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Dairy farmers hurt by low-cost milk powder

Sohel Parvez and Golam Mostafa Jibon
Dairy fanners are in trouble as milk processors are cutting down prices and slowing purchase, as the consumption of locally produced milk has dropped amid falling prices of imported milk powder.
The crisis forces many of the farmers to clear their unsold stocks at a nominal price as the consumers, mainly sweetmeat makers, are now opting for low-cost imported milk powder.
"It's a worse situation. I sold one of my cows last month to pay micro credit instalment as my weekly income from milk sales dropped by Tk 6,000 because of the price cut. If it continues, I will have to sell another cow this month to pay instalment," said Md Waz Ali, a dairy farmer at Shahjadpur upazila in Sirajganj, a major dairy hub.
Ali, who owes around Tk 40 lakh to microfinance organisations, vented frustration as he getsTk 25.95 for a litre of milk, down from Tk 26.95 in the first week of May.
Early this year, he and many others received as muchTk33 a litre.
"I sold milk worth around Tk 24,000 a week before the price cut. Now my income falls to around Tk 18,000 a week,” he said. "Whatever the bill I am getting is spent for buying feeds and rearing cows.”
His total production cost stands over Tk 26 a litre and he gets belowTk 26. "It's hard to survive,” said Ali, who has a farm of 23 cows, among which 11 provides around 100 litres of milk a day.
A melamine scare centring the imported milk powder also helped boost demand for local milk last year.
But the situation started to turn bad as prices of imported milk powder fell close to $2,000 a tonne this year from more than S4.500 a tonne last year.
Processors said the price fall on the global market has made the milk powder cheaper than the local ones with sweetmeat makers, who consume bulk of the milk, shifting to imported milk powder.
Local milk processors blamed smuggled and imported cheap powdered milk from India and other parts of the world for the fall in demand for local dairy milk. A12 percent duty on import also allowed imported milk powder to enjoy price advantage over the local milk, processors said.
"This has affected demand for local dairy milk and forced us to cut price,” said Mohammad Ali, general manager of BRAC Dairy and Food Project that processes and markets Aarong brand milk.
To cope with the competition, some of the processors, mainly private ones, have also reduced their purchase of liquid milk from farmers. Some processors like Milk Vita selling organisation Bangladesh Milk Producers Cooperative Union Ltd (BMPCUL) buy a fixed quantity of milk from the farmers' cooperatives.
The result: many farmers find a portion of their produce unsold and incur losses.
In the recent months, hundreds of farmers threw tonnes of liquid milk on highways in the main dairy hubs in Pabna and Sirajganj in a mark of protest never seen in the country before.
"It's for around three months we have been suffering from price cuts and low quantity purchase by the processors," said Md Arifuzzaman, another dairy farmer at Barabil, Shahjadpur in Sirajganj.
Arifuzzaman, also president of 600-member Barabil Primary Milk Producers' Cooperative Society Ltd, said many cooperatives members now struggle with unsold milk almost everyday as their buyer Milk Vita brand seller BMPCUL maintains quota restriction in purchase.
MA Barik, general manager of BMPCUL, said the organisation has to increase its milk collection volume in the wake of the cut in procurement by other processors.
Amjad Khan Chowdhury, chief executive of Pran-RFL Group that markets Pran brand milk, said the company had to cut its purchase volume due to a fall in demand.
"We can't sell in losses. Earlier we
bought milk at higher price. But what can we do if we can't sell now?” said Barik of BMPCUL that supports around 10 lakh dairy farming families directly.
To stand up in the competition, both the processors and farmers want protection in terms of increase in the duty on imported milk powder and subsidy to bring down the cost of feeds.
"Unless the government imposes higher tax and duty on imported milk powder, it will be tough for us to survive,” said Waz Ali.
Arifuzzaman echoed the same, seeking subsidy to get quality feeds at lower price that will help them sell milk at lower price.
Milk processors also want the government to once again impose the supplementary duty and increase other duties on imported milk powder. The duty was withdrawn when powdered milk price shot up on the global market.
They also urged the government for tax exemption for locally produced dairyproducts.
But the responses from the government on the issue seem lukewarm. Except for a call to processors to stand by the farmers in time of their bad days, no assurance has come yet.
Ministry of Fisheries and Livestock Secretary Mohammad Shah Alam told The Daily Star that the ministry is concerned about the issue and going to hold an inter-ministerial meeting soon.
"We are going to convene an inter-ministerial meeting to firm up the government position regarding the matter,” he said.