Local milk powder churns high

A salesman stacks packets of locally produced milk powder at a retail outlet of Agora in Dhaka yesterday. Pran is the latest player to enter the milk powder market. Photo: Amran Hossain

The dairy industry is set for a boom as another processor Pran moves to produce milk powder with a promise to purchase fresh milk from farmers round the year without curtailing procurement even during peak production season.
Pran will be the third in making powdered milk from locally produced liquid milk after Bangladesh Milk Producers' Cooperatives Union Ltd (BMPCUL) and Brac.
Operators said the entry of Pran would enhance the overall powdered milk producing capacity of the three processors from about 21,000 tonnes a year to about 26,000 tonnes. The targeted quantity will be at least three-fourth of the total annual imports of powdered milk that costs around Tk 700 crore.
Pran now processes liquid milk and has already set up a powdered milk producing plant with an annual production capacity of around 4,800 tonnes. The total cost of the project is estimated at nearly Tk 20 crore, said Kamruzzaman Kamal, director in charge of marketing of Pran-RFL Group.
Industry stakeholders said Pran's new venture would be helpful for dairy farmers as they will not be forced to sell their produce at lower price due to excess supply of milk during the peak production season -- mainly from January to June.
The new plant will help Pran buy more fresh milk from the farmers during the peak season to produce powdered milk.
“We also want to ensure uninterrupted purchase of milk all the time from the farmers without capping supply during peak season," Kamal said.
Insiders said such purchase will also help Pran process liquid milk in a big quantity during lean season when production slumps by nearly 30 percent.
But availability of fresh milk throughout the year at a price encouraging enough for processors to compete with imported milk powder remains as a concern, the insiders said.
Despite a steady rise in production in the recent years, price of fresh milk remains high because of a low yield and high feed cost.
The situation hurts the competitive edge of the processors who need to spend more than Tk 300 to make a kilogramme of milk powder now.
But the current price of imported milk powder is Tk 225-Tk 240 a kg, Kamal said.
“It will be difficult to compete with imported powdered milk,” he said.
Mohammad Ali, general manager of Brac Dairy and Food Project, said the amount of powdered milk import is only about 15 percent of the total annual production in Bangladesh.
"We can bring down the imports to zero level within the next two-three years if the government offers tariff protection," said Ali of Brac Dairy, which processes and markets Aarong brand liquid and powdered milk.
Brac, the second biggest processor, has a capacity to produce more than 2,000 tonnes of milk powder a year. The biggest processor, BMPCUL, which markets Milk Vita brand, has a capacity of producing over 19,000 tonnes, officials said.
Brac collects around 100,000 litres of fresh milk from the farmers in 26 districts per day and now uses half of its capacity. The social business venture now sells around 30 tonnes of milk powder per month, Ali said.
“We can increase our production and expand capacity further if government policy support is available,” said Ali.
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