POTAZIA, Bangladesh -- The morning "rush hour" in this dusty but prosperous village in northeast Bangladesh is a happy affair. Talking and laughing, children and adults throng a collection point in the main square, all holding in their hands the source of the community's success: jugs of milk.

"In 1976, when I first came to this village, the houses were made of straw and palm fronds," says Dr Mohammad Abdul Barik, a veterinarian and Deputy General Manager for Societies of the Bangladesh Milk Producers' Cooperative Union Ltd., known throughout the country by the brand name Milk Vita. "Now, as you see, the houses are made of corrugated iron."

Alhaj Mohammed Huq, a retired teacher and chairman of the local milk society, adds, "The conditions here were miserable when I was a child. Most students had a hard time buying books."

Potazia's business had been to supply milk to a small commercial dairy about 20 to 25 kilometres away. Roads were bad. Villagers would send milk all that way and sometimes the dairy couldn't process any more milk and wouldn't buy it.

"We were exploited," says Mr Huq. "Milk was used in sweets but there was a monopoly of sweet makers and they controlled the price. If they liked they would offer five taka (10 cents), or they would not even take the milk."

Then the people from the Milk Vita dairy cooperative came to town, and the result is a remarkable 25-year march of progress in a corner of one of the world's poorest countries. Not only did Milk Vita break the milk buyers' monopoly but, more importantly, it substantially expanded milk production in the region. The success shows clearly what is possible when the right idea, the right economic and physical environment and the right participants come together under competent management.

FAO, the United Nations Development Programme and the Danish aid agency DANIDA stuck with the dairy cooperative for as long as they were needed -- 15 years -- a long time for development agencies to stay focused on one project. FAO trained the current generation of managers and provided technical assistance for everything from animal health to milk processing to product marketing.

Sheikh Mujubir Rahman, Bangladesh's founding father, had a vision of democratically run farmers' cooperatives leading rural development in the country. The government started Milk Vita shortly after independence in 1974. In the early 1990s it withdrew, leaving the cooperative to an independent Board of Directors, the majority of whom are now farmer-elected. The new board replaced civil servants with professional managers and the cooperative finally became profitable.

Milk Vita is Bangladesh's largest dairy company and the leading supplier of fresh milk and dairy products such as butter and yogurt to Dhaka. Private dairies even copy some of Milk Vita's business model. For the last 10 years Milk Vita has stood on its own two feet, without subsidies from either the international community or the government. In 1998, 40 000 farmers, who pay a nominal fee to join the cooperative, earned a total of US$9.3 million through the sale of 30 million litres of milk. Farmers receive crucial animal services such as vaccations and artificial insemination. Dividends decided by the cooperative flow back to producers -- in 2000, US$1.5 million was paid out. The price of milk is set by the cooperative based on current demand.

The best news of all is that Milk Vita will expand into four new areas of Bangladesh where traditional small-scale milk production still prevails -- to be financed not by international charity but by the cooperative's own profits. "My vision 25 years ago was that this farmers' cooperative would cover all of Bangladesh," says Dr Barik.

Judging by the facts, there is no reason why the dream can't come true.

August 2002