Interviewed by Syed Md. Rakeen, Team MBR

Md. Maksudur Rahman is the deputy general manager of business operations at PRAN Dairy Limited, which is a sister concern of PRAN Group and currently the second-largest dairy processor in the country with its state-of-the-art pasteurized, UHT, yoghurt, and powdered milk processing plants. During the first 10 years of his career, he worked in the areas of promotions, communications, and brand management for three leading local conglomerates in the retail and FMCG industries. He aspires to make PRAN Dairy the largest dairy processor and the largest milk collector in Bangladesh by restructuring the dairy hub model and introducing integrated commercial dairy farm management. Team MBR was in a conversation with Mr. Md. Maksudur Rahman and was fortunate enough to receive his take on the dairy industry.

Syed Md. Rakeen: According to dairy industry experts, there has been a rise of 158% in milk production in the past decade. What are the factors that, in your opinion, have driven this outstanding growth?

Md. Maksudur Rahman: There are a number of factors driving this growth. It has been observed that formal industry players have been highly focused on expansion in the local market in recent years. Alongside this, many NGOs have come forward to support the formal dairy industry to make farming profitable. It must be mentioned that government initiatives through the Department of Livestock Services are also praiseworthy. These days, even remote villages are connected to the cities because of the development that has taken place in the roads, highways, and transportation systems, which is also contributing to this growth passively. Research and development are also playing a significant role here. High-yield cattle are being developed with the help of genetic transformation, and the shelf life of milk has been extended through modern processing techniques like UHT. Most importantly, the demand for milk is steadily growing in the market, as people are more health conscious nowadays and looking for better sources of nutrition like milk.

Syed Md. Rakeen: There is currently a diverse range of locally produced dairy products available on the market. Would you kindly share with us your observations regarding the changes in tastes and preferences about dairy products in the Bangladeshi market?

Md. Maksudur Rahman: As the whole world has turned into a global village, we now understand each other’s culture a lot more. In the earlier days, children used to consume milk primarily, and after the age of five, their habit of consuming milk gradually disappeared. But milk has now evolved into a fusion food. So, people in Bangladesh are now consuming milk in the form of fusion products such as flavoured milk, milkshakes, milk smoothies, flavoured yoghurts, cheeses, protein shakes, salads with cheese cubes, cornflakes or oats with milk, and many others at an individual level based on personal choices. This change in tastes and preferences has led to the development of many processed dairy products by formal dairy processors.

Syed Md. Rakeen: According to the Bangladesh Bureau of Statistics, milk and cream worth BDT 3,244 crore were imported in FY 2020–21. What suggestions do you have to minimize dependence on imports and make the local dairy industry self-sufficient?

Md. Maksudur Rahman: Let’s start with statistics. Over the last 25 years, local milk production has been able to meet 55% of the total market demand. Yes, there is still a long way to go, and we believe that, in the next 10 to 15 years, our dream can come true if we can just bring down the cost of milk production, which is heavily dependent on the availability of cattle feeds and prices. As we know, access to land for cattle grazing is quite limited, and we cannot offer the cheapest source of feed to cattle for this reason. This is why we are dependent on ready-made cattle feeds, and these ingredients are mostly imported. If we can produce cattle feeds locally, we can make the production of cattle feeds cheaper. When the ratio of the prices of milk and feeds is 100:50 in terms of taka, every farm will be able to generate more profits, and more young people will be encouraged to set up dairy farms. Please note that our milk price is 35% higher in comparison to the international price. So, we cannot raise the milk price any more. Rather, we should focus more on lowering the prices of cattle feeds.

Syed Md. Rakeen: It has been observed recently that feed prices have soared along with the price of processed milk; however, the farmers aren’t receiving their fair share. What measures should be ensured, in your opinion, so that every participant in the value chain is better off?

Md. Maksudur Rahman: While it’s true that feed prices and processed milk prices have risen in recent times, I believe that farmers aren’t deprived of their pie. The industry participants believe that farmers are at the heart of this industry. But it must also be mentioned that the transportation and processing of milk require a very costly investment. Also, the costs of operating such facilities are heavily dependent on utility costs as well. In the last four years, utility costs such as oil, gas, and electricity have increased rapidly. At the same time, we need to think of our front-line partners as well, such as distributors, sales representatives, and outlets, whose costs have also gone up. So, ensuring fair increments for all the back and front value chain partners is a must.

Syed Md. Rakeen: It has been observed that the major portion of milk trading in the local market takes place via informal channels in the traditional way. How can industrial milk processors leverage this market gap and reap benefits by catering to the market demand via formal channels?

