Protection and Comparative Advantage of Milk Production through Rearing of Cross-Bred Dairy Cattle in Bangladesh: A Policy Analysis Matrix

The study aims to determine the policy incentive in terms of protection and efficiency of production through a comparative advantage in the milk sector by using policy analysis matrix (PAM) on the basis of field level primary data from different agro-ecological zones of the country. From policy analysis matrix in-line with private/financial profit, social/economic profit and policy divergences/transfers, various protection coefficients such as NPCO, NPCI, EPC and PC and competitiveness coefficients such as DRC, SCB were derived to measure the level of protection and comparative advantage in the milk sector of Bangladesh. The results of the policy transfer and protection coefficients ( NPCO, NPCI, EPC and PCO criteria) shows that milk production in Bangladesh is subsidized for inputs (NPCI<1) and taxed for the product/output (NPCO>1).The net effect of output taxation and input subsidy resulted in net taxation on value added (EPC>1) for policy goal of self-sufficiency. From the efficiency perspective, the estimated economic profitability criteria and competitiveness indicators (DRC, SCB) exhibit that Bangladesh has a comparative advantage in milk production domestically for import substitution.