Proponent
Tetra Laval Food for Development Office
Katarina Eriksson, Senior Project and Partnership Development Manager
Date/Timeframe and location
Project name: Dairy Hub and Dairy Academy Development in Bangladesh
Timeframe: 2011 and onwards. From 2014, donor funding has co-funded the development of 3 dairy hubs (no 3,4,5) in a 3.5 year partnership project.
Location: Bangladesh
Main responsible entity
PRAN Dairy in Bangladesh (part of PRAN-RFL Group)
Nutrition context
The Dairy Hub model, as implemented in Bangladesh, was developed by Tetra Pak and its Food for Development Office together with Tetra Pak’s sister company DeLaval. The Dairy Hub project in Bangladesh started as a private sector initiative in 2011 as a response to the dairy processor’s need to source more locally produced milk for processing.
In 2008, as a response to the food crisis, when prices of globally traded milk powder more than doubled, and when Tetra Pak realised that many dairy processing customers in developing countries had problems to cope with these cost increases, Tetra Pak took the initiative to develop the “Dairy Hub model” as a way to help customers in developing countries get access to more locally produced milk and better quality milk.
The model rests upon the idea of linking smallholder farmers to a dedicated dairy processor in a selected area, and providing hands-on practical knowledge transfer. By setting up sufficient infrastructure with appropriate technology and cooling facilities, providing knowledge transfer, and offering the farmers advisory services, the supply of locally produced quality milk will increase and the dairy processor can establish a more stable supply chain.
In Bangladesh, the market for safe, nutritious and affordable dairy products is increasing and milk, being a very nutritious food, should be made available to all consumers. This project links smallholder dairy farmers in Bangladesh to the dairy industry. Small holders increase volumes and quality of locally produced milk and the dairy processor puts safe, nutritious dairy products on the market at affordable prices. Dependence on imported milk powder is reduced and milk is available and affordable also to consumers with low incomes.
In addition to milk being available to more consumers, farmers benefitting from the project increase their incomes and invest some of their additional income on improving their diet. Safe, affordable milk can now also be made available for school feeding and other social programs.
Key characteristics of the food system(s) considered
- Bangladesh is a country depending on import of milk and dairy products. The demand for milk and dairy products is increasing. This project has reduced the need for imported milk powder and made more products based on locally produced milk available in the market.
The introduction of milk in aseptic packaging has made it possible to distribute milk without the need for cooling. Safe milk and dairy products are now available to more consumers, not only through retail but also through “traditional trade”, i.e local markets and kiosks etc.
Key characteristics of the investment made
A Dairy Hub project requires investments in:
- Pre-project assessments of milk production potential, identification of strategic locations for collection centers, project feasibility etc
- Infrastructure such as collection/cooling centers, milk quality control and milk transporting equipment/vehicles
- Milk reception, processing and packaging equipment
- Farmer and staff training in milk production incl. animal health and breeding, milk quality, feed production and feeding, farm management etc
- Farmer services such as veterinary services, input supplies etc
- Project management
All investments in “hard ware” are made by the private sector. Some of the investments in training and project management has been co-funded by donor funds (Sida) in a 3.5-year Private Public Development Partnership project implemented by Unido.
Key actors and stakeholders involved (including through south-south/triangular exchanges, if any)
- PRAN Dairy in Bangladesh
- Tetra Pak Bangladesh
- Tetra Laval Food for Development Office
- Swedish International Development Cooperation Agency (Sida)
- Unido (implementer of partnership co-financed by Sida)
Ministry of Fisheries and Livestock- Department of Livestock Services
Key changes (intended and unintended) as a result of the investment/s
The middle men that used to buy farmer’s milk on irregular basis are no longer involved. The milk reaches the dairy faster and with better quality. Farmers benefit from a secure market for all milk they produce and get a fair price. Farmers’ incomes increase.
Examples of impact after 60 months (Dairy Hub no 1):
- Average milk yield per cow per day increased from 4.45 to 10.8 litres (+143%)
- Average income per smallholder farmer (2006 farmers) increased from USD 100 to USD 244 (+144%)
- Daily milk collection in Dairy Hub 1 area increased from 2,000 litres to 41,000 litres
When the five Dairy Hubs are completed and fully operational, more than 10,000 farmers will be covered by the project.
Challenges faced
- Staff trained by the project is attractive on the labor market and many leave for other employment.
- Partnership projects are complex and stakeholders different internal processes sometimes lead to delays.
Lessons/Key messages
- Smallholders can be effectively integrated into formal industrial value chains.
- Project results and impact must be carefully monitored, in this case on a per cow and per farm basis.
- Project feasibility should be demonstrated by private sector first, and donor funding used to scale up and increase outreach.
The PRAN Dairy Hub case is described in HYSTRA’s report “Smallholder farmers and business” “http://hystra.com/smallholder/
Ms. Katarina Eriksson