Improving the Marketing System Performance for Fruits and Vegetables in Bangladesh

Bangladesh Agricultural University, Mymensingh

Prof. Dr. Md. Kamrul Hassan

Prof. Dr. Shankar Kumar Raha

This study was carried out with the support of the

National Food Policy Capacity Strengthening Programme

Improving the Marketing System Performance for Fruits and Vegetables in Bangladesh

The study conducted by:

Department of Horticulture Bangladesh Agricultural University, Mymensingh

Principal Investigator:

Prof. Dr. Md. Kamrul Hassan

Co-Investigator:

Prof. Dr. Shankar Kumar Raha

Research Assistant:

Nasrin Akhther

This study was carried out with the support of the

National Food Policy Capacity Strengthening Programme

June 2013

Improving the Marketing System Performance for Fruits and Vegetables in Bangladesh

[Type a

This study was financed under the Research Grants Scheme (RGS) of the National Food Policy Capacity Strengthening Programme (NFPCSP) Phase II. The purpose of the RGS is to support studies that directly address the policy research needs identified by the Food Planning and Monitoring Unit of the Ministry of Food. The NFPCSP is being implemented by the Food and Agriculture Organization of the United Nations (FAO) and the Food Planning and Monitoring Unit (FPMU), Ministry of Food with the financial support of EU and USAID. The designation and presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of FAO nor of the NFPCSP, Government of Bangladesh, EU or USAID and reflects the sole opinions and views of the authors who are fully responsible for the contents, findings and recommendations of this report.

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Executive Summary

Introduction Efficient marketing is important to reduce postharvest loss, and risk and uncertainty in timely delivery of quality and safe produce at reasonable prices to the consumers. Appropriate marketing channels and market functionaries are important in the movement of products from the producers to the consumers. Inefficient marketing system reduces demand from consumers and participation by farmers, who face significant challenges to participate in the growing markets for high-value nutritious crops like vegetables and fruits. The important constraints in marketing perishables include both high costs and risks. High marketing costs often stem from poor transportation networks, lack of market information, and sometimes from the lack of competitiveness in the market. Spoilage after harvest is also an important problem due to highly perishable nature of most vegetables and fruits. These factors in turn can lead to highly unstable prices of the commodities. If these constraints can be removed, farmers would earn more by specializing in crops for which they have a comparative advantage. Presently, an important need is the generation of reliable and up-to-date data on the actual costs and margins of the producers and the intermediaries involved in fruits and vegetables supply chain. The outputs of the present project are expected to fill up the information gap and thereby contribute greatly to find out efficient marketing options in order to formulate a meaningful national policy to improve the fragile marketing systems of fruits and vegetables in Bangladesh. Given the increased importance of fruits and vegetables in nutritionally balanced diets, it will be important to establish efficient marketing systems that reduce risk and allow reasonable prices for both growers and consumers. The National Food Policy Plan of Action (2008-2015) as well as the Bangladesh Country Investment Plan (BCIP) placed stress on strengthening the food marketing system and improving value chains as a measure for improving food security and increasing incomes. The present research, by collecting and disseminating essential up-to-date data on costs and margins of market actors, will identify cost-effective options for improving the performance of marketing system and propose improved policies and better institutional supports throughout the marketing chain of fruits and vegetables. Objectives and expected outputs As per the terms of reference (ToR), the project was designed with three objectives: (i) to describe actors, commodity flows and price formation in the marketing chain for three vegetables (potato, brinjal and okra) and two fruits (mango and banana) in Bangladesh, from the main producing areas to Dhaka retail markets, (ii) to evaluate performance of marketing system by calculating gross and net margins, and (iii) to assess the critical factors affecting market performance and to propose policy recommendations. The expected outputs include: (i) presently-operating marketing channels for the selected commodities are identified, (ii) important actors in the channels are identified, (iii) price formation methods at different levels of marketing are explored, (iv) costs of production and marketing are determined, (iv) gross and net margins of the market actors are estimated, (v) seasonal factors and coefficient of variation for the selected fruits and vegetables are calculated and compared with other agricultural commodities, (vi) market performances are evaluated on the basis of performance indicators (price spread, growers‟ share, marketing margins, marketing efficiency, return on investment, involvement of intermediaries, types of marketing channel, marketing infrastructures, etc.), (vii) critical factors in marketing channels are identified and analysed

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towards the improvement of existing marketing systems, and finally, (viii) five booklets on production and marketing of the selected five vegetables and fruits are prepared and disseminated, and finally (ix) policy recommendations are suggested to improve the performance of marketing system so as to ensure growers‟ profit, reduce postharvest losses and deliver quality and safe fruits and vegetables to the consumers at reasonable prices. Materials and methods The present study attempted to examine the marketing channels, market actors, marketing costs and margins, seasonality, marketing efficiency, and the bottlenecks in marketing of potato, brinjal, okra, mango and banana. The approaches include analysis of secondary data and collection of primary data. Secondary data, especially with regards to marketing channels, market actors, price formation, seasonality and marketing efficiency were collected from books, journals, reports (BBS, DAM, HIES), documents and online resources. Secondary data on monthly prices of the selected commodities were collected for at least five years. Time Series Analysis was followed to examine the pattern of price (nominal and real) difference among different months and years. Primary data were collected from market actors (producers and intermediaries) using different PRA tools including FGD and questionnaire interviews. Marketing efficiency was investigated following the methods described by Acharya and Agarwal (2004) and Shepherd (1972).

Results and discussion In the present study three important vegetables viz., potato (winter), brinjal (year-round) and okra (summer) and two important fruits (mango and banana) were included. Substantial amounts of secondary data on area, production and market prices (nominal and real) of the selected vegetables and fruits and important cereals (rice, wheat and maize) were collected in accordance with the terms of reference of the present project. The collected data were analysed and required tables and graphs were prepared to present and discuss the results. An extensive primary survey was conducted to study marketing channels, market actor, gross and net margins, marketing efficiency and marketing constrains. The most striking results are highlighted under the following subheadings. Trend in area and production Trends in area and production of important cereals (rice, wheat and maize) and selected fruits and vegetables (potato, brinjal, okra, mango and banana) were investigated based on secondary data. Areas under Aus and Aman rice trended to decrease over the last decade, whereas area under Boro rice showed an increasing trend. Although Boro production was found to be consistently increasing but Aman production did not follow any specific trend. A steady increase in Aman production was observed during the period from 2000-01 to 2003-04 followed by dramatic falls in 2004-05 and 2007-08. Wheat production sharply declined from 2000-01 to 2005-06 and then slightly increased until 2009-10. The decline could be due to the adverse climate and increase in Boro, potato and maize areas. Maize has become an important cash crop in Bangladesh in the recent years, especially for the production of poultry feed. Clear upward trend in area, production and yield was noticed during 2000-01 to 2007-08. In terms of potato, Bangladesh is ranked the 8th in the global context. Potato production steadily increased over the last years except 2005-06 and 2008-09. In 2005-06, the farmers of some main potato growing regions in the northern part of the Bangladesh brought large potato areas under maize cultivation, which caused significant decrease in potato area and production. Similarly, in 2008-09, a large part of potato area was brought under rice

