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Milk Marketing Channels in Bangladesh: a Case Study of Three Villages from Three Districts

Ashoke Kumar Ghosh
Graduate Student
Graduate School for International Development and Cooperation, Hiroshima University, 1-5-1 Kagamiyama, Higashi-Hiroshima 739-8529, Japan and Sher-e-Bangla Agricultural University, Development and Poverty Studies

Keshav Lall Maharjan
Associate Professor
Graduate School for International Development and Cooperation, Hiroshima University, 1-5-1 Kagamiyama, Higashi-Hiroshima 739-8529, Japan

Abstract/ Executive Summary:

This study has been undertaken to understand the general features of milk marketing in Bangladesh and explore some of the issues on milk production among dairy households and their conditions under various milk marketing channels. This study highlights share of milk marketed in the urban and rural regions, quality of milk and price variations under different stages of marketing and selling spots. This study also identifies problems faced by farmers in milk marketing and their probable solutions.

Keywords: Milk, Milk marketing, Field study, Marketing channels

Location: In Bangladesh

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Milk

Objectives:

To discuss the general milk marketing channels, methodology of field study and the marketing channels existing in different research areas.

Methodology:

The milk marketing channels in Bangladesh are not organized. Sometimes, dairy farmers sell their milk directly to the local market, neighbors, tea stalls and local restaurants. Most of the times they sell their milk through different types of middlemen like Gowala, Aratdar and retailers. These intermediaries operating at a different level of milk marketing earn margins that affect primary milk producers directly or indirectly. The proportions of milk selling by the farmers through different channels differ from place to place. The typical milk marketing channels are described below. Petty milk marketing practice is very common in Bangladesh and milk marketing channels are not regular and organized. Producers may sell their milk directly to local markets, neighbors and tea stalls. But most of the times, they sell their surplus milk to the Gowala. In the traditional milk marketing channel, Gowalas collect milk from the producers, sometimes mix water or milk powder for more profit, and sell this in the urban market. In the rural area Gowala perform the door-to-door milk collection from milk producers and deliver the milk to consumers (Rahma et al. 2002). Some of the Gowalas are milk producers themselves, selling rurally collected milk in addition to their own produce. They sell this milk to different types of consumers in an urban area, such as, individual consumers at the market, contact households, tea stalls and hotels or restaurants. Price is always uncertain both for primary producers as well as for Gowala in this type of marketing channel. At times, there are few other middlemen such as Aratdar and retailers in this marketing channel. Sardar is a commission agent and mediates between producers and Gowlas/ retailers, consumers as well as hotels and restaurants. Aratdars charge a fixed amount of commission form of monetary value or milk from producers. Retailer includes the milk trader who buys milk from the Aratdar, Gowala or group or individual producers in the market and supplies this milk to the city consumers, hotels and restaurants. Pala is an informal group made by the villagers having milk cows in the Char area, difficult to be reached by normal transportation means. The small dairy farmers in the area producing 1-5 liters of milk which cannot be profitable for the individual farmer to sell in city with high transportation cost, make an informal marketing group (Pala) with 20-50 members to sell the milk jointly. All the Pala members participate rotationally, each for one day, marketing their milk. The Pala representative brings the group’s milk to the market and sells to retailers through Aratdar. Aratdar is paid a certain amount of milk/cash by Pala representative as commission for mediating the job. Retailer finally sells this milk to the urban consumers, restaurants and tea stalls at a higher price and earn his own margins. The Pala system seems to be efficient in collective marketing of the milk by dairy farmers in the Char area. However, the Pala farmers again depend on middlemen for marketing their milk. To reverse the situation of primary milk producers in milk market and the quality of milk, the cooperatives were made as to, 1) raise the subsidiary agricultural income for poor landless and marginal dairy farmers by introducing them in organized milk marketing channels. 2) development of infrastructure for milk collection at fixed and fair prices through organized village milk producers cooperative and relieve them from exploitation by the middlemen, and 3) to ensure the supply of pure and hygienic milk and milk products to the consumers.

Source of Information: Journal of International Development and Cooperation, Vol.8, No.2, 2002, pp. 87–101

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

It is observed that most of the dairy farmers were small in size, their milk production low and they market the surplus milk after consumption. However, the cooperative farmers had more cows and were producing more milk per cow compared to non-cooperative farmers. Farmers were following dominant marketing channels for selling major portion of their milk according to the locations. Price fluctuation in marketing is one of the important constraints for the small dairy farmer. The seasonal price fluctuation was higher for both the villages of Labutalla and Tarabunia at local as well as at urban markets. However, the cooperative price was fixed and it varied according to the fat content of the milk. The average price of milk received by the dairy farmers was higher for the Potajia, with a cooperative marketing system compared to other places. It means marketing channels of cooperative are more efficient than the other channels. The higher and fixed price of milk would help farmers to better dairy farm planning. The milk price is not fixed under the traditional marketing system and milk producers frequently suffer from low price, seasonal price fluctuation and irregular payments. Middlemen on the other hand, appropriate larger margins from the milk market often mixing fresh milk with water and powder milk. The milk quality supplied to urban markets through middlemen was not of good standard and price of milk varied according to different types of consumers even at the same market. Generally, the infrastructures for milk marketing are not available in the markets. Lack of infrastructure also damages the quality of milk. But the cooperative provides all modern marketing facilities to their members for marketing their milk. The milk supplied under the cooperative system is hygienic and guaranteed with price and quality. Therefore further development of dairy farming depends upon the organized marketing channel in which farmers can get fair price. Collective marketing like a cooperative system can also reduce transportation cost. The majority of dairy farmers are satisfied with the cooperative marketing system. So, keeping in mind for mass of the small producer, a cooperative milk marketing system can be developed for the betterment of the rural dairy farmers.

Knowledge Management: Journal