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International Journal of Sustainable Agricultural Research

September 2021, Volume 8, 3, pp 164-179

Factors Determining the Smallholder Milk Producers Participation in Contractual Agreements: The Case of North-West Bangladesh

Onik Chandra Das


Mohammad Jahangir Alam


Mohammad Ismail Hossain


Md. Mazadul Hoque


Swarup Barua

Onik Chandra Das 1

Mohammad Jahangir Alam 2 Mohammad Ismail Hossain 2 Md. Mazadul Hoque 4
Swarup Barua 5

  1. General Banking Division, Uttara Bank Limited, Keshorhat Branch, Keshorhat, Mohonpur, Rajshahi, Bangladesh. 1

  2. Department of Agribusiness and Marketing, Bangladesh Agricultural University, Mymensingh, Bangladesh. 2

  3. Social Islami Bank Ltd. Dhaka, Bangladesh. 4

  4. Department of Agricultural Marketing and Business Management, Sylhet Agricultural University, Sylhet, Bangladesh. 5

Pages: 164-179

DOI: 10.18488/journal.70.2021.83.164.179

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Article History:

Received: 28 April, 2021
Revised: 04 June, 2021
Accepted: 06 July, 2021
Published: 02 August, 2021


Contract farming plays a significant role by establishing a bridge in order to link the milk farmers to market. The study aimed to state current institutional arrangement of dairy sector in Bangladesh. By using simple random sampling, a total of 90 (45 contract and 45without contract) dairy farmers from Chatmohar Upazila of Pabna District were interviewed. For determining the factor of farmers willingness to participate into contractual system was analyzed by conducting factor analysis. The highest factor loadings for the first dimension were found for the stable milk output price and access to training on dairy farming while timely payment for output has relatively factor loading on second dimension as well as the access to good quality inputs (drugs and feeds) higher in third dimension respectively. The most important reasons for unwillingness to participate in contract farming were under weighing of fat, lower milk price than the market price, distance to the location of milk collection centers, sell at home, rules and regulations of PRAN Dairy Ltd., & availability of dairy farmers etc. The result clearly shows that contract farming has the potential of raising income of the smallholder dairy farmers. It benefited the farmers through reducing different input costs and other relative costs related to dairy farming, which may be more in the informal markets or without contract arrangement. In addition, contract farming contributes for improving the income of dairy farm and reducing production costs by providing different services and technical advice by the contract firms.
Contribution/ Originality
This study is one of the very few studies which have investigated contractual arrangement system of dairy farming in Bangladesh. This study contributes to the existing literature and provides comparison between the income of contracted and non-contracted dairy farmers.


Contractual arrangement, Factor analysis, Stepwise regression, Dairy farms, Bangladesh.


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This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


The authors assert heartfelt gratitude to the enumerator, respondents, and stakeholders of the study areas for their consistent support in conducting surveys and collecting the data and information.

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