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cultivation due to global food shortage and price hike in 2007-08. Production of summer brinjal showed slightly increasing trend. The area under both summer and winter brinjal showed a decreasing trend. Okra is an important summer vegetable crop, which greatly contributes to fill up the gaps when the market suffers from paucity of supply of vegetables. Both the area and production of okra are gradually expanding, which indicates that the demand of okra is increasing in the country day by day. In terms of production, mango ranks the top in Bangladesh. Mango production trended to increase over the last years. Production of banana increased until 2006-07 and then started to decline, which can be due to the fact that during 2007-08 lands under various crops including banana were brought under Boro cultivation and also area under newly released jujube variety, BAU Kul, expanded. Price fluctuation Rice, the main staple in Bangladesh, is found available in the markets in three principal types, viz. coarse, medium and fine. Price volatility of rice is an important food security issue in Bangladesh. The fluctuation of rice price for the last 10 years was investigated. A clear upward trend in retail rice price (nominal and real) was observed during the period from 2000-01 to 2008-09. However, the rate of increase was very sharp from 2007-08 to 2008-09 mainly because of the dramatic price hike in the global food markets in 2007-2008 since 1973-1975 crisis. Then rice price declined in 2009-10 possibly due to the bumper production of Aman and Boro and also due to normalcy in food price in the global markets. Potato price fluctuation is quite common in Bangladesh. Often the farmers are the worst sufferer of low prices of their produce. Relationship between production and price of potato was investigated. Retail price of potato increased with time except from 2000-01 to 2001-02 and 2002-03 to 2004-05. It was noticed that when production increased price fell, especially during 2004-05, 2007-08 and 2010-11. The year with lower production causes higher prices, which pushes the growers to produce more in the next year with a resultant drop in price in the following year (cyclical nature of production). Even though the result did not fully at par with the cobweb type model but it partially supports the cobweb model. Another important observation was found that the real (deflated) price of potato in 2001-02 (Tk. 14.12 kg-1) was almost the same as the price recorded in 2010-11 (Tk. 13.83 kg-1), which indicated that the changes in potato prices in real term were very negligible over the last ten years. In the case of brinjal, the harvest and retail prices increased from 2000-01 to 2009-10 except in 2002-03. In the case of okra, the harvest price trended to gradually increase from 2000-01 to 2009-10. In case of banana, the retail price decreased over the last several years. In 2003-04, banana retail price dropped sharply and the trend continued until 2008-09. However, in 2009-10, the banana harvest price suddenly gone up and reached the peak. This recent price hike of banana can be linked with the gradual decrease in banana area and production which actually started from 2007-08 and still being continued. Price variation among cultivated varieties Results of primary survey demonstrated that wide variation in price existed among the cultivated varieties of the selected fruits and vegetables. In 2011-12, price of indigenous potato Lal Pakhri in 2011-12 was the highest (Tk. 300.00-760.00 mound-1) followed by Cardinal (Tk. 300.00-715.00 mound-1), whereas the modern variety Granula was sold at the lowest price (Tk. 200.00-475.00 mound-1). Similarly, price variation due to variety was observed in other selected fruits and vegetables. The price of mango varieties Khirsapat, Gopalbhog and Himsagar (May-June) ranged from Tk. 45.00-50.00, 40.00-45.00, and 50.00-60.00 kg-1, respectively. The price of Langra (June-July) varied from Tk. 75.00-80.00 kg-1. The retail prices the latest mango varieties, namely Fazli (June-August) and Aswina (July-September) ranged from Tk. 70.00-150.00 and 50.00-150.00 kg-1, respectively. In the BBS

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and DAM reports, potato prices of the local and Holland (no such potato variety, possibly they mean modern HYV) varieties are cited. In the case of mango, the prices of gootee (seed-propagated variety) had been in use until 2008-2009 but from 2009-2010, BBS included the prices of some important commercial varieties. In the case of brinjal, no such varietal price information are available, although brinjal price could be categorized in terms of production season (winter and summer) or shape (elongated, round and oval). So, price data as given in the BBS and DAM reports seem inadequate and incomplete. So, the BBS and DAM reports should include the harvest, wholesale and retail prices of the commercially important cultivated varieties of important horticultural produce. This would ensure better use of market information by the growers, intermediaries, researchers, extension workers and the policy makers. Seasonality Seasonality of important cereals and selected fruits and vegetables was examined by calculating seasonal price index following moving average method. In the case of national wholesale price of rice, seasonal price index varied from 96.00-105.00 with co-efficient of variation 2.96%. There were two clear peaks, one in January-March and another in September-October. There exists seasonality in wheat price with a co-efficient of variation of 3.68%. In case of wheat two peaks (January-February and September-November) and a trough (April-July) were observed. The price peaks were due to lower supply of food grains in the markets (preharvest Aman period) and the trough during April-July was possibly due to abundant supply of rice in the market (postharvest Aman period). Seasonality existed in potato prices. The wholesale price index of potato varied from 59.55-128.20 with co-efficient of variation 24.57%. There was a clear peak during August-October and a trough during March-April. Most strikingly, the seasonality in potato was much more pronounced as compared to those observed in rice and wheat. These results underlined the possible vital role of potato as a source of macro nutrients (alternative of rice or wheat) because the peak prices of rice and wheat are fairly synchronized but potato is counter synchronized to these two staples. In the case of brinjal, the minimum price months were March-April and December-February, and these periods are considered the peak harvesting seasons of summer and winter vegetables, respectively. The maximum price months of brinjal were September-October, which is known as „lag period‟ of vegetables supply in market. So, varietal improvement could be sought so that adequate supply can be ensured during the „lag period‟ in order to stabilize the price of vegetables round the year. The seasonal price index of brinjal varied from 59.00-174.00 with a co-efficient of variation of 35.75%. Significant seasonality also existed in okra prices. The seasonal wholesale price index of okra ranged from 46.80-145.67 with a co-efficient of variation of 32.71%. There were two peaks, one in March and another in July-August and a trough in May-June. In the case of banana wholesale price, seasonality existed with a sharp peak in November and a trough in July. The wholesale price of banana gradually decreased from January to July. The wholesale price was the lowest in July and then started to go up and the trend continued until November. The trough in July-August was due to the arrival of various seasonal fruits, especially mango, jackfruit, pineapples and litchi. This finding indicated that there is great need to introduce or develop new fruit varieties which can be successfully grown in the winter season in Bangladesh. Extensive research is needed in this sector since the consumption of fruit in Bangladesh is still far from the minimum requirement. In conclusion, seasonal price variation is lower in rice and wheat as compared to those of other perishable fruits and vegetables. The lower price variation in rice and wheat is possibly due to year round availability, less perishability and high market integration. On the other hand, the higher price variation in brinjal, okra and banana could be due to high perishability and lack of adequate postharvest handling infrastructures including

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refrigerated transport vehicles and short and long-term storage facilities. Strong policy is required to establish adequate numbers of specialized low temperature storage facilities for perishables like mango, banana, brinjal, okra and other commercially important fruits and vegetables. Refrigerated transport vehicle and other techniques of extending shelf life of perishables should also be researched and extended to the potential users. Marketing channels and market actors Marketing channels and market actors varied widely with types of produce and production locations. In majority of the cases, marketing channel involved various intermediaries, namely Faria, Bepari, Aratdar (commission agent), wholesalers and retailers. However, some channel was found relatively shorter, for example, the potato channel, Munshigonj (Sadar)-Dhaka, where no Faria was found to operate business. Unlike Bogra, the growers of Munshigonj were not found to sell potato as early crop, and they sold only mature potatoes after adequate field curing (formation of outer protective layer). The growers were found to sell potatoes either from home (traditionally-stored potatoes from February-May) or from the cold stores (from June-January). The marketing channels and market actors for brinjal and okra were similar to that of potato except for the fact that brinjal and okra were not held in cold stores. In most channels there were no local commission agents except the brinjal marketing channel, Chougacha (Jessore)-Dhaka, where the growers were compelled to sell their produce to the Bepari or other buyers through the local Aratdar after paying certain percent of commission. The marketing channels for mango and banana were quite similar, which involved Faria, Bepari, Aratdar, wholesalers and retailers. In general, there were assemble markets from where Bepari purchased produce and delivered to the city wholesale markets. An exception was observed in Munshigonj where there was no assemble markets for potato, and the Bepari purchased potatoes directly from the growers‟ field or from the traditional-stores at the growers‟ house, and therefore the Munshigonj (Sadar)-Dhaka channel was observed to be more efficient than other potato channels studied. Postharvest handling The performance of marketing greatly depends on the status of postharvest handling. During primary survey information was collected on washing, sorting, grading, packaging, transportation and storage. Early-harvested potatoes grown in Bogra are washed and marketed, especially to fetch apparent higher price. In contrast, washing is not practiced in Munshigonj since the growers do not harvest potatoes as early crop. Sorting is generally practiced for most fruits and vegetables to discard spoiled items. Grading is seldom practiced other than some limited scale size grading. In Bangladesh, sill no grade standard has been developed for horticultural produce but is urgently needed for both domestic and export markets. For example, because of the paucity of grade standard, potential produce like potato, mango, banana, etc. could not be exported to the mainstream global markets. The present export is only destined for the ethnic markets in the overseas. Adequate packaging is also necessary for facilitating handling and marketing of produce. Results of primary survey showed that packaging is practiced in potato marketing. Generally, gunny sacks of 80-84 kg capacity are used in packaging table potatoes. However, the cold store owners and traders showed interest to use 40-50 kg capacity net bags which could be much easier to handle and would comply with the labour health and safety issues. For brinjal and okra, still voluminous packages made up of bamboo baskets and gunny sacks are used for long distance transportation and wastage is high due to vibration, impacts and internal heat generation. For mango, plastic crates of 22 kg capacity are currently used for long distance transportation with no or very minimal wastage. There are scopes to introduce plastic packages, plastic net bags, foam wrap, tray-pack, corrugated fibreboard boxes, etc. to reduce wastage, maintain

