The Financial Express

A much-required boost for dairy industry

A much-required boost for dairy industry

Dairy, no doubt, has continued to remain one of the most flourishing industries over the past decades. With technology providing the support in a commendable way, dairy comprising the most-consumed products like yogurt, cheese, butter, and pasteurised and powdered milk offers the most beneficial consumer products for people of all age groups. A report published in the FE a few days ago had highlighted the potential of the expanding dairy industry in Bangladesh and mentioned the lack of processing as a major hurdle to further expansion. The report pointed out that only nine per cent of fresh milk produced in the country goes for processing. The overwhelming reliance on imported milk products, particularly milk powder, is ever growing in the absence of processing facilities, and due to, what the report said, import bias. There can be no arguing that import is the only choice for the domestic market because of high demand, and absence of processing locally makes import inevitable.  

The FE report came up at some length on the country's dairy situation. The country spent US$ 365 million for milk-powder import in 2020, up from $250 million in 2015, the report said. Many companies in the processing industry, like sweetmeat and ice-cream producers, use imported bulk milk powder for its low cost. Quoting a survey, the report mentioned that the size of Bangladesh's milk market is $2.47 billion which is expected to grow over 5.0 per cent annually in the coming years. However, the fact remains that the country's dairy market is dominated by unprocessed, raw milk, and the processed segment is dominated by imported powdered milk. As for other milk products like butter, cheese, yogurt etc, a major portion of the demand is met from import.  

Milk is a valuable nutritious food that has a short shelf life and requires careful handling. Milk is highly perishable because it is an excellent medium for the growth of microorganisms, particularly bacterial pathogens that can cause spoilage and disease in consumers. Milk processing allows the preservation of milk for days, weeks or months and helps reduce food-borne illness.

The usable life of milk can be extended for several days. Of these, pasteurisation is a heat treatment process that extends the usable life of milk and reduces the numbers of possible pathogenic microorganisms to levels at which they do not represent any health hazard. Milk can be processed further to convert it into high-value, concentrated and easily transportable dairy products with long shelf-life, such as butter, cheese and ghee.

Processing of dairy products gives small-scale dairy producers higher cash income than selling raw milk and offers better opportunities to reach regional and urban markets. Milk processing can also help deal with seasonal fluctuations in milk supply. The transformation of raw milk into processed milk and products can benefit entire communities by generating off-farm jobs in milk collection, transportation, processing and marketing.

While most countries produce their own milk products, the structure of the dairy industry varies in different parts of the world. In major milk-producing countries most milk is distributed through wholesale markets. In Ireland and Australia, for example, farmers' cooperatives own many of the large-scale processors, while in the United States many farmers and processors do business through individual contracts. In developing countries, the past practice of farmers marketing milk in their own neighbourhoods is changing rapidly. Notable developments include considerable foreign investment in the dairy industry and a growing role for dairy cooperatives. Output of milk is growing rapidly in such countries and presents a major source of income growth for many farmers.

As in many other branches of the food industry, dairy processing in the major dairy producing countries has become increasingly concentrated, with fewer but larger and more efficient plants. This is notably the case in the United States, Europe, Australia and New Zealand.

Although in Bangladesh dairy is still a nascent industry operated largely informally, over the years it has experienced considerable change in procuring high milk-yielding cows, introduction of semi-mechanised milking techniques. But the supply chain is far from organised. Since there are only a few processing plants which procure fresh milk from farmers, pricing, mostly low, is often a disheartening aspect affecting them. There are a few cooperatives in the northern region of the country, but it is a tough task for them to ensure fair price because of lack of bargaining power.

As the dairy industry in the country is getting more and more organised and modern tech-based farms are also coming up with sizable investments, producing raw milk must not be the only objective. While there will always be demand for raw milk among a section of the consumers, pasteurisation, to start with, can be a viable means to capturing a better and bigger market. But this has to be done by a third party with big investment. Observers believe that despite the capital-intensive nature of investment, prospect for such venture is very bright. Next comes investment in other product areas such as yogurt, butter, cheese etc.

Eevidently, investing in milk processing has hardly ever figured as a subject of importance in the country-for strange reasons. Isn't it time the dairy industry received the right boost by way of investment in processing?


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