Journal of Social and Political


ISSN 2615-3718 (Online)

ISSN 2621-5675 (Print)

Published: 01 September 2018

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

S. Islam

Bangladesh Livestock Research Institute, Bangladesh

pdf download

Download Full-Text Pdf



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.


  1. Alam, J., Akteruzzaman, M., Ataur Rahman, S. M., and Huda, F.A. (2007). Profitability and comparative advantage of producing livestock and poultry products in Bangladesh and their international competitiveness. Annual Research Review Workshop 2011, BLRI, Savar, Dhaka.

  2. Alpine, R.W.L.; Pickett. J. (1993): Agriculture, Liberalization and Economic Growth in Ghana and Cote d’Ivoire, 1960-1990. OECD Development Center, Paris: OECD Publications (cited in Fang and Beghin, 2000, also in Masters and Winter-Nelson, 1995).

  3. Anwar, S. (2004): Comparative advantage and competitiveness of major agricultural crops in Indus BASIN: Price risk analysis. A PhD thesis submitted to the faculty of agricultural economics and rural sociology, University of Agriculture. Faisalabad, Pakistan.

  4. Appleyard, D. (1987): Comparative Advantage of Agricultural Production Systems and its Policy Implications in Pakistan. Development Paper No. 68. The Food and Agriculture Organization of the United Nations, Rome, Italy (cited in Fang and Beghin, 2000, also cited in Anwar, 2004).

  5. Balassa, B.; Schydlowsky, D.M. (1972): Domestic Resource Costs and Effective Protection Once Again. Journal of Political Economy. VO. 80: PP.63-69 (cited in Nelson and Panggabean, 1991). [G1] 

  6. Beghin, J.; Fang, C. (2002): Protection and Trade Liberalization Under Incomplete Market Integration. American Journal of Agricultural Economics. 84(3): PP.768–773. American Agricultural Economics Association.

  7. Bruno, M. (1967): The Optimal Selection of Export-Promoting and Import-Substituting Projects. Planning the External Sector: Techniques, Problems and Policies, Report on the First Interregional Seminar on Development Planning. New York: United Nations, (cited in Nelson and Panggabean, 1991, also in Shahabuddin,, 2002).

  8. Bruno, M. (1972): Domestic Resource Costs and Effective Protection: Clarification and Synthesis. Journal of Political Economy. Vol. 80: PP.16-33 (cited in Nelson and Panggabean, 1991).

  9. Bruno. M. (1965): The optimal selection of export-promoting and import substituting projects. In planning the external sector: Techniques, problems and policies. New York: United Nations (cited in Balaassa and Schydlowsky, 1972). [G2] 

  10. Bureau, J.C.: Kalaitzandonakes, N. (1995): Measuring effective protection as a superlative index number. American Journal of Agricultural Economics 77: PP. 279–290.

  11. Byerlee, D.; Morris, M. L. (1993): Calculating levels of protection: Is it always appropriate to use world reference prices based on current trading status? World Development, Vol. 21, No. 5. PP. 805-815 (cited in Shilpi, 1996).

  12. Corden, W. M. (1971): The Theory of Protection. London: Oxford University Press.

  13. Corden, W. M. (1979): The Theory of Protection (London: Oxford University Press) (cited in Shilpi, 1996).

  14. Fang, C.; Beghin, J.C. (2000): Food Self-Sufficiency, Comparative Advantage, and Agricultural Trade: A Policy Analysis Matrix for Chinese Agriculture. Working Paper 99-WP 223. Center for Agricultural and Rural Development and Department of Economics, Iowa State University[G3] , Ames, Iowa. USA.

  15. Gittinger, J.P. (1982): Economic Analysis of Agricultural Projects, 2nd ed. Baltimore MD: The Johns Hopkins University Press, London (cited in Nelson and Panggabean, 1991 also in Anwar, 2004).

  16. Gonzales, L. A.; Kasryno, F.; Perez, N. D.; Rosegrant. M. W. (1993): Economic Incentives and Comparative Advantage in Indonesian Food Crop Production. Research Report No. 93. International Food Policy Research Institute, Washington, D.C (cited in Fang and Beghin, 2000 and in Masters and Winter-Nelson, 1995).

  17. Gulati, A.; Hansen, J.; Pursell, G. (1990): Effective incentives and India’s agriculture: cotton, groundnuts, wheat and rice. Policy, Planning and Research Working Paper No. 332, The World Bank Washington, DC (cited in Rakotoarisoa and Gulati, 2006).

  18. Kannapiran, C.A.; Flemming, E.M. (1999): Competitiveness and comparative advantage of tree crop smallholdings in Papua New Guinea. Working paper series in agricultural and research economics (cited in Anwar, 2004).

