Monday, 29 November, 2021

How Will Farmers Get Fair Price?

  • Dr. M. Jamal Uddin
  • 23rd November, 2021 07:11:12 PM
  • Print news

The farmer wants a fair price, the trader wants a higher price and the consumer wants a lower price. It is quite challenging to satisfy everyone by combining these three values. The solution does not match perfectly. The question may be why this is happening? The simple answer is that traders (intermediaries) are doing this to make more profit although they are making all sorts of arguments.

Practically this argument is irrational because there is a big difference between the prices received by the farmer and the retail price paid by the consumers. This is due to the profiteering mentality of the intermediaries. So the buyers demand the government to set a tolerable price. Many experts also proposed the formation of a price commission for this. Basically, the main reason is that the farmers do not get a fair price due to the lower bargaining power of the farmers and the syndicate of the intermediaries in most of the cases.

In the existing market system, after a product is produced, it is purchased directly from the farmer by the peddler or local trader or wholesaler. They sell the purchased product directly to the commission agents (Arateder). The commission agent sells goods to retailers or wholesalers for a fixed commission on profits. Retailers also buy products directly from farmers or peddlers, traders and wholesalers.

All the traders except the farmer have a close relationship. In many cases it is called syndicate. This syndicate is one of the main reasons for the rise in prices in the retail market. Most of the farmers in our country are marginal and small. They are almost short of cash for crop production. As a result, most of the farmers grow crops by borrowing money from moneylenders at interest. Farmers sell products in isolation due to lack of effective farmers organisation.

As a result, it loses its bargaining power. Although there are organisations in many places, they are weak in nature. On the other hand, traders are less in number than farmers but they have understanding among themselves. And because of this understanding, farmers cannot raise the price as per their demand. Since most agricultural products are perishable, it cannot be stored for long. Again, there is a dearth of storage facilities, forcing many to sell their products in a hurry or in advance. For this reason, they are deprived of getting a fair price.

If the supply is high during the season, the price also goes down. But the products produced in the off-season get good prices. Therefore, farmers should place more emphasis on off-season crop production. Farmers are also deprived of fair prices due to inaccessible places of production, more sellers, fewer buyers, transportation crisis (especially in hilly areas), poor roads and poor quality goods.

In order to ensure a fair price for the produce of the farmers, the marginal and small farmers have to ensure direct access to the market. In this case, it can be done through group marketing by forming farmers' organisations based on specific areas. But unfortunately, it has been proved that as long as there is a project, the farmers’ organisation is active. Once the project is over, the organisation is no longer effective. There are two reasons for this, the first is the lack of leadership development among the members of the organisation and the second is the lack of good governance.

To solve this problem, soft skill development training like leadership development, networking, collaborating, negotiating etc. is essentials for the members of farmers groups. Farmers’ organisation may be involved in DAE mainstream work once the project is completed. At the field level, the amount of labor and time spent by the staff of the Department of Agriculture (DAE) on production would have benefited the farmers to some extent if they could have helped in selling the crop through farmer’s organisation.

The responsibility of marketing remains with the Department of Agricultural Marketing (DAM). But the set-up of the Department of Agricultural Marketing is not at the union or upazila level. There is only limited manpower at the district level. They have to work hard to monitor the market at the district level. Who will see at the union or upazila level? Therefore, a complete set-up is required at the upazila level with the manpower of agricultural marketing officers. The government also has that plan. The Hon'ble Minister of Agriculture has already taken very enthusiastic steps in this regard.

Recently, the government of Bangladesh has formulated the Agricultural Marketing Rules-2021 with the aim of determining the maximum profit at the producer, wholesale and retail level of agricultural products. This is good news indeed! According to the new rules, 30 to 40 percent profit can be made at the production level, 15 to 20 percent at the wholesale level and 25 to 30 percent at the retail level. In the light of these rules, if anybody wants to trade in the market designated for agricultural products, need to get a license. In fact, it is everyone's expectation that the rules will be properly implemented! For this, everyone should extend a hand of cooperation for successful implementation of this rule. As a result the farmer can get a fair price for his produce.

In order to ensure that farmers get a fair price, the first step is to reduce the cost of production. He also needs to establish communication between traders and farmers. Administrative intervention is needed to breakdown the syndicate of middlemen. It is very important to connect farmers-researchers-extension workers-businessmen. Lessons on modern market management can be impacted by involving local traders in farmer training in various agricultural projects.

Enhancing farmers' resilience to ensure fair prices, building and strengthening farmers organisations, developing leadership in farmers group, making it a habit to sell goods through group or cooperative based marketing, ensuring access to small and marginal farmers to large markets, disseminating market information in the media, practicing contract farming through applying GAP, improving communication, setting up of adequate collection centers at the larger crop growing areas, launching of agriculture and marketing services at union level, setting up of a pack-house/warehouse at upazila level and setting up of agro-processing factories at district level are demands of the time.

The government collects paddy and wheat at fixed prices to ensure that farmers get a fair price. It can be a good example of ensuring fair prices through launching price support programme. In the language of father of nation Bangabandhu Sheikh Mujibur Rahman “If the farmer survives, the country will survive.”

The writer is an Agricultural Economist, Former National Consultant of FAO, and Senior Scientific Officer, Bangladesh Agricultural Research Institute (BARI)