Case studies from Bangladesh: milk

Cold milk for hot profits

Transforming Markets Photopod Series 2008

In this photopod Alison Griffith (the International Team Leader) shares her insights into one of Practical Action's Markets and Livelihoods Programme's project: a.k.a. "Cold Milk for Hot Profits". This project has been implemented following some of the principles of our Programme's Participatory Markets Systems Development (PMSD) approach. It focuses on the improvements of the local dairy markets in Dinajpur (North-East Bangladesh).

Your comments are welcome. You can write to Lucho Osorio, Alison Griffith, or directly to the Bangladesh Team Leader, Abdur Rob. Enjoy!

This is a successful case of participatory development of a community-based integrated market of milk, a highly perishable agricultural commodity.

Bangladesh is in a transitional stage of graduating from subsistence to commercial agriculture. Farmers are eagerly trying to engage in commercial production of different high value commodities and are struggling to organize production systems to link with the formal market system in order to maximize profits. In many occasions they are not succeeding due to inability to manipulate or control the market forces. The situation has worsened in cases of perishable products. Many development initiatives are now focused to assist the producers organize and link them to markets with limited success.

Cold Milk Hot Profit Project is one such initiative to assist all stakeholders of the milk industry to come together and play supportive roles in order to create a sustainable community-based integrated marketing system for milk which will create a win-win situation for all stakeholders and take the milk industry as a whole a step ahead for better income and livelihoods with greater focus on the needs of small and marginal producers.

The projects worked in partnership with local NGOs for one year and emerged as a success story. Practical Action intends to replicate the system in milk or other commodity markets elsewhere. Its learning can also be shared by other institutions who are engaged in similar initiatives.

This a working paper under revision. PLEASE DO NOT CITE. All comments are welcome (contact: Mr. Abdur Rob, February 2008

Participatory Market System Analysis: market actors understanding themselves as part of a system

The Markets and Livelihoods team in Bangladesh initially selected the milk subsector in Dinajpur because of its high potential impact on (i) the income of small-scale farmers, (ii) development of local milk markets due to strong local demand for milk and (iii) improved nutrition of the rural poor.

Over a period of 5 months the project team has facilitated three PMSA workshops with the participation of farmers, milkmen, middlemen, wholesalers, small-scale processors (of milk-based sweets), milk chilling plant owners, extension workers, dairy association members, veterinaries and decision makers (e.g. district and local livestock officials).

In the preliminary stages of market mapping , rather than the project team taking the lead, a small group of farmers, a "middleman" and input supplier formed a Market Opportunity Group. They decided to collect the information about the market system over a 10 day period by doing semi-structured interviews with key informants on what they called a "Market Chain Tour".

"When you ask the farmer, the milk man, the middleman… they manifested different sort of problems. By collectively realising this difference they understand that they have to solve their problems together. This is the kind of consciousness that the PMCA develops. That is why they [the PMCA participants] did not want to leave the workshop even when it was really late! They get so excited to know these news and information about their own sub-sector."
— Practical Action Team Leader in Bangladesh

In the later workshops representatives from the market system were involved in mapping out the market system for milk and identifying the complex linkages and issues affecting it. This developed their appreciation that they were part of a wider system of actors and relationships. Furthermore they could understand that they shared common problems and need to tackle them in a coordinated way.

Participants of the PMSA workshops identified critical issues affecting the milk market within the three areas of the market system  (i.e. market chain, services provision and business environment,). For example:

  • In the market chain: underdeveloped markets (current production only meeting 1/5th of demand); high wastage of milk and by-products due to spoilage; mistrust and miscommunication between farmers and suppliers; and poor quality of input supplies (e.g. calves, feeds).
  • In the provision of services: lack of chilling and quality testing facilities; inadequate or poor quality advice from extensionists; and lack of veterinary services.
  • In the business environment: land regime policy affecting availability of grazing; cattle insemination and breeding policy, and social negativity associated with small-scale milk production.

The participants have also been able to use PMSA to jointly decide how to tackle these issues. Some of the outcomes and decisions were:

  • Stimulate supply of suitable technology products and services (e.g. refrigeration technology) to the small-scale dairy sector in Dinajpur and "kick-start" this with a Dinajpur Dairy technology Fair 
  • Exploring "embedded" services with key buyers and farmers (such as information on dairy hygiene and milk handling) and cost sharing options on testing equipment.
  • Farmers collaborating to "bulk up" fresh milk for marketing purposes; and to access services such as village level testing and chilling.
  • Small-scale processors to access local finance to purchase cream separators.
  • Working with the local land department so that sufficient grazing land is allocated to farmers.
  • Advocate for improved extension services from the government and private sector, particularly advice on animal husbandry and breeding.    

The PMSA process helped to change negative perceptions between market actors. In one Participatory Market Mapping workshop, some of the farmers blamed another participant (a supplier of calves and cows) for the low milk productivity of the animals that he sold to them. The livestock seller explained that as an intermediary he has to rely on those selling to him for accurate information. He then passes this information on (e.g. about the productivity of a given breed) to his buyers i.e. the farmers. He gave his view which was that some farmers do not achieve high productivity from their animals due to inadequate nutrition and health care. This discussion, and the inputs from other participants who confirmed the claims, led the whole group to understand that the productivity problem was not caused by a single ill-willed actor, but by a more complex chain of events, (for example,  inadequate national insemination/breeding policy).

Practical Action has learnt much from this exercise. The organisations' typical starting point would often be technology, and in this case a clear need for chilling technology to farmers has been identified. However, the difference is that the exercise has revealed that a systemic approach is necessary, one which considers how market linkages will be developed, how services will be provided and how a better business environment can be achieved by the participants themselves.

In summary, the experience of PMSA in the milk sector in one area of Bangladesh shows how it can help market actors to: (i) understand themselves as part of a complex system, in which they share problems and benefits; (ii) change negative perceptions amongst themselves; and (iii) engage more effectively in multi-dimensional interventions to develop the market systems.

May 2006

Contact details

Alison Griffith
International Team Leader - Markets and Livelihoods 

Luis Osorio
International Programme Co-ordinator

More production and markets case studies
Participatory Market Chain Analysis

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