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quality and safety and improve marketing performance. The modes of transportation at the local level include head load, bi-cycle, van, Votvoti, tractor, trolley, etc. For long-distance transportation, mini and large trucks of 7 and 10 tons capacities without any cooling facilities are used. So, any modifications to the present vehicle or introduction of refrigerated vehicles at least in pilot basis would greatly contribute to enhance marketing. For example, Hortex Foundation of Bangladesh recently purchased few REEFER Truck with refrigeration facilities to carry horticultural produce. Storage is the most important function in agricultural marketing. Storage adds the time utility to the products. Low temperature storage facility for perishables is lacking in Bangladesh. For most fruits and vegetables, no noticeable low temperature storage facilities are available except potatoes. Pilot projects can be undertaken by the Government of Bangladesh and then private firms may come forward to improve the storage sector in Bangladesh. In relation to modern storage, reasonable progress has been made for storing potatoes. There are now around 393 cold stores (public and private), with a capacity of approximately 4.0 million metric tons against 82.05 millions in 2011-2012. So, there are still demands for more cold firms to spring up in the country. The rest of the potatoes are marketed from growers‟ house or traditional stores in the first 4-5 months (February-May), and this technology is largely used in Munshigonj area and could be extended to the other parts of the country after making some refinement or optimization. This traditional store can hold potatoes up to 4-5 months without any refrigeration. Another important aspect of postharvest handling is the use of recommended ripening technology for climacteric fruits (mango and banana). In Bangladesh still no such technology has been found available during the survey and various non-recommended ethephon-based plant growth regulators are being used. So, there is a great need to introduce ethylene gas-induced ripening technology at least at pilot basis to encourage the private sector to come forward. In addition, postharvest technologies like MA storage, heat treatments, recommended chemical dips, ethylene scavengers, etc. are required to prolong the shelf life of fruits and vegetables. This is very important to note that enhancement of market performance is directly linked with improvement of postharvest management particularly for perishables (fruits and vegetables). Value addition in agro-produce Fruits and vegetables are highly perishable, and considerable proportion of fruits and vegetables never reach the consumers mainly because of postharvest loss. Very often the growers suffer from low price of their produce due mainly to the lack of adequate storage and processing facilities. For instance, the use of potatoes can be diversified (flours, chips, fries, flakes, etc.), which could help earn foreign currency and also safeguard the interests of growers. Similarly, value addition activities are also possible for mango (canned mango, pickles, jams, jellies, marmalade, leather, bar, juice, etc.) and banana (canned bananas, dry chips, etc.). In this regard, the success of PRAN-RFL group is exemplary, and this company is currently exporting their products to around 100 countries in the world. So, processing plants (small, medium or large) should be patronized to enhance the fruit and vegetable industries in Bangladesh. At the same time, establishment of strong and effective linkage among growers, traders and processing companies would greatly help reduce postharvest wastage and thereby improve marketing performance. Modernization of marketing The present study revealed that modern facilities are largely absent in most of the assemble and wholesale markets visited during the survey. The markets lack basic infrastructures and facilities. There is a great potential to introduce some of the modern facilities, for example, forklift and conveyer belt for large-scale loading and unloading purposes. This would greatly save labour costs and thereby enhance marketing performance. However, this step would

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result in significant curtail of jobs but the policy of trading-off could be considered here and ample facilities could be created both at the public and private levels so that extra labour forces could be accommodated in other income generating activities. Marketing costs and margins of intermediaries The costs and margins of market intermediaries for the selected fruits and vegetables were studied. In the case of potato, marketing costs were the highest for the retailers of Dhaka city (Tk. 1.2-1.5 kg-1) and the corresponding net margins were also the highest for the same retailers (Tk. 0.8-1.2 kg-1). The net marketing margin of Aratdar (commission agent) in Dhaka city was the lowest. Along the marketing channel (Shibgonj, Bogra-Karwan Bazar, Dhaka), the highest value was added by the retailers of Karwan Bazar, Dhaka (31.10%) followed by Bepari (29.50%). The net margin of the brinjal retailers of Mahakhali Kacha Bazar, Dhaka was the highest (Tk. 3.70 kg-1) followed by those of Karwan Bazar, Dhaka (Tk. 3.60 kg-1). The highest value was added by the retailers of Dhaka city (49.64%) followed by Bepari (16.77%), whereas the lowest value was added by Faria (10.07%). In the case of okra, the net marketing margin of the retailers of Dhaka city was the highest (Tk. 2.30-3.60 kg-1). The percentage of value addition was also the highest (39.80%) at the hands of the retailers, while the lowest value was added by the Aratdar (7.21%). Similarly, along the mango marketing channel (Rajshahi and Chapai Nowabgonj to Dhaka), the highest value was added by the retailers of Dhaka city (37.61%) followed by the Bepari (25.13%). By contrast, the Aratdar of Dhaka city added the lowest value (6.45%). In the case of banana, the highest net margin (Tk. 31.00 bunch-1) was received by the retailers of Dhaka city followed by the Bepari (Tk. 26.00 bunch-1). As usual the highest value was added by the retailers of Dhaka city (38.69%) followed by Bepari (32.85%). Results also demonstrated that the net marketing margins of the intermediaries involved in brinjal, okra and banana trade were much higher than those involved in potato trade. This is possibly due to the less perishablity and cool storage facility for potato, and the corresponding high perishablity and lack of storage facilities for brinjal and okra. From the results, it appeared that irrespective of produce, the net margins of the retailers of Dhaka city were the highest followed by Bepari, whereas the net margins of the Aratdar and Faria were the lowest. The retailers actually charge more price than that they should. Higher net margins for retailers and lower for Aratdar apparently indicate that market may be less efficient at retail level and more efficient at Arat level. It may also indicate that competition is less at retail level and high at Arat level. It is also important to note that for perishables like fruits and vegetables retailers assume more risk, and their per unit marketing as well as operating costs are higher compared with Aratdar. Again, as Aratdar handled large quantity of produce, and their total profit must be much higher than retailers. This is reflected when return on operating capital (ROC) was calculated. The ROC of Aratdar was found consistently the highest for all the fruits and vegetables studied. Furthermore, the ROC of Aratdar of fruits was much higher than those involved in vegetable trade, and which findings could be attributed to the higher per unit price of fruits than vegetables and also due to the higher perishablity of the examined fruits than vegetables. It was also found that Aratdar and Bepari traded the largest quantity of produce, whereas the traded quantity was smaller at the Faria level, and it was the smallest at the retail level. Marketing performance Marketing performance was investigated using various estimates like price spread, growers‟ share, marketing efficiency using Acharya‟s formula and return on operating capital were investigated. In the case of potato, price spread was higher in Bogra-Dhaka channel (Tk. 8.11 kg-1) than Munshigonj-Dhaka (Tk. 4.89 kg-1). Growers‟ share of the Mushigonj-Dhaka channel was higher (70.55%) than Bogra-Dhaka channel (49.33%). As per the formula of

