Dairy value chain project goes nowhere in three years

Nearly three and a half years have gone by since a project was taken up to develop a dairy value chain and ensure fair prices of milk for farmers, but only primary level work of creating producer groups is now nearing completion.

So far, 3,266 dairy producer groups – each having 20-40 farms – have been formed against the target of 3,333 under the five-year project undertaken in 2019.

The project authorities could not begin work on milk collection centres, dairy hubs and processing units meant for developing a complete ecosystem. 

The planners had thought up a supply chain from milk production to its processing in dairy hubs to marketing under the Livestock and Dairy Development Project involving Tk4,280 crore. 

Jointly funded by the government and the World Bank, the project saw financial progress of 30.58% as of March 2022. 

What the project implementing agency, the Department of Livestock Services under the Ministry of Fisheries and Livestock, has done so far is installation of the project management unit, appointment of consultants and disbursements of cash aid amounting to around Tk700 crore to dairy farm owners, procurement of 360 mobile veterinary clinics and formulation of some guidelines, according to sources in the know about the development.

Md Abdur Rahim, project director (joint secretary), told The Business Standard that the project work had been delayed mainly in the process of necessary manpower recruitment and compliance with the terms and conditions regarding the World Bank loan.

A series of pandemic-led lockdowns had also come in the way, causing the delay in field-level work, he said.

As decided in principle, the project will get two more years for all the remaining work to be finished, he noted.

"We hope to complete work on the supply chain within the extended timeframe as there is now no more delay," Abdur Rahim added.

Once the dairy value chain is created, milk production will increase by 20%, according to the project document. 

Project sources say 400 village milk collection centres will be built across the country with up to 40% of investment support from the project under the matching grant and the rest by entrepreneurs. 

A circular will be issued within a month or two for interested entrepreneurs to construct the collection centres, they also say.

Milk cooling centres will also be set up in 175 out of the 400 collection centres to maintain quality, according to the project document.

Dr Md Golam Rabbani, chief technical coordinator, told TBS that the collection centres will be managed by individuals or institutional entrepreneurs. There will be certain policies according to which farmers will sell their milk to them at reasonable prices. 

In this way, entrepreneurs will be created all over the country and thousands of people will be employed, he said.

As per plan, the milk collection centres will be linked to 20 dairy hubs to be set up in regions where market management is weak. 

Each hub will be connected with 20 milk collection centres. The hubs will also be set up through private investment. But up to 40% will be provided for creating infrastructure and purchasing equipment from the project.

Project officials say two types of work will be carried out in the hubs after milk collection. A certain quantity of milk will be processed to produce different dairy products, including ghee and yoghurt. The rest will be supplied to milk processing companies as per specific agreements with them. Sweet shops also can collect milk from the hubs.

Dr Monjur Mohammad Shahjada, director general of the Department of Livestock Services, told TBS, "We want to increase the amount of milk processing as it is done in other countries and create a safe supply chain so that marginal farmers can also sell their milk at good prices. As a result, farmers outside the project will see an increased demand for milk and also get fair prices."

SM Rezaul Karim, Minister of Fisheries and Livestock, said, "We are working on increasing milk production through the project. At the same time, work is going on to create a permanent supply chain from production to processing so that farmers do not have to remain in uncertainty about sales of milk."

"Many young entrepreneurs have entered the livestock sector. They are playing an important role in the production of milk and meat. We are working on the development of the market management to keep them in production," he added.