brac makes rural hi-tech where and when that will build local advantage - sroey from 2009 brac report
Lokman Hossain, an artificial
insemination worker, uses bull
semen from a nitrogen tank and
inseminates cattle in Kharuaganjla,
one of many villages in Sirajganj
district where BRAC collects milk
from a group of dairy farmers. One
of them, Joynal Abedin, praises
Hossain’s work: “He helped me to
get a better breed that gives more
milk. My wife took a loan from BRAC
to buy our first cow and now we
have three.” Abedin adds that
supplying milk to BRAC means
getting good service and a fair
price in return.
BRAC provides Hossain with
training, refresher courses, imported
semen variety and all necessary
equipment and supplies. He carries
out about 15 inseminations every
month, earning between
additional extract from brac 2009 annual report - explain dairy as a brac enterprise is designed round positive cashflow but not profit maximisation; its raison d;etre is to secure the value chain of the whole market so that hundreds of thousands if women can owb a cow and make a surplus by selling to brac
Development Problem: A typical microcredit borrower, a poor
woman, uses her loan to buy a milk cow. Her goal is to earn a daily
income by selling the milk. When the cow falls sick and stops giving
enough milk, she not only loses income but is on the way to losing
her asset (the cow will probably die) and she still owes money.
She will need to pay back her loan for which she will borrow again
(this time from a money-lender at exorbitant rates or from another
microcredit provider), she is likely to sell off any other asset and take
her children out of school and into domestic or hazardous labour.
The end result is that the household will sink deeper into poverty.
Conversely, the woman’s cow gives a lot of milk – but there is no
market for milk in her village or there is an over-supply of milk as
other borrowers are also investing in cows. At most, she gets a very
low price which does not cover the cost of feeding the cow or
repaying the loan. There is also no way to store the fresh milk or
opportunities to sell to distant villages where prices may be higher.
A Business Solution: Many of our borrowers invest their loans in
livestock. To increase their productivity, we provide supporting
activities that form backward and forward supply chain linkages,
including disease management, dissemination of improved
breeds, supply of livestock and poultry feeds and marketing of milk.
To minimise borrower risks, we provide training on feed, care and
illness detection, deliver veterinary services at the household level,
provide artificial insemination to improve cattle breed and arrange for
village-level milk collection. Women can walk from their house to a
central place in the village from where milk is collected daily and
taken to regional chilling centres. Tankers collect from chilling centres
and deposit centrally for processing, packaging, national distribution
and sale. The end result is a winning situation for our borrowers,
creation of employment and a furthering of our mission.
Serving the Underserved
One way to look at how BRAC’s development programmes and
social enterprises relate is to view them as lying on the same poverty
reduction spectrum. In Bangladesh, we are facing new challenges as
we are not creating enough jobs for the 2 million people who come
into the labour market annually. One way is create to selfemployment.
BRAC’s comprehensive development approach, which
includes microcredit, education, healthcare, social empowerment
and legal awareness, provides the opportunity and the enabling
conditions. However, the commercial success of self-employment
ventures can only be ensured through social enterprises.
A key distinguishing feature of our social enterprises is our willingness
to accept low profit margins and the openness to shouldering
considerable market risk. Because the social enterprises have
evolved in direct response to a need identified during programme
implementation, there is a demand for the products of these
enterprises. This demand ensures that the enterprise is viable.
However, the very nature of BRAC’s commercial activities and their
concentration in sectors where most of the poor are involved acts to
contain excessive profit-making. BRAC persists in running low-profit
enterprises because they create transformative benefits for the poor
in terms of employment increased income and opportunities for
exposure to improved technology and new methods for processing
and marketing. Taken together with access to BRAC’s healthcare,
education and social empowerment programmes, they form
a value chain.
Workers package milk at the BRAC Dairy Factory in Gazipur.
Driving Competition
With regard to competition, since our overall role is always
to fill gaps, BRAC does not enter into sectors or markets
that are already served fairly by the private or public sector.
In fact, when the private sector moves into sectors opened
by BRAC and serves our target markets effectively, we often
step out. Are we creating barriers to entry for the private
sector because they have to pay taxes? So, for each and
every activity that is deemed taxable under the law, in fact,
do we operate at a much greater financial disadvantage?
