Fixing a Market Failure Provides Profits and Empowerment
Shahera Khatun says that the biggest changes since her community got a Digital Fat Tester Collection point are that she makes more money than she did before, and now she is able to be involved in the dairy business.
“Before, my husband made all of the decisions about what to do and where to sell our milk. I am not even sure where we sold it, although I think it was to other companies or in the market. Now, the center is close to home, and I can come myself to sell the milk. I have gotten so much education in the 18 months this has been here. Now I know how to raise the cows, and I am selling more milk—higher quality milk.”
How did the change happen? After five years of focusing on producer group training, we had a major breakthrough. The Digital Fat Tester—introduced by CARE’s Strengthening Dairy Value Chain project with the support of the Bill and Melinda Gates Foundation—corrected a simple market failure: the lack of transparency in testing meant that buyers couldn’t reward high quality milk, and farmers had no incentive to invest in better production.
Women in Bangladesh’s dairy sector face huge challenges: little access to information, limited mobility that prevents them from going to markets, middlemen who take a cut of the profits, and the lack of transparent buying practices. They have little ability or incentive to invest in higher quality milk.
Dairy producers, like BRAC Dairy, also have challenges. They get inconsistent milk quality, since the expense and difficulty of traditional testing methods and the number of middlemen in the existing value chain makes it hard to compensate farmers for producing higher quality. Since they struggle to reach producers, they cannot teach them new techniques that would make for a steady supply of quality milk. So plants run below capacity and companies lose money.
The DFT collection centers change all that. Independent business owners with connections to the BRAC chilling plant system run local centers that provide fast, transparent quality testing close to women’s homes. The machines provide written receipts to farmers so they have a record of both quality and price. And they provide a platform for companies and extension agents to provide new tools and training to women farmers.
Farmers see a huge advantage. Not only are women more able to participate, but they are earning more money. Shahera says, “I can make twice as much money selling through the DFT as I do if I sell in the open market. And I use that extra income to educate my children and buy higher quality food, as well as investing in the cows.”