Save dairy farmers from ruination
Thursday, 16 April 2009
Syed Fattahul Alim
Recently the plight of the hundreds of thousands of milk producers has been reported in the media. The recession-driven fall in the prices of powdered milk is the cause of the present predicament of the farmers engaged in rearing cows for producing milk for its onward sale to the different dairy companies.
But of late, the scenario in the sector has changed. Many of the smaller dairy companies that buy milk from the open market have now switched to powdered milk, which is cheaper. On the other hand, companies that collect their milk from contract farmers are finding it hard to consume all the milk produced by them.
The farmers who produce milk for commercial purpose are concentrated mostly in the districts of Pabna and Sirajganj. The state-owned Milk Vita Company was the driving force behind the enhanced interest of the farmers of those districts to go for this trade. The farmers got a boost last year when the prices of imported powdered milk shot up in the international market to as high as US$4,500 per ton. The upshot of it was that all the dairy companies, sweetmeat producers, and others who usually depend on the powdered milk turned towards the rural dairy farmers. Though it was bad news for the urban and semi-urban consumers of the dairy products in the country, it spurred the growth of dairy farming in the country. Seeing that producing liquid milk was profitable, more farmers turned to this trade. The various users of milk and the smaller and bigger dairy companies then started to depend on the rural milk producers. Unbeknown to the government and the media, the country was then witnessing a kind of revolution in one of its agro-industrial sectors.
But to face the apparent crisis of powdered milk in the market, the government of that time lowered taxes on the powdered milk import drastically. Despite this tax cut, the vertical rise of the powdered milk price went unabated. As noted earlier, the skyrocketing price of powdered milk did also have its redeeming features. Had the government of that time taken due note of the development, the apparent crisis in the imported powdered milk market could be turned into a blessing for the dairy farmers of the country. Unfortunately, the tax cut coupled with plummeting price of the imported powdered milk has now driven the dairy farmers in the rural areas to take a suicidal path. Finding no market for their products, they cannot even afford the cost of carrying their milk back home. So, one is not surprised when finding no other alternatives the dairy farmers are pouring their milk on the highway. For earlier, even two months back, they used to sell their milk between 32 and 35 taka per kg, whereas they are now being forced to sell it taka 26.5. What can the farmers do in this situation? They are not a big company that they would use the marketing strategy of selling its goods at a 'throw away price' to make less profit, but more sales. The small rural dairy farmers, who depend on a few cows for their livelihood, cannot simply afford such a marketing strategy. The way open to them is to either throw the milk on the road at best or commit suicide at worst.
The big companies like Milk Vita or Arong that have contract dairy farmers are still buying milk from the farmers' cooperatives at previously set prices. But all the dairy farmers are not covered by such arrangements. On the other hand, there are also other farmers who produce milk independently and sell it in the open market. They are the worse victims. On the other hand, big companies having contract sellers of milk will also not be able to provide the price protection to their dedicated suppliers forever unless there is any favourable development in the market in the meanwhile.
The condition that has befallen the dairy farmers, however, is nothing unique in the agro-products sector of the country. The farmers in the vegetable growing areas of the country often face similar predicament. Reports of vegetable producing farmers leaving their merchandise on the road to rot are often printed in the country page of the newspapers or get some space, if any, in the country news section of the electronic media. That means the media is still unaware of the import of such news. So are the authorities concerned in the government. What an irony! Each and every government that come and go in this country are all for agriculture and the farmers who make it. Surprisingly, they draw a blank when the moment of truth arrives.
Returning to the issue of the milk producers, it is time the government took a fresh look at the dairy farms at home and the tens of thousands of dairy farmers in some districts of the country. The thought of helping this sector did never take centre stage in the agro-industrial policy of the successive governments. In consequence, the nation has remained beholden to the interests of the multinationals marketing powder milk and various dairy products in the country.
Last years' crisis in the powdered milk market, forced the government to slash the tax on its import. Now with steeply sliding price of the imported milk bolstered by the local tax cut has inflicted a telling blow to the local dairy industry, and the dairy farmers in particular.
Now that different sectors of the industry and economy are approaching the government for financial assistance to sail through the recession, it will have to prioritise the sectors deserving the highest attention. Agriculture, especially, the agro-industry is a highly potential sector as a driver of economic growth as well as creator of employment. At the same time, it should take urgent measures to arrange financial assistance for the dairy farmers who have been hit below the belt in the affected districts. The local dairy industry in general and the farms still supporting the dairy farmers merit the government's best consideration in this regard.
What the dairy farmers, the vegetable growers and such other producers in the agricultural market will need is price support. What the dairy farmers have been experiencing this year may force them to abandon dairy farms and switch to other trades. The dairy farms, on the other hand, would increase their dependence on the imported powdered milk. Helping these victims of unsteady market dominated by foreign-brand powdered milk is but a short-term measure. In the long-term, on the other hand, the government will have to consider agro-industry as the thrust sector and extend all facilities to the producers and entrepreneurs accordingly.
Small scale dairy farming can be encouraged all over the country. One needs to remember that the practice of rearing cows is ubiquitous in the countryside. In the rural areas, the women members of peasant households mostly feed and take care of the cows. They only need proper patronisation and market support to upgrade their operation from the subsistence scale to a more market-oriented one.
Milk and its products have a vast domestic market. Under favourable condition, bigger enterprises may also flourish to export their products abroad after meeting local demands. But to achieve that end the government will have to sharpen its policy to reduce dependence on foreign dairy products and stimulate the domestic sector.
