Corporatisation of dairy in Bangladesh

Government-run cooperative organisation Milk Vita pioneered the corporatisation of dairy in Bangladesh in the '70s by setting up a milk processing plant and starting various uses of milk.

A year after Milk Vita was founded in 1973, the government started another dairy project called Savar Dairy with milk processing capacity of 3,000 litres per day. The figure has not increased much till date.    

After a pretty long time, private entrepreneurs came forward in this sector in the '90s. In 1996, a company called Amo Milk established a milk company.

The number of milk producers had increased significantly since early 90s after artificial insemination was introduced for increasing milk production. The government also imposed tax on milk powder imports and offered duty-free facilities for agriculture machinery imports, leading milk's corporatisation to boom.

Soon after that, various companies such as Tulip Dairy, Aarong Dairy, Bikrampur Dairy, Ultra Shelaidah Dairy, Aftab, and Grameen-CLDDP invested in the dairy industry, and the corporate form of dairy business got finalised.

In 2007, Rangpur Dairy, Akij Group and Grameen Danone also invested in the sector. Recently, a new company called EON is marketing pasteurised milk under the Bakara brand.

However, dairy products of Milk Vita, Aarong, Akij, Aftab, Pran and Rangpur Dairy are available in the market at present.

A study by LightCastle Partners found that one crore tonnes of milk were industrially processed last year. Milk Vita currently has a 40% market share in the pasteurised milk market, followed by Pran and Arang with a 24% market share each. Akij Dairy's Farm Fresh holds a 2% market share. Apart from this, the total market share of other companies is 10%.

MILK VITA

Milk Vita is the largest dairy processor in the country with a capacity to produce about 3 lakh litters of pasteurised and UHT (Ultra-high temperature processing) milk per day. Besides, it is preparing various dairy products including condensed milk, flavoured milk, chocolate, yoghurt, mattha, sweets and powdered milk.

Milk Vita Chairman Sheikh Nadir Hossain Lipu said, "There is a lot of demand for our products as they are of good quality. Our production is still low against the demand."

The company has 11 milk processing factories and 32 chilling centres in different districts across the country.

Milk Vita started production in 1973 in independent Bangladesh. However, the main initiative to form the National Nutrition Company was taken in 1947. Although machinery was brought to set up a dairy factory in the Lahiri Mohanpur area of the Sirajganj district, the establishment of the factory was stopped. The initiative was discontinued in 1947 due to the partition of the country.

Later in 1948, Mukhlesur Rahman took ownership of the factory through his exchange of assets. The factory was renamed Eastern Milk Products and production began in 1952. The products used to be marketed in Kolkata under the brand name Milk Vita.

Then in 1966, an initiative was taken to form a cooperative based primary milk-producing society. However, with the ups and downs, the production of the factory stopped again in 1970.

In 1973, it was decided to develop the factory with the help of the United Nations Development Programme (UNDP) and Denmark's International Development Agency (Danida).

PRAN

Starting in 2001, Pran Dairy is one of the major corporates in the dairy products in the country. The company collects and processes 2.5 lakh litres of milk every day.

Pran Dairy has five hubs in Chatmohar in Pabna, Gurudaspur in Natore, Shahjadpur and Baghabari in Sirajganj and Rangpur. There are 101 milk collection and cooling centres under these hubs.

Farmers supply milk directly to these centres. There are 20 milk collection and cooling centres under each hub.

The company is currently producing 12 types of dairy products – UHT and pasteurised liquid milk, powdered milk, ghee, butter, cheese, lassi, yoghurt, mattha, labang, cheese and flavoured milk.

Officials said that there are currently 12,000 contract-based farmers who rear cows.

Kamruzzaman Kamal, Director (Marketing) of Pran RFL Group, said, "Currently, the rate of having milk is increasing. In the coming days, people will be busier in line with urbanisation and the demand for processed milk will increase. So there are plans to set up five more hubs in the south-west of the country for the development of this sector."

"We are helping farmers increase milk production by providing various assistance and training to them. We help them avail low-interest loans from Sonali Bank, Karmasangsthan Bank and IFIC Bank to expand their farms," he added.

Aarong

Aarong Dairy's journey started from a project to alleviate poverty in rural areas of Bangladesh by increasing milk production through the development of farmers' cattle breed.

In 1988, Aarong started helping farmers by providing cows and in 1998, it started the dairy business.

Aarong Director Mohammad Anisur Rahman said, "Sir Fazle Hasan Abed came up with the idea of this project to ensure fair price of milk produced by our farmers. We started Aarong Dairy in 1998 and set up a factory in Gazipur. Then we gathered farmers, started feeding system and milk collection. Later, the sale started on our management."

According to Aarong sources, the company currently collects 1,40,000 litres of milk daily. Aarong has 28,000 registered farmers. Out of 139 ceiling centres of the company, 107 are own mother plants.

"The capacity of each of the ceiling centres is 2,000 to 5,000 litters. We can collect up to two lakh litres of milk daily in our ceiling centres. However, the amount of the collection is 1.6 lakh litres at present," he added.

Aarong is producing more than 20 products including pasteurised milk, UHT milk, curd, ghee and mattha from the collected milk. There are 32 selling centres for selling products, he said further.

AKIJ

Akij Dairy Limited, an organisation of Akij Group, invested in the dairy sector in 2007. It collects 70,000-75,000 litres of milk per day and processes it. The company makes various products including pasteurized milk, flavoured milk, UHT milk, powdered milk, yoghurt, ghee and markets under the name Firm Fresh. The company markets re-packaged powdered milk like other milk processor companies.

Syed Alamgir, the Managing Director and CEO of Akij Ventures Ltd, told The Business Standard, "We place more importance on quality than quantity. That is why our growth in the market is a little slow."