Food product prices in rural areas of Bangladesh have been consistently higher than those in cities for the past several years despite that rural regions contribute to over 80% of the total food grain production in the country.

According to data from the Bangladesh Bureau of Statistics (BBS), rural food inflation stood at 12.51% in September, 12.54% in August, and 9.76% in July this year. In contrast, urban food inflation was slightly lower, with rates of 12.01% in September, 12.11% in August, and 9.63% in July.

Notably, rural food inflation was 8.79% in FY23, 6.51% in FY22, and 5.99% in FY21, while urban areas experienced 8.52% in FY23, 5.02% in FY22, and 5.15% in FY21.
This disparity between rural and urban food prices is surprising, considering that a significant portion of the food supply in cities originates from rural areas.

Khajida Parvin, a housewife in a rural village in Rajbari, highlighted the disparity, saying, “We are buying most of the products at higher prices than in the cities. When we asked the sellers why the prices are higher, they replied that they also purchase products at higher rates from the cities.”

Economists point out two primary dimensions of this problem faced by the rural population. Firstly, rural individuals are forced to spend more on locally sourced products. Secondly, farmers are not receiving fair prices for their products, and prices increase significantly as they move through multiple intermediaries to reach urban markets.

Planning Minister MA Mannan explained that inflation rates are calculated based on the prices and costs of various staple products like rice, lentils, coarse flour, regular flour, and oil, which are essential in rural communities, leading to a surge in food inflation in villages.

Conversely, the purchasing power of rural residents has increased, and their food preferences have evolved, enabling them to purchase items like pizza in their own villages.
Md Alamgir Hossen, deputy director of the Bangladesh Bureau of Statistics (BBS), noted that improved communication systems between rural and urban areas have made it easier for people to buy and sell products across the country.

Additionally, some regional products initially come to wholesale markets in cities before reaching rural markets, contributing to higher prices in rural areas.

“There are now burger shops in different places in the village. Fast food is being sold in the tea shop. Again in the city, we eat panta rice and hilsa on Pahela Baishakh, the first day of the Bangla calendar. Inflation is also increasing due to this cultural change,” he mentioned.

Ziauddin Ahmed, director of the BBS, told the Daily Sun, “For several months, we have observed an increase in inflation in the village. We primarily calculate inflation using product price data. Currently, we do not have a research and development section, but we are planning to open one. I hope that in the future, I will be able to identify the causes of inflation in villages and propose remedies.”

Dr Ahsan H Mansur, an eminent economist and executive director of the Policy Research Institute of Bangladesh (PRI), explained how the consumption pattern in villages has changed, resembling urban areas more closely.

Many products are now commercially cultivated in villages, reducing kitchen gardens, he noted, adding that the distribution chain often involves products going from villages to cities and then back to villages, contributing to rising prices in rural areas.

Other factors contributing to high inflation in villages include a lack of storage facilities for daily produce, remittance investments in unproductive sectors, declining rural savings, and increased borrowing, concluded Mansur.

Ashraful Alam Hiron, a farmer and rural businessman, shared his experience, emphasising that he engages in fish farming and vegetable cultivation in Muladuli union under Ishwardi upazila of Pabna district.

“I sell my products to buyers in cities including Dhaka and Rajshahi, rather than in the rural market, due to agreements with my buyers.”

Economists recommended that the government widen its food rationing up to the rural areas, especially in areas damaged by floods, by ensuring proper targeting and eliminating leakages.

They also stressed the need for increasing the government’s food stocks, strengthening the market monitoring system, and streamlining the distribution chain to rein in ever-increasing food inflation, particularly in rural regions, they added.

Prof Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD), emphasised the importance of the government focusing on the market management system to reduce food inflation.

“Although the marketing system in cities is fairly organized, the market system in villages is not efficient. This is why many rural people prefer to bring their products to the city for sale. Developing a modern market system along with product storage facilities in villages is essential,” he explained.