SDVC Project Summary

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SDVC Project Summary
The Dairy Sector in Bangladesh
Figure 1: The Dairy Value Chain in Bangladesh Dairying activity in Bangladesh is comprised of two somewhat
overlapping but weakly integrated systems: the informal semisubsistence local market system and the improved commercial
value chain (see the value chain diagram, Figure 1). The informal market is characterized by smallholder mixed farms
with 1-3 local breed cows that subsist on low quality feed and
other inputs. Producers sell perhaps 1 liter of milk per day to
local buyers at low and fluctuating prices with few hygiene
practices. The formal market includes large and medium sized
private sector processing companies that collect, refrigerate,
pasteurize, process and package milk and milk products for
consumption primarily in urban centers.
For smallholders to benefit from dairy production they must
overcome challenges including low productivity and profit
margins, limited access to quality inputs, low informal market
prices, geographically disaggregated production, and a lack of
transparency and efficiency in dairy transactions. Further up
the economic ladder, commercial diary processors face a different challenge—insufficient supply of quality milk. Operating below capacity, these companies are unable to satisfy the
booming demand for dairy products in the urban areas. In
fact, they receive only nine per cent of the country’s domestic
milk production, requiring the country to import 27% of its
milk consumption needs. Apart from foregone business opportunities and unrealized profits, highly unequal distribution of
milk products between rural and urban regions leads to the
escalating malnutrition rates, especially among children. In
Bangladesh, 48 percent of children under five are chronically
malnourished and 30 percent of the total population is below
the minimum level of dietary energy consumption. Yet, although Bangladesh’s dairy sector is weak and fragmented, the
potential for a more aligned and integrated value chain to
simultaneously improve the livelihoods of small farmers and
the businesses of processors is significant.
to $40-50 per month. In addition to helping milk-producing
small scale and landless farmers to enhance their livelihoods,
by taking a value chain approach the project also aims to
benefit a range of dairy value chain actors, including 350 milk
collectors, 165 paravets, private sector processors, investors,
and transporters.
Holistic Value Chain Intervention
The SDVC project has taken a holistic approach to strengthening the dairy value chain (Figure 1) through a series of market-based interventions that engage a variety of stakeholders
and address many of the inherent weaknesses of the system.
Having identified as series of key constraints CARE developed
a comprehensive response strategy, broadly focused on:
Working to improve producer capacity, knowledge, market
power and agency through organizing farmers into dairy
producer groups
Improving access to quality inputs and services through
partnerships with various private sector actors; and,
Creating linkages between producers and formal or informal market buyers through a range of delivery channels.
CARE’s Response
In 2007, CARE launched the Strengthening the Dairy Value
Chain (SDVC) project, a 5-year, US $5.25 million initiative
funded by the Bill and Melinda Gates Foundation aims to improve the livelihoods of 35,000 rural smallholder and landless
households (175,000 individuals) in nine districts in north
and northwest Bangladesh by enhancing their participation in
and profits from the strengthened dairy value chain.
By project end, CARE Bangladesh expects to increase household incomes of participants from a current $18-30 per month
Using a facilitation approach to create market linkages, SDVC
staff members create opportunities for village producers and
farmer leaders to meet and get to know other important value
chain actors such as chilling plant managers, feed and medicine sellers, vets and animal health workers, informal sector
milk buyers, and artificial insemination service providers. Simultaneously, CARE has built relationships with all of the
country’s major milk processors, as well as a number of strategic medium-sized and small processors and retailers to enhance demand for milk produced by CARE-facilitated groups.
In addition to these core activities, CARE is continually pursuing strategic pilots to test potential solutions to bottlenecks
in the dairy value chain and improve producer outcomes.
Some efforts of note include:
Community-Based Dairy Veterinary Services. This effort is
testing a new approach to providing smallholders with
access to quality dairy services and inputs.
Rural Sales Program / SDVC Linkage. This pilot is facilitating
smallholder producer access to improved dairy inputs,
including improved animal feed and veterinary services,
by integrating dairy input commerce in the Rural Sales
Program’s retail distribution network which has 3,000
active agents.
Participatory Performance Tracking Matrix. This unique,
interactive tool allows CARE field staff to systematically
collect and analyze data from dairy producers, promoting
CARE’s accountability, supporting cooperation among the
members of producer groups and allowing CARE to better
identify and address potential problem areas.
Introducing Digital Lactometers. CARE introduced a pilot for
milk collectors and processors to use digital lactometers
to assess the quality of the milk, and set an appropriately
fair price. The transparency this enables (as opposed to
buying by weight) has improved milk quality in the supply chain and enhanced trust among market actors.
By focusing on a combination of core activities and innovative pilots, SDVC is advancing toward its targets while also
taking on forward-looking challenges to long-term, pro-poor
growth in the Bangladesh dairy sector.
As of April 2010, SDVC has organized over 15,000 farming
households into 519 producer groups and trained 163 milk
collectors and 120 local animal health workers. Households
have increased milk production 78% to 2.1 l/day and have
increased their dairy related incomes 31% to 30 Taka($0.43)/
day. The percentage of SDVC producers, 77% of whom are
women, selling milk to private sector processors increased
from 25% to 29% and the average price received by farmers
increased 5% to 26.5 Taka ($0.38). Women farmer leaders are
successfully leading 65% of farmer groups and providing animal health and feeding advice to group members and their
communities. SDVC has also signed MOUs with the major processors BRAC, PRAN and Milk Vita to help them think through
how they could provide needed inputs and services to lowincome farmers on a profitable commercial basis. To further
address the challenge of access to quality inputs for farmers,
SDVC is supporting the development of a grassroots network
of dairy input and service shops where farmers can buy quality
feed and medicines and procure veterinary and artificial insemination services. CARE has also made progress in positively
influencing the overall policy environment for the dairy sector
by commissioning evidence-based research on specific issues
constraining the industry, and then convening a national conference and issue-specific multi-stakeholder advocacy groups
to work together on achieving the necessary improvements in
government policy and regulation.
Narayan and Zaman (2009). Breaking Down Poverty in Bangladesh. Dhaka, Bangladesh: University Press Limited. See also Haque (2007). Improved Market
Access and Smallholder Dairy Farmer Participation for Sustainable Dairy Development. Living in poverty in this co ntext means consuming less than 1 ,900
calories per day (the minimum desired level is 2,300).
Haque (2007). Improved Market Access and Smallholder Dairy Farmer Participation for Sustainable Dairy Development.
CARE. (2007). Strengthening the Dairy Value Chain in Bangladesh: Proposal to the Bill and Melinda Gates Foundation.
WHO, 2009. Health Action in Crisis: Bangladesh. See also Barker, K. And Hin sch , M. 2009, TetraPak in Bangladesh.
WHO, 2005. Regional Health Situation: Bangladesh.
For more information on each initiative, please refer to the individual case studies.
All figures from SDVC’s Semi-Annual Report to the Bill and Melinda Gates Fou ndation, April 2010.
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