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Acharya, the marketing channel, Munshigonj (Sadar)-Karwan Bazar (Dhaka) was more efficient (1.094) than the channel Shibgonj (Bogra)-Karwan Bazar (Dhaka) (0.861). This result could be attributed to the absence of Faria in the Munshigonj-Dhaka channel, and the less marketing cost due to the shorter distance from Munshigonj-Dhaka. By contrast, the marketing channel, Bogra-Dhaka was longer, and it involved Faria along with other intermediaries. In the case of brinjal, price spread was higher in Jessore-Dhaka channel (Tk. 25.95 kg-1) than the Norshingdi-Dhaka channel (Tk.12.40 kg-1). The growers‟ share of the marketing channel Norshingdi-Dhaka was higher (63.87%) than that of the Jessore-Dhaka channel (23.78%), which indicated that the former channel was more efficient, and which might be due to shorter distance between Norshingdi-Dhaka than Jessore-Dhaka. In the case of okra, price spread was found to be higher in Comilla-Dhaka channel (Tk. 19.55 kg-1) than the Chittagong-Dhaka channel (Tk. 18.15 kg-1). In contrast, growers‟ share in Comilla-Dhaka channel was marginally lower (39.38%) than Chittagong-Dhaka channel (43.72%). In the case of mango, price spread was found to be higher in Chapai Nowbgonj-Dhaka channel (Tk. 10.28-22.28 kg-1) than Rajshahi-Dhaka channel (Tk. 4.60-16.60 kg-1). The growers share in mango marketing channels were found to be very high and varied from 62.87-78.58% in Chapai Nowabgonj-Dhaka channel and 72.83-90.42% in the Rajshahi-Dhaka channel. This result demonstrated that marketing channels of mango originated from both Chapai Nowabgonj and Rajshahi are efficient and the mango markets are competitive. In relation to Acharya‟s values, the performances of marketing channels that originated from Rajshahi were better (4.21-4.35) than those channels originated from Chapai Nowabgonj (4.01-4.14). This was possibly due to the comparatively shorter distance between Rajshahi and Dhaka than Chapai Nowabgonj-Dhaka. In the case of banana, price spread ranged from Tk. 55.00-90.00 bunch-1. The values for marketing efficiency as calculated by the formula of Acharya varied from 2.66 (Madhupur-Gulshan D.C.C. Market) to 3.33 (Kushtia-Street Vendor, Dhaka). This is also important to note that the values from Acharya‟s formula are significantly higher in fruits (Mango 4.08-4.35 and Banana 2.66-3.33) than vegetables (Potato 0.70-1.30; Brinjal 0.80-0.98 and Okra 0.91-1.35), which further suggested that fruit marketing channels are more efficient than vegetables marketing channels. Generally, the higher the values the higher the performance of the concerned marketing channels. In the case of mango, better marketing performance can also be linked with the recent significant change in terms of long distance mango transportation with improved packaging (Plastic crates) which greatly minimized wastage and transport damage. Results also indicated that return on operating capital (ROC) of Aratdar was found consistently the highest for all the fruits and vegetables studied. Furthermore, the ROC of Aratdar of fruits was much higher than those involved in vegetable trade, and which findings could be attributed to the higher per unit price of fruits than vegetables and also due to the higher perishablity of the examined fruits than vegetables. There are further scopes to elevate the rate of the share of the growers, especially for some vegetables like brinjal and okra. Contract farming would greatly help in this regard. Currently, many importers, Hortex Foundation and City Super Shops are procuring some of their required fruits and vegetables from contract growers. Overall, results demonstrated that marketing efficiency was mainly influenced by distance covered and condition of transportation. However, even though some marketing channels were found to be more efficient than the other channels based on the estimates but still basic market infrastructures are absent, and which need to be adequately addressed in order to improve the performance of fruits and vegetables marketing in Bangladesh. Marketing constraints Scores of constraints were identified in the existing marketing channels of perishables. Firstly, almost all the channels were long with many middlemen. Only few channels were

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found to be slightly shorter, for example, the Munshigonj Sadar-Dhaka channel. The other important constraints were mainly related to inadequate market infrastructures, paucity of uninterrupted electric supply in potato cold stores, unauthorized tolls and commission throughout the channels, restricted entry of vehicles into Dhaka city, existence of syndicate/price control, hegemony of middlemen in the marketing channel, absence of modern marketing tools and equipments, lack of market information, lack of knowledge and skills, and lack of specialized training. The problems in the potato cold stores were slightly different and they mainly include: lack of power supply, especially during the peak loading period (April-May) and lack of proper management in relation to turn over („Palat‟), ventilation, positioning (horizontal in place of upright), intake of fresh air, etc. Based on the foregoing facts and figures the following policy recommendations are suggested.

Policy Implications and Recommendations Safeguarding Growers‟ Interest Conduct farmers training: There are scores of constraints at the growers‟ end of the supply chain. For example, in the case of banana panama disease (pseudostem splitting) in Kushtia was found to be the most serious problem (20% infection in 1st year and 50% infection in 2nd year). The growers should be given training to overcome these problems. The DAE should make immediate intervention so that growers‟ interests are safeguarded.

Avoid immediate postharvest sales: It is a general trend that farmers sell their produce immediately after harvest. In order to receive reasonable price farmers should wait for a while. This option could be for those farmers having greater real-time market information and greater access to cold storage and other traditional storage, either on-farm or off-farm, in order that farmers can optimize the timing of the sale of their produce.

Research and extension of traditional storage: Research and extension could be done to optimize and improve traditional storage methods. This is given that cold storage expansion is going to take time, and it might not be always cost effective and also might not be always in every farmer‟s interest. So, research and extension of age-old traditional storage technology should be strengthened.

Market policy: To reduce postharvest loss and maintain quality and safety, a marketing policy would be helpful to comply with the domestic and global marketing requirements and standards. For instance, in Sri Lanka, the National Committee on Postharvest Technology and Value Addition Research (NCPHT) prepared a research priority list, where the top most priority is the quality management and prevention of losses in marketing channels and value addition activities for income generation.

Monitoring of intermediaries in supply chain Unusually high marketing margins of retailers: The most striking result of the present study was that the net margin and percent value addition by the retailers of Dhaka city were consistently and unusually the highest among all the intermediaries regardless of the crop. Regular monitoring and more competition at retail level, especially in Dhaka city are required which would help significantly reduce commodity prices at the retail levels.

Low price received by farmers due to price control by organized traders: Public perception is that there exists syndicate in market. Present study revealed that there are indirect price controls in supply chain. In some rural assemble markets, Bepari collectively show artificial reluctance to buy produce for a while to create panic, which ultimately force

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the farmers to sell produce at lower prices. There should have more oligopolistic markets with high completion. Growers‟ organizations and cooperatives should be encouraged.

Maintenance of quality and safety in supply chain Quality and grading standard: Bangladesh lacks standardized quality assurance (QA) systems for horticultural produce. Immediate steps to be taken to develop national QA system to train, and ultimately to accredit, growers and traders in the major international certification such as HACCP, ISO, GAP and GMP. BAU, BARI, BARC, Hortex Foundation and BSTI can jointly perform this assignment.

Capacity strengthening in postharvest research and training Dissemination of appropriate technology: Relevant government departments may assist disseminate technical information, e.g. cauliflower, broccoli, apples and grapes can be stored with potatoes in the existing potato cold stores due to compatibility in terms of produce mix while mango, papaya and banana can‟t. This is probably more important than providing improved access to capital. In addition, low-cost and effective technologies like earthen cooling pot and zero energy cool chambers need quick dissemination.

Training and technology transfer: Development of appropriate training manual by experts and conduction of training by appropriate trainers on different aspects of postharvest management like harvesting, washing, sorting, grading, packaging, transportation, storage and processing is required. All the supply chain actors including women should be included in the process. BAU may play a leading role in collaboration with BARC, DAE, BARI and BSTI.

