The Chain That Bleeds Everyone

Picture a smallholder farmer in Jashore who wakes before dawn to harvest green chillies. By mid-morning, he has sold his entire crop to a local faria – a travelling buyer – at whatever price he is offered. He has no cold storage to hold his produce, no transport to take it further, and no way of knowing what the same chillies are fetching at Karwan Bazar forty-eight hours later.

The faria, in turn, passes the produce to a district-level “bepari”, who sells to an urban “aratdar”, who finally supplies to the retailer. By the time those chillies reach a consumer’s kitchen in Dhaka, their price has more than doubled. The farmer who grew them is none the wiser – and none the richer.

This is not an anecdote invented to make a point. It is, with small variations, the everyday reality of agricultural commerce in Bangladesh. A 2025 market survey by the Centre for Policy Dialogue (CPD) covering around a thousand participants – from farmers to retailers – across ten major commodities found that farm-to-retail price markups stood at 116% for green chillies and 87% for onions. Pulses and brinjals were not far behind, with markups of 78% and 72% respectively. CPD Executive Director Fahmida Khatun was unambiguous in her diagnosis: the longer the chain of intermediaries, the higher the price paid by the consumer – and the smaller the share reaching the producer. The report identified urban aratdars as a central chokepoint, concentrating market power and, in effect, functioning as a private toll booth on Bangladesh’s food economy.

The consequences are twofold and symmetrical. Consumers in an already inflation-pressured economy pay prices that bear no rational relationship to production costs. Simultaneously, over 85% of smallholders depend on middlemen to access markets, with intermediaries often capturing up to 40% of the final sale price, leaving farmers chronically underpaid and discouraging investment in agricultural productivity. The structural cruelty of this arrangement is that both ends of the chain lose, while those in the middle – who add logistical convenience but rarely commensurate value – continue to extract disproportionate margins.

Compounding the problem is an infrastructure deficit that makes farmers structurally dependent on intermediaries in the first place. Many rural areas remain poorly connected by road, requiring hours of travel for farmers to carry their products to nearby markets, and the means of transporting goods remain largely unchanged – raw, unpacked agricultural products piled on trucks without any cold chain, leading to food waste and contamination. Bangladesh’s cold storage capacity, meanwhile, is almost entirely devoted to potatoes. More than 400 cold storages with a combined capacity of 60 lakh tonnes operate across the country, but these are mainly used to store potatoes and are not fit for storing fruits and vegetables. The result is that up to 20%-44% of fruits and vegetables are wasted annually, resulting in estimated losses of $2.4 billion each year. A farmer who cannot store his produce cannot negotiate. He must sell immediately and accept whatever is offered – a desperation that the intermediary class has learned to price in.

This is fundamentally a governance failure, not a market failure. Markets cannot self-correct when information is asymmetric, infrastructure is absent, and regulatory oversight is weak. The concentration of wholesale power in the hands of urban aratdars – who determine procurement prices and supply volumes, and upon whom retailers depend entirely for sourcing – creates what economists recognise as oligopolistic market structure. In such an environment, competition is illusory. Prices are not discovered; they are dictated.

Bangladesh is hardly the first country to wrestle with this problem, and it need not start from scratch in designing solutions. India’s experience is instructive. After years of failed incremental reform, the Indian government launched e-NAM – an electronic National Agriculture Market – in 2016, creating a pan-India digital trading platform that connects agricultural markets and allows farmers to sell to buyers anywhere in the country. According to official data, the average reduction in intermediaries in e-NAM markets is around two to three per transaction, resulting in higher income for farmers, and the platform has cut transaction times from eight to ten hours down to thirty minutes. The transparency of real-time price discovery, electronic payments, and standardised grading has meaningfully shifted bargaining power back towards producers. Bangladesh, with its dense mobile internet penetration and active fintech sector, has the foundational infrastructure to build an analogous system – one that allows farmers to see prevailing market prices before they negotiate, rather than after.

The cooperative model offers an equally compelling template. In Thailand, cooperatives such as Green Net have carried out integrated marketing activities along the supply chain, connecting farmers directly to buyers under transparent pricing, increasing marketing efficiency and returning higher benefits to farmer-members. Kenya, Ethiopia and Mali have achieved sustainable farming and stable market prices for dairy, coffee and cotton through effective logistics support underpinned by cooperative structures. Bangladesh is not short of institutional precedent either – Milk Vita has demonstrated that a producer cooperative can function and scale in the local context. The question is whether the political will exists to extend that model to vegetables, pulses and other high-markup commodities.

Infrastructure investment must run parallel to market reform. The absence of robust cold chain infrastructure is among the most pressing challenges, with high costs and a lack of technical expertise identified as significant barriers to adoption. The government’s proposal to exempt cold storage plant and equipment from import duties is a useful start, but incentivising private investment in distributed cold storage, particularly at the upazila level, is far more consequential. A network of small-scale refrigerated hubs at production clusters would allow farmers to hold produce, compare prices and negotiate from a position of relative strength rather than post-harvest urgency. Contract farming arrangements, which some private firms have already piloted in Bangladesh, can further stabilise farmgate prices by guaranteeing off-take and eliminating the need for multiple intermediary layers.

Regulatory reform must accompany all of the above. CPD has called for the Competition Commission to be empowered to investigate anti-competitive practices in commodity markets – and this is overdue. The commission currently lacks both the resources and the mandate to meaningfully scrutinise aratdar pricing behaviour or wholesaler cartelisation. A stronger regulatory framework, backed by a transparent commodity price reporting system – publicly updated and disaggregated by commodity and location – would deny intermediaries the information advantage they currently exploit. Market participants at every level, from the Jashore farmer to the Dhaka retailer, deserve access to the same price signals.

None of this is insurmountable. Bangladesh is the world’s third-largest vegetable producer, the fourth-largest fish producer, and a country whose agricultural workforce represents close to 37% of total employment. It cannot afford a supply chain that simultaneously impoverishes its producers and gouges its consumers. The reforms required – digital market platforms, cold chain investment, producer cooperatives and genuine regulatory teeth – are neither exotic nor unprecedented. They have worked elsewhere, and they can work here. The only condition is that policymakers must stop treating the aratdar problem as a logistical inconvenience and begin confronting it as the structural injustice it is. Markets that serve no one except their own gatekeepers are not markets at all. They are extraction mechanisms dressed in the language of trade.