Md. Maksudur Rahman: The informal market does not ensure the quality of milk when procured, whereas the formal players in the market purchase milk in two categories, namely, fat and solids-not-fat. If they get high-fat milk from farmers, they pay more to the farmers. And if they get less, they are required to pay less. Additionally, formal players conduct at least 10 tests to ensure the quality of milk. Since the food habits of cows are not standard, fat often seems to be lacking in the milk. Farmers currently sell milk without checking the quality of the fat content. If the government can ensure a price chart based on the fat at all levels, then farmers would have the incentive to focus on the percentage of fat in the milk they sell and, in turn, make efforts to improve the quality of milk.

Syed Md. Rakeen: Milk is considered a highly perishable item because it provides a favourable environment for microorganisms, such as bacterial pathogens, to grow and contaminate the milk. What measures can industrial milk processors take to ensure the end consumers get the very best products?

Md. Maksudur Rahman: In Bangladesh, industrial milk processors have taken various measures to ensure that end consumers have access to safe and high- quality dairy products. Among these measures are the following:

i) Procurement of Milk from Selected Farmers: Industrial milk processors have set up milk collection points in various parts of the country. They source their milk only from selected farmers who are committed to adhering to strict guidelines on animal health, feed quality, and milking hygiene.

ii) Testing the Quality of Milk: Milk processors test milk based on various quality parameters, such as its fat content, protein content, dry matter, and microbial content, before procuring it from farmers. Milk that does not meet the required standards is rejected.

iii) Processing of Milk under Hygienic Conditions: Industrial milk processors follow strict hygiene standards while processing milk. They use state-ofthe-art equipment to pasteurize, homogenize, and standardize their milk and pack it in airtight containers to prevent contamination.

iv) Tamper Checking: Industrial milk processors carry out regular inspections to detect milk adulteration. They use various methods, such as infrared and ultraviolet spectroscopy, to detect the presence of foreign substances such as water, cane sugar, powdered milk, and starch.

v) Certification: Industrial milk processors are certified by regulatory bodies such as the Bangladesh Standards and Testing Institution (BSTI) to ensure that their products meet the required quality standards. Overall, industrial dairy processors in Bangladesh are taking various measures to ensure that the final consumers receive safe and high-quality dairy products. These measures help prevent milk adulteration and ensure farmers receive a fair price for their produce.

Syed Md. Rakeen: Would you kindly share with us your observations regarding the technological evolution that has taken place in the local dairy industry over the years? Do you think that industrial processors have reached the global standard? If not, how can they do so?

Md. Maksudur Rahman: Bangladesh’s dairy industry has undergone significant technological developments over the years. The increased use of modern technologies and equipment in the industry has increased productivity and efficiency. Many industrial processors are also introducing new processing techniques and modern machinery to improve production capacity and product quality.

However, the lack of clear definitions of what constitutes global standards for the dairy industry makes it difficult to determine whether industrial processors have reached global standards. It is also difficult to compare the dairy industry with other countries due to different factors such as climate, land availability, and government policies. However, there is always room for improvement, and industrial processors in Bangladesh can take some steps to improve their standards. One such step is investing in research and development to find innovative ways to produce high-quality dairy products. Additionally, the industry can focus on building robust supply chains and invest in modern transportation and logistics systems to reduce waste and ensure the timely delivery of products. By investing in research and development and building robust supply chains, industries can improve productivity and product quality, making them more competitive on a global scale.

Syed Md. Rakeen: Do you think the policy support is adequate for the local dairy industry? What are the areas in which policymakers can work to help the industry flourish even more?

Md. Maksudur Rahman: In the context of Bangladesh, policy support for the local dairy industry can be seen as somewhat limited. The government has taken some steps to promote the sector, but there is still much room for improvement, for example, by subsidizing dairy farmers and establishing dairy promotion associations.

One area where policymakers can work to help the industry thrive is by investing in infrastructure. This includes improving the road networks to transport milk from farms to markets quickly and efficiently, and improving access to electricity and water in rural areas where many dairy farms are located.

Another important area for policymakers to focus on is research and development. This includes investing in new technologies and techniques for dairy farming and processing, as well as conducting research on the nutritional values of local dairy products. By improving the quality and quantity of locally produced dairy products, the industry can become more competitive and better meet the needs of domestic consumers.

In addition, policymakers can work to create better marketing channels for local dairy products, such as by supporting the development of local brands and promoting consumption of local dairy products, which will increase demand for dairy products and increase production and profitability for dairy farmers.

Overall, some efforts have been made in Bangladesh to support the local dairy industry, but more needs to be done to help the sector thrive. By investing in infrastructure, research and development, and marketing, policymakers can help create a more sustainable and profitable dairy industry that can contribute to the country’s economic development.