Demand for dairy products to grow double digits

Bangladesh has huge growth potential in dairy and the demand for dairy products is likely to grow double-digit, buoyed by rising income and expanding middle class, said a senior executive of an international dairy company owned by farmers.

Tim Ørting Jørgensen, executive vice-president and head of Arla Foods International, said: “When you create stronger wealth and middle-class economy, you just increase your dairy consumption. Then you move from powders to liquid to yogurts to cheese to whatever.”

“I think there is a good opportunity that consumption of milk and dairy products will increase and innovations will come.”

The senior official of Arla shared the view during an interview at his office in Copenhagen last month.

Arla Foods is an international dairy company owned by 9,900 farmers from Denmark, Sweden, the UK, Germany, Belgium, Luxembourg and the Netherlands.

It has been in Bangladesh since 1961 and its Dano milk powder brand is the best known in the country.

The company caters mainly to the powdered milk segment in Bangladesh, where Tk 2,812 crore was spent to import milk and dairy products in fiscal year 2018-19, up 19 percent year-on-year.

Jørgensen said Arla has created opportunities for consumers to explore products it is offering here. It has also invested in a joint venture to set up a factory in Bangladesh.

The multinational dairy cooperative has taken an initiative to create opportunities for 5,000 women to become micro- entrepreneurs over the next four years. 

The entrepreneurs will sell Arla’s milk products among the low and lower-middle income population.

The micro-women entrepreneurs will sell Arla’s milk products in sachets by going from doors to doors.

“It is also a business for us because they will sell our products,” Jørgensen said.

The company also has the capability to raise the business to industrial scale.

“At the industry level, we try to establish partnerships on how we can increase the effectiveness, yield and quality of local milk production because we think that is important.”

Arla has rolled out dairy sector development initiatives in other countries, including Nigeria.

“We know whenever we go to an emerging market, we need to make sure that our activities contribute to the development of the local industry and not just selling our products.”

“I think it is a good business because by increasing local production of milk, we are also raising awareness about milk and the entire opportunity for milk and dairy.”

In Bangladesh, Arla and state-backed milk cooperative MilkVita signed a memorandum of understanding in October last year to collaborate and share knowledge for development of a sustainable dairy sector.

The agreement aims to improve the quality of dairy products to European standards throughout the value chain, from raw milk to end consumer by exchanging knowledge and best practices from the Danish dairy sector.

The deal focuses on improving milk yield and quality, farm management practices and farm technology as well as increasing efficiency throughout the value chain.

The primary agreement was inked based on a deal signed by Bangladesh and Denmark in order to promote cooperation in the dairy through establishment of a cooperation platform.

Jørgensen said understandings with MilkVita and others have been made to see how Arla, with its technology, can assist local dairy producers in increasing and improving the quality of milk and ensure efficient production so that it becomes more competitive going forward.

“We would actually like to scale it up and move it forward because we think that is important to create stronger awareness.”

When asked whether Arla has any plan to buy and process milk produced in Bangladesh, Jørgensen said there is no doubt about it but it will take some time.

“If we work well, milk production increases and quality is there, then that is definitely one of the options that we would have.”

“It has to live upto the qualities that we have. It has to live upto products and the sales but that should definitely be an ambition in the long-term,” said Jørgensen.

Over the next decade, there will have to be opportunities where local milk can also play a role, he said.

He said Arla has initiated a project in Nigeria with the support of the Danish International Development Agency to encourage dairy farming and development.

Under the project, cows have started producing quality milk.

“We will collect the milk. We have set up a dairy line. We will start selling these products in the markets. That should be more or less the same vision that we should have for Bangladesh,” he said.

He, however, said Arla also needs to be sure that Bangladeshi companies, dairy industry and the government are ready to embark on this partnership.

“This is because we can’t fix it ourselves. We need strong partner. We need government help. We need local industry and we need all other things,” he said, adding that these things are needed to start the process.