An Opportunity Worth Milking:

There is no doubt that the dairy sector is one of the most important economic contributors in Bangladesh. From a very humble beginning to growing into a sizable market, the rise of the dairy industry in the country is certainly commendable. However, even after increasing supply and trying to keep pace with the world dairy market, Bangladesh is still incapable of fulfilling the dairy demands of the whole nation. With a few gaps here and there, there is still scope for improvement in this sector.

From implementing innovative and modern technologies to improving farming practices and allocating more budget, there are more than a few factors which can be put into practice for Bangladesh to become a leader in the world market.

Size matters

The dairy market is one of the most important sectors in Bangladesh. Even though there have been several economic shocks in recent years, this sector still maintains constant growth and adds more to the overall economy. According to the Department of Livestock Services, the dairy market size in Bangladesh is estimated at $2.47 billion, as per IDLC. This market is expected to increase by over 5% every year.

Even though the market size is quite big and has a lot of potential, the demand and supply of dairy products aren’t proportional. While the market imposed a demand of 152.02 lakh metric tons of milk in the financial year 2020–21, the produce was just 119.85 lakh metric tons against the demand. The gap was almost 32.7 lakh metric tons in the year, which is fulfilled by importing dairy from the rest of the world.

Fig: Demand and supply curve of dairy in Bangladesh

Even though milking production in the country has grown significantly, a gap between the demand and supply always remains because of the increasing demand by the nation.

Filling the gap

Bangladesh was ranked the 23rd top milk producer country in the world. With a production of 130.74 lakh tons of milk in 2022, the country meets the majority of demand by its people.  However, as it can’t fulfill the complete demand for dairy, Bangladesh needs to import a significant amount of powdered milk and other dairy products from all over the world, namely Australia, New Zealand, Holland, Denmark, and Poland.

From powdered milk to butter, cheese, yogurt, and other dairy products, the country imports a variety of dairy items to meet the nation’s requirements completely.

How much does Bangladesh spend on dairy imports? 

Bangladesh has a growing demand in the dairy market. However, local producers cannot completely meet the demand of the nation. And therefore, the government needs to import dairy from all over the world to fulfill the daily dairy needs of the people.

Milk imports – Bangladesh Bank

According to a Bangladesh Bank report, the country spent nearly $37bn (Tk4,000 crore) in 2023 to buy powdered milk and other dairy products from other countries.

Although the amount Bangladesh spent on dairy imports was quite high due to inflation and the increasing dollar rate, the volume was lower than in the previous years. During the fiscal year of 2022-23, our country imported 118,000 tons of milk, which was nearly 16% lower than the volume imported the previous year.

The drop in imports isn’t only for an increase in the production level but also for a decrease in demand. Because of increasing costs, household’s consumption of powdered milking has decreased significantly.

Becoming self sufficient

Bangladesh has shown commendable growth in the dairy sector in the past couple of years. However, even after consistent growth, the nation is still not self-sufficient and, hence, has to import dairy items from the rest of the world.The government should allocate more budget in the field to accelerate growth. Even though the estimated investment in the local dairy sector now is over Tk 90,000cr, the government is launching a TK4,280cr project to improve the dairy sector. Funded by the World Bank, this project (the Livestock and Dairy Development Project) will merge traditional methods with modern technologies to ensure it is not only self-sufficient but can also export dairy products

• An increase in milk production is the key. Bangladeshi farmers and dairy producers often face a lack of farming resources, like land, feed, and freshwater for dairy animals. All these factors lower milking production significantly, creating a gap between demand and supply. The concerned parties and government must take the initiative to provide all the necessary resources to increase milk production quickly
• Maintain a consistent tariff rather than increasing it every year — increasing tariffs in the dairy sector has become a concern for the farmers and the stakeholders alike. Because of high tariffs, they seem less interested in investing in the farms rather than not. The government should, therefore, take necessary actions to maintain an affordable tariff

By 2030, the demand for milk will increase to 17.22 million tons (172.2 lakh metric tons) in Bangladesh. With the current production rate of 119.85 lakh metric tonnes, the nation must adopt effective solutions to increase milk production to meet the ever-growing milk demand.