Recently the plight of the hundreds of thousands of milk producers has been reported in the media. The recession-driven fall in the prices of powdered milk is the cause of the present predicament of the farmers engaged in rearing cows for producing milk for its onward sale to the different dairy companies.
But of late, the scenario in the sector has changed. Many of the smaller dairy companies that buy milk from the open market have now switched to powdered milk, which is cheaper. On the other hand, companies that collect their milk from contract farmers are finding it hard to consume all the milk produced by them.
The farmers who produce milk for commercial purpose are concentrated mostly in the districts of Pabna and Sirajganj. The state-owned Milk Vita Company was the driving force behind the enhanced interest of the farmers of those districts to go for this trade. The farmers got a boost last year when the prices of imported powdered milk shot up in the international market to as high as US$4,500 per ton. The upshot of it was that all the dairy companies, sweetmeat producers, and others who usually depend on the powdered milk turned towards the rural dairy farmers. Though it was bad news for the urban and semi-urban consumers of the dairy products in the country, it spurred the growth of dairy farming in the country. Seeing that producing liquid milk was profitable, more farmers turned to this trade. The various users of milk and the smaller and bigger dairy companies then started to depend on the rural milk producers. Unbeknown to the government and the media, the country was then witnessing a kind of revolution in one of its agro-industrial sectors.
But to face the apparent crisis of powdered milk in the market, the government of that time lowered taxes on the powdered milk import drastically. Despite this tax cut, the vertical rise of the powdered milk price went unabated. As noted earlier, the skyrocketing price of powdered milk did also have its redeeming features. Had the government of that time taken due note of the development, the apparent crisis in the imported powdered milk market could be turned into a blessing for the dairy farmers of the country. Unfortunately, the tax cut coupled with plummeting price of the imported powdered milk has now driven the dairy farmers in the rural areas to take a suicidal path. Finding no market for their products, they cannot even afford the cost of carrying their milk back home. So, one is not surprised when finding no other alternatives the dairy farmers are pouring their milk on the highway. For earlier, even two months back, they used to sell their milk between 32 and 35 taka per kg, whereas they are now being forced to sell it taka 26.5. What can the farmers do in this situation? They are not a big company that they would use the marketing strategy of selling its goods at a 'throw away price' to make less profit, but more sales. The small rural dairy farmers, who depend on a few cows for their livelihood, cannot simply afford such a marketing strategy. The way open to them is to either throw the milk on the road at best or commit suicide at worst.
The big companies like Milk Vita or Arong that have contract dairy farmers are still buying milk from the farmers' cooperatives at previously set prices. But all the dairy farmers are not covered by such arrangements. On the other hand, there are also other farmers who produce milk independently and sell it in the open market. They are the worse victims. On the other hand, big companies having contract sellers of milk will also not be able to provide the price protection to their dedicated suppliers forever unless there is any favourable development in the market in the meanwhile.
The condition that has befallen the dairy farmers, however, is nothing unique in the agro-products sector of the country. The farmers in the vegetable growing areas of the country often face similar predicament. Reports of vegetable producing farmers leaving their merchandise on the road to rot are often printed in the country page of the newspapers or get some space, if any, in the country news section of the electronic media. That means the media is still unaware of the import of such news. So are the authorities concerned in the government. What an irony! Each and every government that come and go in this country are all for agriculture and the farmers who make it. Surprisingly, they draw a blank when the moment of truth arrives.
Returning to the issue of the milk producers, it is time the government took a fresh look at the dairy farms at home and the tens of thousands of dairy farmers in some districts of the country. The thought of helping this sector did never take centre stage in the agro-industrial policy of the successive governments. In consequence, the nation has remained beholden to the interests of the multinationals marketing powder milk and various dairy products in the country.
Last years' crisis in the powdered milk market, forced the government to slash the tax on its import. Now with steeply sliding price of the imported milk bolstered by the local tax cut has inflicted a telling blow to the local dairy industry, and the dairy farmers in particular.
Now that different sectors of the industry and economy are approaching the government for financial assistance to sail through the recession, it will have to prioritise the sectors deserving the highest attention. Agriculture, especially, the agro-industry is a highly potential sector as a driver of economic growth as well as creator of employment. At the same time, it should take urgent measures to arrange financial assistance for the dairy farmers who have been hit below the belt in the affected districts. The local dairy industry in general and the farms still supporting the dairy farmers merit the government's best consideration in this regard.
What the dairy farmers, the vegetable growers and such other producers in the agricultural market will need is price support. What the dairy farmers have been experiencing this year may force them to abandon dairy farms and switch to other trades. The dairy farms, on the other hand, would increase their dependence on the imported powdered milk. Helping these victims of unsteady market dominated by foreign-brand powdered milk is but a short-term measure. In the long-term, on the other hand, the government will have to consider agro-industry as the thrust sector and extend all facilities to the producers and entrepreneurs accordingly.
Small scale dairy farming can be encouraged all over the country. One needs to remember that the practice of rearing cows is ubiquitous in the countryside. In the rural areas, the women members of peasant households mostly feed and take care of the cows. They only need proper patronisation and market support to upgrade their operation from the subsistence scale to a more market-oriented one.
Milk and its products have a vast domestic market. Under favourable condition, bigger enterprises may also flourish to export their products abroad after meeting local demands. But to achieve that end the government will have to sharpen its policy to reduce dependence on foreign dairy products and stimulate the domestic sector.