Improvement of transport system Relocation of wholesale markets: Results suggested that huge wastage occurred due to restricted movement of trucks into Dhaka city. Currently, trucks are not allowed to enter into Dhaka after 6:00 AM. If a vehicle gets late due to some unforeseen reasons, the entire products are spoiled. Smooth and rapid movement of trucks should be ensured to reduce wastage and improve marketing performance. So, relocation of large wholesale markets at the vicinity of Dhaka city would be considered.

Improvement of traffic congestion: Traffic congestion is a national problem but the problem is much more serious for perishable horticultural commodities. The problem is further compounded by the absence of cold chain. Delay in the Ferry Ghat is one of the most serious problems and needs to be resolved. Goods train for carrying bulk volume of fruits and vegetables could also be considered.

Improvement of transport vehicle: Transportation is the key to efficient marketing. Generally, open trucks without cooling facilities are used for long-distance transportation, and wastage becomes very high. So, trucks with cooling facilities should be used for long-distance transportation from the farm/assemble markets to the wholesale markets. Hortex Foundation of Bangladesh already brought such few refrigerated REEFER Trucks.

Improvement of packaging system Introduction of affordable plastic package: Packaging of perishables has not been developed in Bangladesh. Still voluminous package made of bamboo baskets and gunny sacks are predominantly used, which results in high spoilage due to impact, vibration and heat generation. Recently, mango traders adopted plastic crates of 22 kg capacity, which

11

created positive impacts in minimizing loss and maintain quality. Hence, there is a great potential to manufacture plastic crates and other suitable packaging materials for agro-produce in Bangladesh.

Introduction of 40-50 kg net bags for potato storage: There is strong demand from the potato cold stores to introduce 40-50 kg plastic net bags to facilitate handling and maintain quality of potato due to more ventilation. The presently used 84-kg jute bags are hard to handle, and are hazardous for the labourer in longer term. So, immediate introduction of 40-50 kg net bags in the potato cold stores would be considered.

Establishment of low temperature storage facilities Pronounced seasonality in fruits and vegetables than cereals: Seasonal price indices were lower in cereals (co-efficient of variation 2.96-3.68%) than those of perishables (co-efficient of variation 24.57-35.75%). Lower price variation of cereals was due to their less perishability, while pronounced price variation of perishables was due to their high perishability and lack of adequate storage facilities. To reduce seasonal price variation of perishables (fruits and vegetables) ample storage facilities should be created.

Low temperature storage facility in assemble markets: Undertaking pilot projects to establish limited number of specialized cold stores in production catchments for high-value produce. Recommended locations would be Chapai Nowabgonj for mango; Madhupur of Tangail for banana; and Jessore, Comilla and Bogra for vegetables.

Establishing central distribution centre: In many countries, central distribution centre has been established, where produces are temporarily stored. These centres generally possess different compartments with different temperatures and relative humidity, from where produces are distributed to the retail outlets through cold chain.

Improvement of power supply: The most important problem in potato cold stores is the paucity of uninterrupted supply of electricity. Special attention should be given for potato sector so that electricity supply remains uninterrupted, especially during the loading period (March-May). Research to produce alternative energy (conversion of agro-waste to power) should also be given priority considering the present power crisis and future demands.

Increase the number of BADC cold stores: There is high demands of BADC cold stores, especially for seed potatoes. Presently, there are 18 BADC cold stores. There are scopes to further increase the number of BADC cold stores, especially in the leading growing areas. For example, in Munshigonj there are no BADC cold stores although Munshigonj is still considered the leading potato producing district of Bangladesh. Establishment of BADC cold store in this area would help further augment potato production. This is worth noting that the BADC Potato Seed Programme is one of the very few profitable programmes of the Government of Bangladesh (net profit of Tk. 10.00 kg-1 in 2012). Since, 80% of the potato seeds are the farmers own seeds that are held in private cold stores, the BADC staff may monitor the private cold stores and issue certificates of good storage practices. A policy on potato cold stores can be useful in this regard.

Adoption of modern marketing Adoption of modern marketing facilities is required: Adoption of modern facilities in agricultural marketing is important. However, there is a debate on this issue whether modernization can curtail jobs. In this regard, the results of a study conducted by Peter Trimmer (1973) in Indonesia, who categorically showed that modernization does not affect the jobs. Trade-off would be a very useful alternative where the extra work force can find

12

better option and contribute to the overall economic development of the country.

Introduction of modern loading and unloading: In the peak season, there is rush in the market, where vehicles are loaded by manual labours and produce reaches the market after going through various marketing activities. Loading and unloading by manual labour is time consuming and costly. Forklifts can be introduced in the local assemble and big wholesale markets to expedite the movement of perishables.

Introduction of modern weighing machine: Still in Bangladesh, beam balances are used to weigh produce in the market. This method is also time consuming and may lead to have incorrect weight. More modern and sophisticated weight bridge would be introduced to weight big lot of produce. It saves time and cost of weighing.

Strengthening public-private partnership Public private partnership is needed to introduce new and modern postharvest technologies like refrigerated transport vehicle, low temperature storage and ethylene-induced ripening chamber. For example, in the case of low temperature storage facilities for fruits and vegetables (except potato), the government could start one or two in order to encourage the private sectors to do more.

Value addition in agro-produce for diversified use Value addition of agro-produce: Small and large-scale processing plants are needed in Bangladesh. Use of potatoes could be diversified to safeguard growers‟ interest and to reduce wastage. Often growers do not receive reasonable price of their produce due to high production, less price and wastage. Various value added products like flakes, chips, fries, powder, etc. could be produced for domestic market and export. However, to access mainstream export markets food companies must comply with international standards.

Alternative of rice and wheat during peak price months: The results on seasonal price variation underlined the vital role of potato as a source of macro nutrients (alternative of rice and wheat) because the peak prices of rice and wheat were fairly synchronized but potato is counter synchronized to rice and wheat. So, there are ample scope to popularize potato and potato products as the viable alternatives of the main staples rice and wheat.

Rapid access to market information Easy access to market information: Access to right information on market price is very important. Nowadays, information about prices is published in newspaper and announced in radio and television regularly. The farmer must be familiar with the prevailing prices and their trend. Even though, Upazilla Information Centre is established but getting daily prices from the internet is still difficult. In this regard, board may be used to display daily prices of agricultural commodities. Also DAM can send price information of important agricultural commodities to the farmers by SMS.

Improving quality of price data of BBS and DAM: Results of primary survey demonstrated that there were wide price variations among varieties. For instance, in 2011-12, price of indigenous potato variety Lal Pakhri in 2011-12 was the highest (Tk. 300.00-760.00 mound-1) followed by Cardinal (Tk. 300.00-715.00 mound-1) and Granula (Tk. 200.00-475.00 mound-1). However, in the BBS and DAM reports, there are paucity of such valuable details for most fruits and vegetables. Price data as cited in the BBS and DAM reports should at least include harvest, wholesale and retail prices of the commercially important cultivated varieties of horticultural produces. This could ensure better use of

13

market information by the growers, intermediaries, researchers, extension workers and policy makers.

Minimize malpractice in marketing Though there are government departments to watch and observe the activities in markets but still due to certain compulsions of farmers and lack of retention of power, they are exploited by middlemen through malpractices. Sometimes, undue deductions are made. In this regard, taking „Dholta‟ can be mentioned in Jessore, where traders take 5 kg more mound-1 convincing that there may be loss due to rots and shrinkage. Relevant government department should also strengthen their assistance to the farmers to reduce the added costs of informal tolls levied against fresh produce as it is carried from farm-gate to the market.