Because a private business with a profit motive can choose
to source inputs and locate its production facilities from
wherever it is most cost effective. Our outreach, however,
is driven by other considerations – we need to get services to
underserved areas. We first choose an area that is
underserved and then we start with what is needed. Are we
maximising profits? No, we are operating at whatever level
the market will sustain and the market is our best indicator.
Aarong products, for example, are touted as too expensive –
however, Aarong’s sales continue to increase, and on the
other end, we are sustaining the livelihoods of more and
more poor
over the years (50 that Sir Fazle Abed served 1970-2019) the full list of brac enterprises
2,6 14 nation leading supply chains financial opportunities to end poverty ;
define the markets that the poor needed designed nationwide to maximise human development of the whole nation - back when bangladesh emerged as new nation in 1971- 90% of people were rural-- the national government were had little enough taxes etc to cater for the 10% in the cities; not every poorest nation will need exactly the same markets value chains designed for development but if poorest nations dont have a network playing the enterprise role that brac played it is hard to see how a nation emerges from leatr developed
it should also be noted that bangladesh has virtually no position in mineral resources (please correct me if you have other info chrisd.macrae@yahoo.co.uk); on the one hand this means that it does not have many foreign corporations extracting from it; conversely to date this gas meant that bangladesh's exoert markets are confined to 3 main dimensions
food ie where agriculture produces srpluses to its own people food needs nd/or cash crops (eg tea)
garments - bangladesh has becomes second to china as a leading garment exporter - brac has played a background role in always celebrating artistc and cultural design capabilities (nb 2020s may be a tough decade to retain this ranking - its not clear whether technology will disadvantage Bangladesh or even who/what forms the nation's main's strategizing in this market) - there have also been tragedies eg Rana which make the transparency of this sectirs wealth distribution unclear - of course the world's biggest fashion brand's also bare responsibility for teh overall global purpose of clothes markets which faces both environmental and social scrutiny
remittances - brac is a country where many of the strongest males are sent abroad to work on other nations buildings etc - by remitting back much if their earnings they support their families- over time brac needed to get into remittances a market that has often charged (excessively) for the money transfer from foreign nation through to village families - some estimates show remittances as about a third of all foreign exchange earned (ongoing review needed)
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previous notes on brac dairy
milk is a difficult product to market in a developing and humid nation - it doesnt keep long
fazle abed wanted to improve value even for small producers by marketing powdered milk , but timing was everythng- he had to wait untile the eu stopped dumping
there are q uite a lot of stories about brac dairy that need careful mapping - one is a new accountant who seeing the numbers of the dozen or so manufacturing plats said its obvious this one needs closing - its bring down profitabilty- to which abed said not obviious thats the poorest part of the coubtry and more emplymemt would be lost by closing that dowb than anywhere else
social business models are not afraid to cross-sponsor for the benefit of maximising total livelihoods sustained
================= write up at brac factsheet
BRAC Dairy was launched in 1998 to help marginal and homestead dairy farmers gain better access to the market and receive fair prices. A large number of our microfinance clients were investing in cattle, and in doing so were being exposed to risks owing to poor breeding, limited veterinary services, shortages in cow feed and the inaccessibility of the market. Some of these challenges were addressed through social enterprises such as BRAC Artificial Insemination and BRAC Feed Mills, but the perishable nature of dairy products meant that it remained difficult for rural dairy farmers to reach large urban markets. BRAC Dairy works to offer market access to rural dairy farmers by buying milk from them at a fair price, and ensures a constant and steady demand and good return for the milk being produced by these rural entrepreneurs
BRAC Dairy today Today, BRAC Dairy not only secures fair prices for its rural dairy farmers, but has also expanded to offer cattle development and technical training, vaccination, feed cultivation facilities and other services. BRAC Dairy was the first dairy company in Bangladesh to have received ISO 22000 Certification, setting an example of vigilance at every stage of dairy production, processing, and distribution contributing to dairy products’ safety record.Through its 101 chilling centres, BRAC Dairy collects milk from more than 50,000 registered farmers and sells them nationwide under the Aarong Dairy brand.
Quick stats BRAC Dairy has a collection and processing capacity of around 250,000 litres of milk per day. Today, the enterprise accounts for 24 per cent of the national packaged dairy products market. Currently, this enterprise serves approximately 50,000 dairy farmers in the western region of Bangladesh with over 1,400 employees working under its umbrell
