Bangladesh set to be a top-three international market for Arla

With a 15% annual sales growth for the last one decade, Bangladesh has entered into the top-ten international markets for Arla Foods and the market is set to be in the top-five by two-three years, said Simon Stevens, executive vice president for international operations of the European dairy giant.

Due to the country's economic growth and the middle-class consumers' increasing awareness of the nutritional benefits of dairy consumption may make Bangladesh the third largest among Arla's over 120 international markets in the next five-ten years, he said in a recent interview with The Business Standard.

"If we look at per capita dairy consumption in Bangladesh versus some other markets in around the world, Bangladesh is still relatively low, not even one-tenth of that in Saudi Arabia, the UAE or any European market," he said adding, "I do think there is a lot of scope for increasing dairy consumption, which we are seeing."

However, the rising costs of dairy farming—energy, feed, fertilizer—is reducing global dairy output while the demand is on the rise, and it is set to increase the price of milk and other dairy products globally. 

Farmers across the key dairy producing continents will not increase production amid the huge cost pressure and uncertain supply chain, even at the possibility of getting higher price.

The global dairy market grew by around 5% last year, while the global output dropped by 1.6 billion Kg or 2%.

Bangladesh, despite its increasing local production, is and will be, in need of imports of milk and other dairy products and the tariff should be rationalized if the government keeps nutrition in mind, opined Simon Stevens.

Across the world powdered milk is the most affordable dairy, while UHT milk is priced a little higher and fresh milk is the most expensive one. Due to high import duty and no apparent production of local milk powder in Bangladesh the scenario is completely opposite.

Arla's flagship product Dano milk powder, a brand that has been loved here for six decades, has already entered one of every three families in the country. The company's official operation in Bangladesh started in 2013.

Arla Foods Bangladesh's packaging factory is in Gazipur, and it is the only powder milk company here with complete control over the product quality and entire production value chain.

The company, directly employing around 170 people in Bangladesh, has plans to continuously increase its packaging capacity that would need millions of Euros in coming years.

Arla is yet to and still has no plans to source raw milk locally as it still does not find it feasible adhering to its quality standard.

However, it has entered an industry master plan for the development of the local dairy sector. Arla Bangladesh has already partnered with local giant Pran Dairy for a market driven solution to the problems in milk productivity, quality and the economic output of the local dairy value chain in Bangladesh.

They will conduct farm assessments to build capacity and to identify opportunities for more sustainable dairy farming solutions and for that they would engage researchers, trainers, and of course the dairy farmers across Bangladesh.

"The core desired outcomes are to educate and empower small holder farmers and help them increase the quantity and quality of milk yield," said Simon Stevens.