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Dairy Farmers’ Milk Selling Options in Major Milkshed Areas of Bangladesh: a Comparative Analysis

Sumi Ferdusi Sarna
Department of Agribusiness and Marketing, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Md. Salauddin Palash
Department of Agribusiness and Marketing, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Mohammad Mohi Uddin
Department of Animal Nutrition, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Abstract/ Executive Summary:

Dairy farmers’ profit is relatively low compared to the end user milk purchase price of Bangladesh. A lengthy debate has been running to pinpoint the reasons for this phenomenon. However, one of the trigger reasons is the milk farm gate price. Milk farm gate prices vary depending on the selling options used to flow the milk from producer to consumer. It also affects the farmers’ share with the consumers spending. An attempt was made to analyze the farmers’ share in existing selling options and factors of choosing the selling options in Sirajganj district of Bangladesh. The mathematical analysis of farmers’ share to consumer price and binary logistic regression method was used to make comparisons among different selling options of milk in peak and lean seasons. Primary data were collected from 130 commercial dairy farmers from major milkshed areas (Sirajganj district). A purposive sampling technique and survey questionnaires were followed to collect data from the dairy farmers in the research area. The major findings of the study showed that the dairy farmers did not use local breed for producing milk for business purpose and MilkVita was the major player of absorbing a major share of produced milk, although the farmers’ share was the highest for the Option-III (selling at the farmyard) where milk directly goes to the ultimate consumer without adding much utility to the product. In the peak and lean season, the model showed the variable of ‘amount of milk sold per day’ had a positive influence on the choice of milk selling option of MilkVita. The study concluded that MilkVita, other milk processors (Akij, BRAC, PRAN) and ghosh (middlemen) were popular milk selling options in the area because of guaranteed milk selling and several support services provided to dairy farmers. Thus, the policymakers can plan a policy to benefit the dairy farmers by setting up a mechanism of smoothly selling of produced milk ensuring reasonable farm gate price.

Keywords: Selling option, Marketing cost, Farmer’s share, Binary logistic model, MilkVita, Milkshed area

Location: Shahjadpur and Ullapara upazilas, Serajganj district, Bangladesh

Start Date:

End Date:

Program Area: Food Safety and Security

Commodity: Milk

Objectives:

To determine the Dairy farmers’ milk selling options in major milkshed areas of Bangladesh: A comparative analysis

Methodology:

Study area and data: Sirajganj district was formerly a sub-division of Pabna district. In 1762, a severe earthquake changed the flow of the Jamuna river and created a new river named Baral. On the west bank of this Baral river, new land emerged, and most of the land of surrounding it belonged to Zamindar Siraj Ali Chowdhury. So, after his name gradually this area got its recognition as Sirajganj (BBS, 2017). The present study was conducted in the selected areas of Sirajganj district. Shahjadpur and Ullapara upazilas were selected for collecting necessary information through a structured questionnaire because these areas are the most suitable for getting valuable information related to the objectives of this study. Data were collected from 35 villages of selected upazilas in Sirajganj district from different types of dairy producers. The study was based on primary data for the analysis of selling options. Primary data were collected during the month of April 2018 through the face-to-face interview method. Purposive sampling method was used to select the sample for collecting data and information from the responsive farmers. A total number of respondents were 130 who were the commercial dairy producer having different herd sizes. Seasonal effect of production and price: Because of the higher green grass availability, the highest milk production was observed during January to April (Winter and Spring) followed by moderate milk production from September to December (Autumn and Late Autumn). The lowest milk production was observed from May to August (Summer and Monsoon) (Uddin et al., 2013). Uddin et al. (2013) also stated that after monsoon disappears, farmers cultivate fodder on their own fellow land and embankments of the riversides. Therefore, in this study, the month from September to April was considered as a ‘peak season’ and the month from May to August was considered as a ‘lean season’ for milk production. The variability in milk production during these two seasons has direct effects on the consumer price of milk and farmers’ share as well. Analytical tools: Marketing cost and farmers’ share: Although the main focus of the research was to identify the farmers’ share in consumer’s price of milk, but to get the deeper information of marketing, a graphical presentation of different selling options of milk in the study areas was also identified. A tabular presentation was made to show the marketing cost of milk producers in peak and lean seasons using the following formula, MC = TC + SC + MT + CC + PE. Where, MC= Marketing cost, TC= Transportation cost, SC= Storage cost, CC= Container cost, and PE = Personal expenses. The farmers’ share does not remain constant in different selling options even it varies in the same selling option also, because the milk is a highly perishable product and the consumer price of milk changes in the floating market every day. It refers to the price received by the milk producer and is expressed as a percentage of the ultimate consumer’s price (Acharya and Agarwal, 2004). It has been determined by using the following formula: F_s = {(F_p) / (C_p)} x 100. Where, F_{s =}Farmer’s share, F_p= Farmer’s price, C_p= Consumer’s price.

Source of Information: J Bangladesh Agril Univ 18(2): 463–470, 2020

Article Link (Online Journal): https://doi.org/10.5455/JBAU.82409

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Milk can provide a regular supply of the most critical nutrients to the most vulnerable sections of society. For dairy producers, it also provides a daily source of income with a relatively low-risk factor. Sirajganj is the major milkshed area of Bangladesh where dairy farmers did not use local breeds for producing milk for business purposes. Farmers used crossbred cattle as these cattle give more milk than local cattle which was more beneficial. There were many options for the farmers for selling their milk. Among them, MilkVita was the major player in absorbing the major share of produced milk, similarly, some other options such as selling milk from the farmyard, selling to the local market, ghosh, other milk processors (Akij, BRAC, PRAN) were also available. In the peak season (September to April), total marketing cost for selling milk was the lowest for selling milk to the ghosh among others. In the lean season (May to August), it was the lowest for the local market option. The farmers’ share was the highest for Option-III (selling at farmyard) where milk directly goes to the ultimate consumer without adding much utility to the product and less amount of milk passed through this option. In the lean season, dairy farmers are comparatively getting higher milk prices from the Option-I (MilkVita) and Option-IV (other milk processors) because of less production during the period. In the peak and lean season, the model showed the variable of ‘amount of milk sold per day’ had a positive influence on the choice of milk selling option of MilkVita; and in the peak season, the variable of ‘farmers’ milk price’ had the positive impact. Thus, the policymakers can formulate a policy to benefit the dairy farmers by setting up a mechanism of determining farmers’ milk prices at the farm level.

Knowledge Management: Journal