14

Contents

Chapter Name of Chapter Page Executive summery 1-13 1 Introduction 19-21 2 Review of Literature 22-30 3 Methodology 31-36 4 Results and Discussion 37-127

4.1 Rice 37-42 4.1.1 Acreage and production in Bangladesh 37-39 4.1.2 Trend in rice price in Bangladesh 39-40 4.1.3 Seasonality 40-42

4.2 Wheat 43-45 4.2.1 Trend in acreage and production in Bangladesh 43-44 4.2.2 Seasonality 44-45

4.3 Maize 45-47 4.3.1 Trend in acreage and production in Bangladesh 46 4.3.2 Seasonality 46-47

4.4 Potato 47-81 4.4.1 Trend in acreage and production in Bangladesh 48-49 4.4.2 Seasonality 49-50 4.4.3 Results on primary survey 51-81 4.4.3.1 General practices in potato production and marketing 51-63 4.4.3.2 Marketing channels of potato 63-67 4.4.3.3 Monthly price variation 67 4.4.3.4 Marketing costs and margins of potato intermediaries 68-76 4.4.3.5 Volume of trade of intermediaries 76-77 4.4.3.6 Efficiency of different potato marketing channels 77-81

4.5 Brinjal 81-96 4.5.1 Trend in acreage and production of brinjal in Bangladesh 82-83 4.5.2 Trend in brinjal price in Bangladesh 83-84 4.5.3 Seasonality 84-85 4.5.4 Results on primary survey 86-96 4.5.4.1 Variety 86 4.5.4.2 Postharvest handling 86 4.5.4.3 Marketing channel and market functionaries 86-88 4.5.4.4 Monthly price variation 89 4.5.4.5 Production and marketing costs and returns of producer 89-90 4.5.4.6 Marketing costs and margins of brinjal intermediaries 90-91 4.5.4.7 Volume of trade of intermediaries 91-92 4.5.4.8 Percentage of net margins of intermediaries 92-93 4.5.4.9 Marketing efficiency 93-96 4.5.4.10 Marketing constraints 96

4.6 Okra 96-108 4.6.1 Trend in acreage and production in Bangladesh 97 4.6.2 Trend in okra price in Bangladesh 97-98 4.6.3 Seasonality 98-99

15

4.6.5 Results on primary survey 100-108 4.6.5.1 General practices in okra production and marketing 100-101 4.6.5.2 Marketing channel of okra 102-102 4.6.5.3 Market price of okra 102-103 4.6.5.4 Production and marketing costs and margins of producers 103 4.6.5.5 Marketing cost of okra intermediaries 104 4.6.5.6 Marketing cost and net margins of okra intermediaries 104-105 4.6.5.7 Percentage of net margins by market intermediaries 105 4.6.5.8 Volume of trade of intermediaries 105-106 4.6.5.9 Marketing efficiency 106-108

4.7 Mango 108-116 4.7.1 Trend in acreage and production of mango in Bangladesh 108-109 4.7.2 Seasonality 109-110 4.7.3 General practices by mango producers and intermediaries 110-111 4.7.4 Marketing channel 111-112 4.7.5 Monthly price variation of mango 112-113 4.7.6 Trade volume 113-114 4.7.7 Marketing efficiency 114-116

4.8 Banana 116-127 4.8.1 Trend in banana acreage, production and price 116-117 4.8.2 Seasonality 118-119 4.8.3 Status of preharvest conditions and harvesting of banana 119 4.8.4 Banana marketing channels 119-120 4.8.5 Production and marketing costs of banana growers 120-121 4.8.6 Marketing costs of banana intermediaries 121 4.8.7 Marketing margins of banana intermediaries 121-122 4.8.8 Percentage of net margins received by banana intermediaries 122-123 4.8.9 Trade volume 123-124 4.8.10 Marketing efficiency 124-126 4.8.11 Constraints of banana growers and intermediaries 127 5 Summary and Conclusion 128-136 6 Policy Implications and Recommendations 137-142 6 Acknowledgements 143 7 References 144-147 8 Annexes 148-178

16

List of Tables

Table Title Page 4.1 Months with minimum and maximum prices (national average of wholesale

price) of rice during the period from 2001 to 2011 42

4.2 Months with minimum and maximum prices (national average of retail price) of rice during the period from 2004 to 2009

42

4.3 Months with minimum and maximum prices (national average of wholesale price) of wheat during the period from 2001 to 20119

45

4.4 Months with minimum and maximum prices (national wholesale average) of maize during the period from 2006 to 2011

47

4.5 Months with minimum and maximum prices (national average of wholesale) of potato during the period from 2004 to 2009

50

4.6 Months with minimum and maximum prices (national average of retail) of potato during the period from 2004 to 2009

50

4.7 Comparison between early harvest and optimum harvest of potato in relation to gross income

53

4.8 Details of cold stores in Bogra surveyed in the present investigation. 57 4.9 Important features of potato cold stores in Munshigonj Sadar 58

4.10 Storage practices generally performed in potato cold stores in Munshigonj Sadar and in BADC cold store

58

4.11 Suggestions for better cold storage practices to improve service and maintain quality of potato in cold storage (Munshigonj Sadar)

59

4.12 Costs and profit of a commercial potato cold storage (Bogra) 60 4.13 Costs and profit of a commercial potato cold storage (Munshigonj) 60 4.14 Marketing costs for potato producers (Kichok, Bogra) 68 4.15 Marketing cost of Faria in potato trade (Shibgonj, Bogra) 68 4.16 Marketing costs for Bepari for potato trade 69 4.17 Marketing costs of Aratdar of Dhaka 70 4.18 Marketing costs of wholesalers (Dhaka city) 71 4.19 Marketing costs of retailers of different retail markets of Dhaka city. 72 4.20 Marketing costs of potato retailers of Bogra and Munshigonj 73 4.21 Costs and margins of intermediaries in potato marketing (Bogra-Dhaka) 74 4.22 Costs and margins of intermediaries in potato marketing (Munshigonj-

Dhaka) 75

4.23 Trade volume of various intermediaries in marketing channels from main producing areas to Dhaka retail markets

77

4.24 Price spread in marketing channel of potato starting from Bogra and Munshigonj to Dhaka city

78

4.25 Growers‟ share in potato marketing. 79 4.26 Acharya‟s marketing efficiency of various channels in potato trade (Bogra-

Dhaka and Munshigonj-Dhaka) 80

4.27 Return on operating capital of various intermediaries in marketing channels of potato (Bogra-Dhaka and Munshigonj-Dhaka)

81

4.28 Months with minimum and maximum prices (wholesale) of brinjal during the period from 2004 to 2009

85

4.29 Months with minimum and maximum prices (retail) of brinjal during the period from 2004 to 2009

85

4.30 Marketing cost brinjal producers 89 4.31 Marketing margins of brinjal intermediaries (Norshingdi to Dhaka) 90 4.32 Trade volume of various intermediaries in brinjal marketing channel from

main producing areas to Dhaka retail markets 92

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4.33 Value addition by brinjal intermediaries (Raipura, Norshingdi-Karwan Bazar)

93

4.34 Price spread and growers‟ share in marketing channel of brinjal starting from Norshingdi and Jessore to Dhaka city

94

4.35 Acharya‟s marketing efficiency of various channels in brinjal trade (Norshingdi-Dhaka and Jessore-Dhaka)

95

4.36 Return on operating capital (ROC) of various intermediaries in marketing channels of brinjal (Norshingdi-Dhaka and Jessore-Dhaka)

96

4.37 Months with minimum and maximum prices (wholesale) of okra during the period from 2006 to 2011

98

4.38 Months with minimum and maximum prices (retail) of okra during the period from 2006 to 2011

99

4.39 Marketing cost of okra producer of Comilla district 103 4.40 Marketing margins of okra intermediaries (Comilla to Dhaka) 104 4.41 Percentage of value addition by okra intermediaries (Comilla-Dhaka) 105 4.42 Trade volume of various intermediaries in okra supply chain from main

producing areas to Dhaka retail markets 106

4.43 Price spread and growers‟ share in marketing channel of okra starting from Comilla and Chittagong to Dhaka city

107

4.44 Price spread and growers‟ share in marketing channel of okra starting from Comilla and Chittagong to Dhaka city

107

4.45 Return on operating capital (ROC) of various intermediaries in okra trade (Comilla-Dhaka and Chittagong-Dhaka)

108

4.46 Trade volume of various intermediaries in mango marketing channel from main producing areas to Dhaka retail markets

114

4.47 Price spread and growers‟ share in marketing channel of mango starting from Chapai Nowabgonj and Rajshahi to Dhaka city

