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Impact of Dairy Support Services and Strategies on Reduction of Cost of Milk Production in Different Dairy Production Systems in Bangladesh: Implications for Rural Livelihood Improvement

M.M. Uddin*
Department of Animal Nutrition, Bangladesh Agricultural University

T. Hemme
IFCN Dairy Research Center, University of Kiel, Germany

O.A. Ndambi
International Livestock Research Institute, Nairobi, Kenya

N. Sultana
Department of Animal Nutrition, Bangladesh Agricultural University

M.J. Khan
Department of Animal Nutrition, Bangladesh Agricultural University

Abstract/ Executive Summary:

The objective of this study was to analyse the impact of set of dairy supporting policies within the framework of the government ‘National Livestock Development Policy (NLDP)’ on the potential for reduction of cost of milk production in small-scale dairy farmers under different production systems. This study further aims at identifying the link among increasing household income and rural livelihoods-thus reducing poverty. This study applies the method developed by the International Farm Comparison Network (IFCN). The underlying principle of this method is the application of the concept of ‘Typical Farm Approach (TFA)’ and Technology Impact Policy Impact Calculations (TIPI-CAL) model. Three typical farms from three production systems (e.g. extensive, intensive and traditional) were selected from three agro-ecological zones. The required data collection was done in two steps: first, the data were collected from three baseline typical farms (status quo) operating without policy by applying the ‘Panel Approach’. In the second step, 10 different dairy supporting policy scenarios and technologies were simulated and applied in each of the baseline farms in each production system and data were collected from 30 farms using the base farm as the status quo farm. The data were analysed by utilizing the extended version of TIPI-CAL (Technology Impact Policy Impact Calculations) model (TIPI-CAL software version 5.1). The results showed that improved dairy support services: improved veterinary services (IM-VHS), improved marketing access (IM-MKS), improved feeding and nutritional services (IM-FNS), community based fodder production system (CB-FPS), national breeding programme (NL-BRP) showed the highest impact on increasing milk productivity, decreasing milk production cost, increasing income from dairy and overall household income in all three production systems compared with base line farms. However, the magnitude of the impacts substantially differs among the production systems. This study also reveals that there is a direct link among increasing income and reducing poverty since the household income increases as a result of implementing dairy support services to a level above the poverty line (1.9 US$/day equivalent to 147.96 BDT). This study results could be useful for prioritizing the policies on delivery of support services and technology and are expected to be helpful as a benchmark to implement the ‘draft policy proposal’ by the Ministry of Fisheries and Livestock (MOFL) in Bangladesh.

Keywords: Dairy support policy, Cost, Milk production, Rural livelihood, Typical farm, Poverty

Location: In Bangladesh

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Milk, Livelihood

Objectives:

Methodology:

Choice of Policy approaches There are several methods and approaches available for analysing the impact of agricultural policy on farm level. Most of the methods are based upon the principles that apply to developed countries. The replication of those methods in the developing countries, like, Bangladesh, would be problematic due to distinct differences of dairy production systems, (e.g. complexity of the production environment and different production environment). The applications of particular tools are solely determined by the country to be analysed (Ndambi et al., 2009). In this case, TIPI-CAL model is suit for analysing dairy development policy in Bangladesh because it was built and validated for global application. The TIPI-CAL model has been applied in three prominent areas: the Baseline approach, where the impact of a single policy is analysed on one typical farm type over a period 10 years; the Static approach, where the impacts of several policies on several farm types are compared for a single year; and the Dynamic approach, where several policies are studied on one typical farm type for ten years (Ndambi et al., 2009). This study uses the concept of Static approach (SA) because this study analyses several policies in several typical farms in a single year.

Method of analysis The methodological procedure on policy scenario development and its simulation at farm level on analysing milk yield, cost of milk production, household income (off-farm and income from dairying) and comparing household income with poverty line was done following the method of International Farm Comparison Network (IFCN) developed by Hemme (2000). The underlying principle of this method is the application of the concept of ‘Typical Farm Approach (TFA)’ and Technology Impact Policy Impact Calculations (TIPI-CAL) model. Three typical farms from three production systems (e.g. extensive, intensive and traditional) were selected from three agro-ecological zones. The required data collection was done in two steps: first, the data were collected from three baseline typical farms (status quo) operating without policy by applying the ‘Panel Approach’. In the second step, 10 different dairy supporting policy scenarios and technologies were simulated and applied in each of the base line farms in each production system and data were collected from 30 farms using the base farm as the status quo farm. However, the detailed methodology that was applied in this study is also found in their previous work (Uddin et al., 2012) and the cost of milk production was estimated following the method of Hemme et al. (2014).

Data analysis The background information of the baseline farms and the description of base line farms and policy scenarios are depicted. The data were analysed by utilizing the extended version of TIPI-CAL (Technology Impact Policy Impact Calculations) model (TIPI-CAL software version 5.1).

Source of Information: Asian Journal For Poverty Studies 3(2):95 - 104

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

This study results reveals that adoption of dairy supporting services and policies is of highly beneficial to the overall cost reduction strategy in milk production. Among 10 policies, four most important policies are IM-VET, CB-FPS, IM-MKS, IM-FNS are of highly potential for productivity, cost reduction and increasing household income. Compared with production systems, traditional and extensive systems are more responsive to the policies perhaps the resource endowment and input and output markets not favouring especially milk marketing system is relatively poor in the traditional system. This study also provides that in-sights that the more the income from dairying, the less from off-farm income which implies that policies and strategies should focus on improving dairy farming. The government poverty reduction strategy could be beneficial from this study as this study clearly showed the positive impact of cost reduction with increasing household income to a level of poverty line (1.96US$/day/person). Therefore, adopting new policy and technology would provide more utility as it is in line with the classical utility theory. In addition, the extensive and traditional farming systems are dominated by marginal farmers, which are the centre of poverty reduction focus. Nevertheless, these findings could be used as a benchmark in order to design a strategy for prioritizing policy and technology adoptions on farm level for further development of the dairy sector.

Knowledge Management: Journal