A Farm Economic Analysis in Different Dairy Production Systems in Bangladesh

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Dairying in Bangladesh is growing fast but faces problems of high input and low output prices leading to lower profitability. Due to globalization and the impact of world milk price changes, dairy farmers need to find ways of reducing costs and increasing returns in order to be more competitive. The objective of this study is to provide a detailed farm economic analysis of extensive, intensive and traditional dairy production systems in Bangladesh by using the (Technology Impact Policy Impact Calculations) TIPI-CAL model in order to identify points of intervention for cost reduction. Two typical farms (one average-sized and one large-sized) from each production systems were selected in three regions.

The results showed that each system differed in terms of inputs, outputs, costs, returns and entrepreneur’s profit. The large-scale intensive production system had the lowest milk production costs (30.88 US-$/100 kg Energy Corrected Milk (ECM) compared to 43.46 US-$/100 kg ECM for the small-scale traditional system. The highest milk yield was observed in the large-scale intensive dairy farming system (1600 kg ECM/year). Milk yield increased and the cost of milk production decreased with increasing farm size. Small-scale farmers of extensive and traditional farming system had a negative entrepreneur’s profit (-0.93 and -0.27 US-$/100 kg ECM, respectively), and were not able to cover their full economic costs from dairying.