How Amul fulfilled India’s dairy demands while also exporting

The Indian dairy market is huge. Contributing 24.64% of global milk production in the year 2021-22, India has a market size of $26.11bn and holds the first position in the world. From producing milk (both fresh and powdered) to making butter, cheese, yogurt, and many others, the dairy sector in India is big and diverse. And because of such diversity and capability, this sector is expected to reach $35.96bn by 2029.

Even though there are thousands of small, medium, and large farms all over the nation, Amul has been one of the largest and most prominent companies in the Indian dairy sector. In fact, Amul plays the most vital role in fulfilling the country’s dairy demand while also exporting all over the world. This company exports milk, cheese, butter, and many other dairy products to major and minor countries in the world to help them meet their dairy demand.

How did Amul achieve such success?

Well, this company introduced a cooperative model of dairy farming in India to improve production significantly. The model involves a group of small farmers who work together with all their resources to maximize milk production as much as possible. This model not only showed a substantial rise in milk production but also increased the incomes of small farmers.

Besides influencing small farmers, Amul also introduced various training programs and provided improved veterinary services and animal feed to improve the quality of milk while also raising production. In addition to fresh milk, Amul also prepares processed milk products (powdered milk, cheese, butter, and yogurt) to add versatility to India’s dairy market.

The need for government and non-government initiatives 

There is no doubt the dairy sector in Bangladesh is slowly but surely growing and making a mark in the economy. However, it’s not growing as fast as it should and that’s mainly because of a lack of knowledge, finances, and better farming practices. Both government and non-government bodies in the country should take up and implement more than a few efficient actions to benefit this ever-emerging sector of the economy:

• For instance, the government and related parties should implement initiatives to prevent livestock illness successfully. Diseases like foot and mouth diseases and worms hamper hygienic practices and reduce milk production considerably
• Government and non-government parties must also invest in breeding technology. A mixed breed cattle gives 5 liters more milk than any local breed. Increasing the number of mixed-breed livestock would definitely increase the milk production rate
• Attention needs to be paid to building and improving processing facilities. The absence of processing facilities keeps the nation from producing powdered milking and many other dairy products. With modern manufacturing units, Bangladesh could process dairy products and reduce the need for import
• The government should help establish a better communication channel between farmers and buyers. This will allow the farmers to get better access to the market and get a better price for their products

Connecting producer and buyer

Technologies and innovation play an important part in helping the dairy industry in Bangladesh grow. From helping to grow mixed breeds and enhancing safety and production to market access and sustainability, technology and newer innovation can help the dairy sector flourish like never before.

Here are a few ways technological innovations can help the dairy industry in Bangladesh grow:

IoT and Sensors:

Farmers can use Internet of Things (IoT) devices and sensors to monitor various aspects of their dairy farm and make informed decisions. From finding out about milk production to enquiring about cow health and the overall environment, the data collected through these technologies can be used for better-quality products

Automated Milking System:

Manual milking takes a lot of time and labor hours. If the farmers in the country introduced advanced milking systems in their farms, the machine would automatically milking the cow and save a lot of money and hard work

Better Feeding:

Robotic feeding system has shown revolutionary improvement in the dairy sector. The government of Bangladesh should introduce this technology in the farms to feed the livestock better and quicker and also to cut feed waste significantly

Maintaining Sustainability:

Modern technologies and innovations allow farms to reduce their environmental footprint and manage better farming practices. With better farming practices, farms can not only contribute to a more sustainable environment but also improve production and reduce costs

Better Communication:

Phones, smartphones, and other devices made communication easier than ever. Farmers can use these devices to establish contact with buyers and other interested parties and increase sales in no time. From making direct calls to exploring social media platforms and other e-commerce sites, the contact channels are ever versatile and convenient

The dairy sector in Bangladesh is ever-expanding and emerging as a force to be reckoned with as far as industries go. Even though the industry has yet many hurdles to overcome, with their determination and an urge to meet the nation’s demand, the dairy market is slowly but surely improving. While the farmers and associated parties are implementing better farming practices, the government of the nation is allocating more resources to become self-sufficient in the dairy sector.

It’s only a matter of time before Bangladesh makes a name for itself in the world dairy sector.