115

4.48 Acharya‟s marketing efficiency of various channels in mango trade (Chapai Nowabgonj-Dhaka and Rajshahi-Dhaka)

115

4.49 Return on operating capital of various intermediaries in marketing channels of mango (Chapai Nowabgonj-Dhaka and Rajshahi-Dhaka)

116

4.50 Months with minimum and maximum prices (wholesale-Tangail) of banana during the period from 2006 to 2011

118

4.51 Months with minimum and maximum prices (retail-national) of banana during the period from 2005 to 2011

118

4.52 Marketing costs of banana producers of Madhupur Upazilla, Tangail 121 4.53 Marketing costs and margins of banana intermediaries 121 4.54 Trade volume of various intermediaries in banana marketing channels from

main producing areas to Dhaka retail markets 124

4.55 Price spread in marketing channel of banana starting from Tangail and Kushtia to Dhaka city

125

4.56 Growers‟ share in banana marketing 125 4.57 Acharya‟s marketing efficiency of various channels in banana trade

(Tangail-Dhaka and Kushtia-Dhaka) 126

4.58 Return on running capital of various intermediaries in banana trade (Tangail-Dhaka and Kushtia-Dhaka)

126

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Abbreviations and Acronyms

ANOVA Analysis of Variance ASEAN Association of South East Asian Nations BADC Bangladesh Agricultural Development Corporation BARC Bangladesh Agricultural Research Council BARI Bangladesh Agricultural Research Institute BAU Bangladesh Agricultural University BBS Bangladesh Bureau of Statistics BCIP Bangladesh Country Investment Plan BINA Bangladesh Institute of Nuclear Agriculture BSTI Bangladesh Standard and Testing Institute BSMRAU Bangabandu Sheik Mujibur Rahman Agricultural University CIPC Isopropyl-N (3-chlorophenyl) carbamate CPI Consumers Price Index CPD Centre for Policy Dialogue CSF Cold Storage Facilities DAE Department of Agricultural Extension DAM Department of Agricultural Marketing EU European Union FAO Food and Agricultural Organizations FGD Focus Group Discussion FPMU Food Planning and Monitoring Unit GAP Good Agricultural Practices GHP Good Hygienic Practices GMP Good Manufacturing Practices GO Government Organization GoB Government of Bangladesh HACCP Hazard Analysis and Critical Control Points HIES Bangladesh Household Income and Expenditure Survey HYV High Yielding Variety ICT Information and Communication Technology ISO International Organization for Standardization NCDP Northwest Crop Diversification Programme NCPHT National Committee on Postharvest Technology and Value Addition Research in Agriculture NFP National Food Policy NGO Non Government Organization NFPCSP National Food Policy Capacity Strengthening Programme NFPPoA National Food Policy Plan of Action PoA Plan of Action PRA Participatory Rural Appraisal SAAO Sub Assistant Agriculture Officer SMS Short Message Service SAE Sher-e-Bangla Agricultural University USAID United States Agency for International Development WHO World Health Organization

19

Chapter 1

Introduction

Fruits and vegetables are very important for human diet, especially for vitamins and minerals. However, the per capita consumption of fruits and vegetables in Bangladesh is only 211 g day-1 against a minimum requirement of 400 g day-1 (FAO/WHO 2003; BBS 2010a), which manifests a poor dietary status of the people in the country. Presently, Bangladesh produces around 10923 and 4525 thousand metric tons of vegetables (including potato) and fruits per year, respectively (BBS 2010b). However, due to seasonal glut and absence of proper marketing system, bulk quantity of harvested produce gets wasted every year. Recently, Hassan (2010) reported that postharvest loss of fruits and vegetables in Bangladesh ranged from 23.6 to 43.5%, which accounts for an annual loss of 3442 crore taka. Hence, due attention should be given to the reduction of enormous postharvest losses of fruits and vegetables in Bangladesh. The changing demand in domestic and international markets for fruits and vegetables creates both challenges and opportunities. Therefore, efficient marketing is of paramount importance to reduce postharvest loss and the risk and uncertainty in timely delivery of quality and safe produce at reasonable prices to the consumers. Appropriate marketing channels and the market actors are important in timely delivery of vegetables and fruits from the producers to the consumers. Different marketing channels have been identified by several authors. One of the most common channels is Growers-„Bepari‟-„Aratdar‟-Retailers-Consumers. The commodity price is apparently higher at the retailers‟ level. Hassan (2010) reported that the price of fruits and vegetables increased by 105% at the retailers‟ level. But, Hassan (2010) did not calculate the costs and margins of the different market intermediaries. The intermediaries are very often blamed to take the lion‟s share of market margins in relation to consumers‟ taka. But, reliable information on this matter is meagre in the scientific literature. In Bangladesh, the consumption of fruits and vegetables has been increasing rapidly in the recent years, as the economy grows and consumers diversify their diets. This trend is likely to continue in the future. Furthermore, domestic agricultural markets have undergone modernization (though not that significant) due to rapid urbanization, agro-industrialization, rise of super markets and trade liberalisation, and procurement system is gradually shifting from traditional wholesale markets toward vertically coordinated supply chains. At present, Bangladesh‟s agricultural marketing system is often accused in the popular press of being inefficient. In the case of vegetables, „Aratdar‟ and „Bepari‟ have been found to be critical players in the market. Their margin was between 17-18% of the retail value and their return on working capital was found to be exceptionally high (NFPCSP 2011), although it is possible that the high margins are in turn due, for example, to poor infrastructure. Inefficient marketing systems reduce demand from consumers and participation by farmers, who face significant challenges in seizing opportunities to participate in growing markets for high-value nutritious crops like fruits and vegetables. Marketing constraints include both high costs and risk. High marketing costs often stem from poor transportation networks (Hossain et al. 2006), lack of market information, and sometimes from lack of competitiveness in the market. Production of fruits and vegetables can be very susceptible to pest outbreaks, and spoilage after harvest is an important problem due to highly perishable nature of most fruits and vegetables. These factors in turn can lead to highly unstable prices. If these constraints

20

can be removed, farmers will earn more by specializing in crops for which they have a comparative advantage. Presently, the crying need is the generation of reliable up-to-date data on the actual costs and returns of the market intermediaries. The outputs of the proposed project will fill up the information gap, and indeed, contribute greatly to find out the most efficient marketing options in order to formulate a meaningful national policy to improve the fragile marketing systems of fruits and vegetables in Bangladesh. Given the increased importance of fruits and vegetables in nutritionally balanced diets, it will be important to establish efficient marketing systems that reduce risk and allow reasonable prices for both the producers and consumers. The National Food Policy Plan of Action (2008-2015) as well as the Bangladesh Country Investment Plan (BCIP) placed stress on strengthening the food marketing system and improving value chains as a measure for improving food security and increasing incomes among the poor. The present research, by collecting and disseminating essential up-to-date data on costs and margins within the marketing systems, will identify the most cost-effective options for improving marketing system performance and propose improved policies and better institutional support throughout the marketing chain. The specific objectives, research questions and expected outputs are summarized in the following.

Objective 1: To describe actors, commodity flows and price formation in the marketing chain for two fruits and three vegetables in Bangladesh, from main producing areas to Dhaka retail markets.

Research questions What are the various marketing channels,

especially from leading producing areas to Dhaka city?

What are the various actors in marketing

channels of fruits and vegetables? What are the price formation methods in

various supply chain?

Expected outcomes The presently-operating commodity flow(s)

i.e. marketing channels for the selected commodities were identified.

The important actors (functionaries) in marketing channel of the selected commodities (potato, brinjal, okra, banana and mango) were identified.

Price formation methods of the selected

commodities at different levels of marketing were explored.

