Sunday, 23 January, 2022

Obstacles to Effective Food Chain

Middlemen, high transport cost take it all

Middlemen, high transport cost take it all

Agriculture is the economic backbone of Bangladesh. But farmers say that numerous revolutionary reforms introduced in the sector over the past two decades have failed to bring any major change in their economic condition, reports UNB.

 The reason: The profiteering middlemen who buy fruits and vegetables at extremely low rates directly from farms, but jack up prices in further sales -- from distribution to retailing through commission agents and wholesalers.

 And as this nexus takes a substantial chunk of profit from their produce, farmers are left with very little revenue in the agricultural market hierarchy in the country. Of course, consumers are also a casualty as they pay a higher value for the cheaper farm produce.

 Market analysts also blame the nexus of multi-layered middlemen involved in the distribution process for the huge gap in the prices of agricultural produce at farm and retail levels. Another reason being the high transportation cost to cities like Dhaka.

In fact, vegetable prices are 100-300% higher in the kitchen markets of the capital than that at the farm level, according to the Department of Agricultural Marketing (DAM). 

This has already been admitted by the Bangladesh government. Agriculture Minister Dr Abdur Razzak had earlier said that "many people cannot afford sufficient vegetable intake due to high prices while the farmers are also not getting fair prices of their produce". 

Farmers often throw away their vegetables when they find that the cost of production is higher than that of sales, according to the government.  "We have to create a modern marketing system to eliminate this problem," he had said, adding "value-addition and market chain development are needed for this".   Estimates show that a farmer gets barely one-fourth or 26% of profit by selling a kg of brinjal at Tk 30, while the middlemen earn a whopping 66% by selling the same quantity of the vegetable at Tk 90 per kg in Dhaka.

 "The grower makes a profit of just Tk 8 by selling a kg of brinjal at Tk 30 as they spend Tk 22 for cultivation, and on fertilisers and pest control," said Umed Ali, a farmer of Alampur village in Kushtia's Sadar upazila. "If the labour cost is added, the profit margin would decline more."

 Farmers of Mirzapur in Tangail district, Bahluka in Mymensingh and Bodalgachi in Nogaon echo similar sentiments.

 According to experts, while the high prices of vegetables are troubling the consumers, the farmers are being deprived of fair prices as the supply chain is mostly controlled by the middlemen.  "Coming out from this stagnant agro-product marketing, Bangladesh plans to follow the cooperative marketing system of Thailand," said Mohammad Yousuf, Director General of DAM.

 "A team has already visited Thailand to observe the agricultural product cooperative marketing of Thailand, where farmers are getting a competitive fair price of each product they sell to the cooperative. We are  preparing a project proposal for the same in Bangladesh," he told UNB. 

Prof Mohammad Jahangir Alam of the Department of Agribusiness and Marketing at Bangladesh Agricultural University, said, "If the changing hands or middlemen are reduced, the grower will get a fair price." 

"If a contract farming system is developed here like European countries where big companies will purchase agro products from growers to sell it in their super stores, the farmers definitely will be benefited," he added.