for growth
Chilling raw milk to 4 degrees centigrade as soon as possible after milking is the best way to preserve it. Chilling operations often require the use of diesel generators because electricity supply in remote locations can be unpredictable.
Over time, this can be a massive expense for packaging companies. Spoilage resulting from improper milk preservation also directly affects farmers’ earnings.
These factors collectively deprive consumers of healthier, quality dairy products.
Private-public partnership to boost supply
Joint initiatives by the private and the public sectors are important to effectively address the situation. While established organisations such as Pran, Milk Vita, BRAC, CARE, etc are working on educating farmers and helping them sustain and grow their businesses through various projects and initiatives.
New companies like Promethean Power Systems have entered the Bangladeshi market with innovative low-cost preservation methods.
These methods would ensure higher quality of milk and lower wastage, and would save natural resources and costs incurred by replacing diesel-based milk chilling methods.
The government is also conducting training programs for dairy farmers and is working on developing and implementing policies to help the dairy sector. These developments together have the potential to fill the gaps in and strengthen the value chain of the dairy industry, enabling it to thrive and grow in the long run.
Technology and policy nexus
Innovation is key to driving the growth of any industry in the digital era. The government is supporting digital innovations that have been adding great value across industries.
New players are entering industries with innovative ideas that have either added greater efficiency to existing production methods, or have transformed them entirely.
Established players are embracing new ideas to add a cutting edge to their production methods as well. This has not only increased productivity, but has also opened up newer opportunities for employment for the country’s large number of youth.
The dairy industry, in this case, is no exception. Touted by many as the next “thrust sector,” the dairy industry would highly benefit from informed and educated farmers supported by technologically sound stakeholders in all parts of the value chain.
The government should encourage the youth to contribute to the dairy sector with innovative ideas much like the young innovators at Promethean Power Systems, and should, along with the private sector, launch campaigns to inform the prospective workforce about the importance that should be attributed to the dairy sector while seeking employment.
However, the most important thing to do is to keep a firm policy in place, so that there is a strong guideline for every stake-holder in the value chain to follow and abide by.
In conclusion, it should be reasserted that the private and the public sector should partner up and work together to boost the growth of the dairy industry. Additionally, the government should also seek the assistance of a growing base of tech-savvy young innovators who could contribute to the sector with fresh ideas for growth.
This would not only help the sustained growth of the dairy sector, but would also add great value to the industry and hence the economy.
Taufiqur Rahman is Former Director, BRAC Dairy, Food Enterprises.