Livestock Production and Dairy Sector Performance in Bangladesh: Does Dairy Productivity Promote Smallholder Commercialization?

ABSTRACT Low dairy sector performance is a significant barrier to agricultural transformation in developing countries, where improving dairy productivity can drive market participation and commercialization. Smallholder farmers often struggle to realize the benefits of commercialization due to institutional challenges and supply‐side constraints that limit productivity and reduce marketable surpluses. This study investigates the socioeconomic, infrastructural, and institutional factors affecting dairy sector performance and its role in boosting smallholder commercialization in Bangladesh. Using data from rural smallholder farmers in the Sirajganj district, the study employs Cragg's Double‐Hurdle model to examine dairy commercialization as a two‐step process: market participation and the extent of participation (sales volume). The findings reveal that higher milk production enhances both market participation and sales volume. Moreover, household head age and experience positively influence market participation, while education level, vocational training, and family labor increase sales. However, greater market distance hinders participation, underscoring the need for improved infrastructure. Policy recommendations include increasing milk production through training and resources, enhancing market infrastructure, reducing transport costs, expanding vocational training, addressing gender barriers, and promoting education. These measures can strengthen smallholder dairy farmers' market engagement and improve their economic outcomes, contributing to agricultural transformation in Bangladesh.