  19. Krueger, A.O. (1966): Some economic costs of exchange control: the Turkish case. Journal of Political Economy. 74: PP. 466-480.

  20. Kuddus, M.A. (2006). Production and consumption aspects of milk in some selected areas of Mymensingh. Bangladesh Journal of Agricultural Economics, 29: PP. 39-52.

  21. Masters, W. A.; Winter-Nelson, A. (1995): Measuring the Comparative Advantage of Agricultural Activities: Domestic Resource Costs and Social Cost-Benefit Ratio. American journal of agricultural economics 77: PP. 243-250.

  22. Monke, E.A.; Pearson, S.R. (1989): The Policy Analysis Matrix for Agricultural Development. Ithaca and London: Cornell University Press.[G4] [G5] 

  23. Morris, M. L. (1990): Determining Comparative Advantage through DRC Analysis: Guidelines Emerging from CIMMYT’s Experience. CIMMYT Economics Paper No. 1. Mexico City, Mexico (cited in Fang and Beghin, 2000).

  24. Morris, M.L. (1989): Wheat policy options in sub-Saharan Africa: The case of Zimbabwe. Agricultural Economics, Volume 3, Issue 2, PP. 115-129.

  25. Nelson, G.C.; Panggabean, M. (1991): The Cost of Indonesian Sugar Policy: A Policy Analysis Matrix Approach. American Journal of Agricultural Economics. Vol. 73 No. 3: PP. 704-12. Published by: Blackwell Publishing on behalf of the Agricultural & Applied Economics Association.

  26. Nishimizu, M.; Page, J. (1986): Productivity change and dynamic comparative advantage. Review of economics and statistics, 68: PP. 241-247 (cited in Masters and Winter-Nelson, 1995).

  27. Rabbani, M.S., Alam, M. M., Ali, M. Y., Rahman, S. M. R. and Saha, B.K. (2004). Participation of rural people in dairy enterprise in a selected areas of Bangladesh. Pakistan Journal of Nutrition, 3 (1): PP. 29-34.

  28. Sadoulet, E.; de Janvry, A. (1995): Quantitative Development Policy Analysis, Baltimore, MD.: The Johns Hopkins University Press.

  29. Sadoulet, E.; de Janvry, A. (1992): Agricultural trade liberalization and low income countries: A general equilibrium-multimarket approach. American Journal of Agricultural economics, Vol. 74, No. 2. PP. 268-280. American agricultural economics association.

  30. Shahabuddin, Q.; Hossain, M. Mustafi, B.A.A.; Narciso, J. (2002): Assessment of comparative advantage in rice cultivation in Bangladesh. In: Sombilla M, Hossain M, Hardy B, editors. Developments in the Asian Rice Economy. Proceedings of the International Workshop on Medium-and Long-term Prospects of Rice Supply and Demand in the 21st Century, 3-5 December 2001, Los Baños, Philippines: International Rice Research Institute. PP. 369-384.

  31. Taylor, D.S.; Phillips, P.T. (1991): Food-pricing policy in developing countries: further evidence on cereal producer prices. American Journal of Agricultural Economics 73, PP. 1036–1043 (cited in Rakotoarisoa and Gulati, 2006).

  32. Timmer, C. P. (1989): Agricultural prices and stabilization policy. Development Discussion Paper No. 290 (Cambridge, MA: Harvard Institute for International Development) (cited in Shilpi, 1996).

  33. Uddin, M. T. and Islam, M. M. (2011). Impact of recent changes in livestock production pattern on farm families` livelihood and health in selected areas of Bangladesh. Annual Research Review Workshop 2011, BLRI, Savar, Dhaka.

  34. Weiss, J. (1991): An application of the domestic resource cost indicator to Mexican Manufacturing. Industry[G6]  and Development, 29: PP. 63-78 (cited in Masters and Winter-Nelson, 1995).

  35. World Bank. (1991): Zimbabwe Agricultural Sector Memorandum. Report No. 9429-ZIM. Washington, D.C (cited in Fang and Beghin, 2000).



About Us

The Asian Institute of Research is an online and open-access platform to publish recent research and articles of scholars worldwide. Founded in 2018 and based in Indonesia, the Institute serves as a platform for academics, educators, scholars, and students from Asia and around the world, to connect with one another. The Institute disseminates research that is proven or predicted to be of significant influence for the general public.

Contact Us

Please send all inquiries to the email:

Business Address:

5th Floor, Kavling 507, Fajar Graha Pena Tower, Jl. Urip Sumohardjo No.20, Makassar, Indonesia 90234

Copyright © 2018 The Asian Institute of Research. All rights reserved

Stay Connected

  • Instagram - Black Circle
  • Facebook - Black Circle
  • LinkedIn - Black Circle