Dairy industry will not grow without farmers’ development

Akij Dairy Limited is a company of Akij Group. It collects 70,000-75,000 litres of milk per day and processes it. It is producing various products, including pasteurised milk, flavoured milk, UHT milk, yoghurt, and ghee, and marketing these under the brand Farm Fresh. It also markets re-packaged powdered milk.

In an interview with The Business Standard, Syed Alamgir, managing director and CEO of the company, talks about various aspects of the dairy industry.

Milk Vita started commercial production of pasteurised milk in Bangladesh in 1973. The market for pasteurised milk now stands at Tk1,000 crore, which is 10% of the total milk production, with the efforts of government and private companies.

"Milk production in Bangladesh is still much less than the demand. This is because milk is not produced evenly across the country. Farmers produce milk commercially only in Sirajganj, Pabna, Rangpur, Natore, and Rajshahi. Production has to be spread all over the country," said Sayed Alamgir.

The government set up a refinancing fund of Tk200 crore in 2016 at a 5% interest rate to make farmers self-sufficient in milk production. Farmers can borrow up to a maximum of Tk2 lakh from the fund. However, not all loans have been distributed among actual farmers.

Alamgir said, "The growth of the industry would be hampered if the development of farmers is not done. The government should ensure low-interest or interest-free loans for farmers for the development of this sector."

To be self-sufficient in milk production, Alamgir emphasised development in four areas – building commercial farms across the country, developing communication systems, imposing additional tariffs on powdered milk imports, and cooperation in setting up domestic powdered milk factories.

He also said failure to develop farms would hamper the development of the country's milk processor industry. "Liquid milk collection centres should be set up across the country. For this, commercial farms have to be set up all over the country. Many are closing down farms due to the high cost of raising cows, including feed prices."

Alamgir said, "The country imports powdered milk worth about Tk3,000 crore annually. The quality of the imported powdered milk is low. To protect the domestic industry, it is necessary to stop the import of low-quality powdered milk as well as to cooperate in the production of milk in the country."

"The low-quality imported powdered milk goes to sweet shops. Local producers cannot sell powdered milk at that price. Therefore, the government can provide low-interest loans for the construction of powdered milk factories," he added.

He said, "An entrepreneur needs at least Tk100 crore to set up a modern powdered milk factory. New entrepreneurs will also be interested in investing if there is an easy loan facility."

Noting that people in Bangladesh still consume far less milk than they need, Alamgir said, "People do not want to feed processed milk to children because of doubts about the purity of the product. But in the developed countries, milk is not sold without processing."

Syed Alamgir is the managing director and CEO of Akij Venture Group