Local producers eye big share of powdered milk market

Local producers have been ramping up the production of powdered milk amid growing demand generated by both industrial use and household consumption.

Although the domestic supply is still much lower, compared to the import volume, local producers are trying to grab a significant portion of the market share, business insiders said.

"Consumption of powdered milk is increasing in the country due to surging demand from sweet and ice-cream factories, bakeries, rural and urban restaurants and groceries," said Kamruzzaman Kamal, director (marketing) at Pran Group.

Presently, about ten importers mainly dominate the powdered milk market in the country, he said.

"But we are now expanding into the market gradually to have a greater market share," he added.

According to the Bangladesh Dairy Farmers' Association (BDFA), the production of powdered milk by local companies has soared to 11,000 tonnes in 2017 from 5,000 tonnes in 2011.

The commerce ministry data shows the country imported 0.12 million tonnes of powdered milk (both whole powder and skimmed) in the last financial year (FY) 2017-18, up from only 0.05 million tonnes in FY '09.

Kamruzzaman Kamal said Pran Dairy collects 0.2 million litres of liquid milk from dairy farmers a day.

The company churns out 3,000 tonnes of powdered milk annually in addition to packet milk, he added.

Five years ago, the production capacity of the company was below 4.0 tonnes a day, which has increased to above 8.0 tonnes, said the Pran official.

He also pointed out that local producers are facing stiff competition from importers, as the global prices of powdered milk have been declining for the last few years.

Local importers and multinational companies have been benefitting from the price slump, he added.

He said reputed importers could sell powdered milk at Tk 300-Tk 420 a kg while our production cost is more than Tk 480.

"Demand for milk has been rising in line with the increasing purchase capacity of people," said Md Mustafizur Rahman, deputy general manager (development and planning) of state-run Milk Vita, market leader of liquid pasteurised milk.

He said the demand for powdered milk has also been rising as it is not feasible for the companies to reach packet milk to every corner of the country.

He also said Milk Vita is now producing 12 tonnes of powdered milk a day (4,400 tonnes annually).

"We have started a new project to set up another plant in Baghabari to produce more powdered milk," he said.

Once the plant goes into operation at the end of next year, the production of powder milk will increase to 30 tonnes a day, he said.

"We are now buying over 0.2 million litres of liquid milk from 125,000 registered dairy farmers."

"We will need additional 0.2 million litres of milk a day for the new plant," said the Milk Vita official.

He also said Milk Vita supplies 0.125 million litres of liquid pesteurised milk daily and that the demand has been increasing 8-10 per cent year-on-year basis.

Presently, the domestic production of milk is 7.7 million tonnes against a demand for 15 million tonnes, he said.

Md Hossain Shah Newaz, assistant general manager of Brac Dairy and food project, who markets Aarong-branded milk, said his company is now producing 1,500 tonnes of powdered milk annually.

He suggested that the government should gradually impose restrictions on imports to help local producers have a major market share.

Dr Jahangir Alam, professor of the department of animal production and management at Sher-e-Bangla Agricultural University, said the government should offer more incentives to local producers to encourage dairy farming in order to reduce dependence on imports.

Milk production has been increasing by 9-11 per cent a year over the last five years. The figure was below 4.0 per cent earlier, he said.

The number of registered dairy farms also rose to 2.2 million from only 0.15 million ten years ago, he added.

He suggested that the government should take steps to curb imports to help local dairy industry flourish.

Multinational companies Arla and Nestle, and local importers New Zealand Dairy Products BD Ltd, Meghna Group and Abul Khayer Group are the key players in the powdered milk market.

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