Objective 2: To evaluate performance of marketing system by calculating gross and net margins for each of the five foods studied.

Research questions What are the costs of production and costs

of marketing of the selected crops? What are the shares (gross and net margins)

of intermediaries in marketing channel in relation to consumers‟ taka?

Expected outcomes Details of costs of production and costs of

marketing of the selected crops were calculated.

Reliable and updated primary data on gross

and net margins of market intermediaries were generated for the selected commodities. The information would be useful in formulating national policy to reduce postharvest loss and deliver quality and safe produce to the consumers at reasonable prices. Primary survey results were used to address this research question.

21

Do the intermediaries receive lion‟s share of the profit? If so, who gets the most?

What are the seasonal factors and co-

efficient of variation of monthly prices of fruits and vegetables compared with other agricultural products?

What is the status of market performance?

The marketing margins of the intermediaries were calculated and the results would be very useful to improve market performance by making right decision on whether and how the involvement of the numerous intermediaries should be reduced in the supply chain to control and stabilize commodity prices. Primary survey data were used to answer this research question.

Seasonal factors and coefficient of variation

for each of the selected fruits and vegetables were calculated and compared with other agricultural commodities (important cereals and other fruits and vegetables). Secondary data were used to answer this research question.

Market performances were evaluated on the basis of performance indicators (profitability, price spread, marketing costs and margins, return on investment, involvement of intermediaries, types of marketing channel, etc.) to be determined from the data obtained from the primary survey.

Objective 3: To assess the critical factors affecting market performance and to propose policy recommendations for enhancing market performance.

Research questions What are the critical factors or bottlenecks

or constraints in marketing channel? What would be the recommendations for

improving the performance of marketing system in Bangladesh?

Expected outcomes The critical factors and bottlenecks in the

marketing channels were identified and analyzed towards the improvement of the existing marketing systems of vegetables and fruits. Primary survey data were used to answer this research question.

Policy implications & recommendations

were prepared to improve the marketing performance so as to ensure growers‟ profit, reduce postharvest losses and deliver quality and safe fruits and vegetables to the consumers at reasonable prices. Results of primary survey and analyses of secondary market information were used to answer this research question. Five booklets were also prepared as guides for production and marketing of the selected commodities.

22

Chapter 2

Literature review 2.1 Background Fruits and vegetables are rich sources of phytochemicals (vitamins, minerals and antioxidants) believed to be associated with the promotion of good health and also protection against certain diseases. Due to favourable agroclimates, variety of nutritious fruits and vegetables are grown in Bangladesh. Even though the rate of consumption of fruits and vegetables including potato is gradually increasing but still remain very low (281 g day-1 capita-1) as compared to the FAO-recommended daily minimum requirement of 400 g day-1 capita-1 (Annex 1). Furthermore, the availability of fruits and vegetables in Bangladesh is very low as compared to many other Asian and developed countries (Annexes 2-5). In contrast, although the consumption of rice in Bangladesh decreased significantly from 464.30 to 416.01 g day-1 capita-1 from the year 1995 to 2010 but still remain as one of the highest rice consuming countries of the world (Annex 1, 6). So, there is ample scope of intervention to elevate the per capita consumption of fruits and vegetables and to reduce dependency on rice, which will create a food balance situation and thereby contribute immensely in the food and nutrition security in the country. The situation stated above is further compounded by poor marketing infrastructures and huge postharvest losses. Due to seasonal glut and absence of proper marketing system, bulk quantity of harvested produce gets wasted every year. The estimated postharvest loss of fruits and vegetables in Bangladesh ranged from 23.6 to 43.5% (Hassan 2010). Similar losses of fruits and vegetables have also been observed in other Asia-Pacific countries, for instance, 40% in India, 20-50% in Indonesia, 20-50% in Korea, 27-42% in the Philippines, 16-41% in Sri Lanka, 17-35% in Thailand, and 20-25% in Vietnam (Rolle 2006). The postharvest loss of fruits in the Sub-Saharan Africa is reported to be 50% (Mashau et al. 2012). In general the postharvest losses of fruits and vegetables in the developing countries are substantial (24-40%) as compared to those of the developed countries (2-20%) (Sirivatanapa 2006). Global population is increasing faster than the growth in food supply, and all the resources utilized to produce food are becoming increasingly scarce. Therefore, reducing postharvest losses of food must be an essential component in any strategy to make more food available without increasing the burden on the natural environment (Hudges et al. 2010). Hence, due attention should be given to reduce postharvest losses, maintain quality and safety in supply chain, and deliver produce at reasonable prices to the consumers. Fruits and vegetables are mainly produced by small and marginal holders, but due to weak and fragmented value-chain, only a small percentage of the produce reaches the urban market (Minten et al. 2010). Appropriate marketing infrastructure is crucial for efficient marketing of fruits and vegetables in Bangladesh (GoB 2008; Khandaker et al. 2009; BCIP 2010). 2.2 Marketing channel and market intermediaries Marketing channel refers to the sequential arrangement of various marketing intermediaries involved in the movement of products from the producers to the consumers. In agricultural marketing, there is a lack of direct linkage between the producers and the consumers. After harvesting, the commodity passes through a number of middlemen, and finally reaches the consumers. Marketing channel varies from commodity to commodity. Once a particular

23

commodity is offered for sale by the producers, different types of buyers appper and engage in burgaining to purchase the produce. The first channel is dominated by village „Faria‟, local „Bepari‟, local „Arat‟, and local wholesalers. The produce passes through another set of middlemen like „Bepari‟, „Aratdar‟ wholesalers and processors in the destination markets. Finally, the produce reaches the consumers through the hands of the retailers. This means, the produce is to pass through various channels, and every channel is to receive its reward for its services. In relation to vegetables marketing, a small proportion passes through local retailers directly from growers, and a considerable proportion passes from „Bepari‟ via „Aratdar‟ through „Paiker‟ to the consumers (Rashid 1969; Hassan 2010). Ahmed et al. (1990) reported five important marketing channels of winter vegetables, which are Growers-Consumers; Growers-Retailers-Consumers; Growers-„Bepari‟-„Aratdar‟-Retailers-Consumers; Growers-Agent-Exporter; and Growers-„Aratdar‟-Exporter. Ahmed (1992) reported three principal marketing channels, namely local, regional and inter-regional. The local marketing is characterized by the intervention of fewer middlemen between producers and consumers. The regional channel consists of an extended chain of intermediaries. The inter-regional channels are the most lengthy in terms of number of traders involved and distance over which produce are transported. Roy (1992) reported that the farmers of Jessore sold brinjal mostly in the primary market (65%), while regional and inter-regional mobility were only 10 and 25%, respectively. FAO (1997) identified a large number of vegetable marketing channels, amongst them, 13 were within and between the assemble markets and 19 were from assemble markets to the city markets. However, market actors and marketing channels as influenced by production location, farm sizes and seasonality are not adequately investigated. Myint (2003) reported different categories of market actors in fruits and vegetables supply chain in Myanmar. The market actors are farmers; primary collectors (village brokers); collectors; town wholesalers and large scale wholesalers; market wholesalers; market retailers; transport brokers; and exporters. In the case of potato, two different marketing channels (traditional and cold stored) were reported by Hossain and Miah (2009). In the case of traditionally-stored potatoes, „Bepari‟ and „Faria‟ purchased potatoes from the growers. The amount of potato purchased by „Bepari‟ was higher (60.9%) than „Faria‟ (36.2%). „Bepari‟ bought large amount of potatoes from the farmers and sold directly to the „Paiker‟ (38.9%), retailers (26.2%) and „Aratdar‟ (21.6%). Similarly, „Faria‟ bought potatoes directly from the farmers and mostly sold to the „Bepari (25.8%) and small portion (10.4%) to the retailers through „Aratdar‟. „Paiker‟ bought a major portion of potatoes directly from the „Bepari‟ (38.9%) and a very small from the farmers (2.1%). They also bought a good amount of potatoes (20.9%) from „Faria‟ and other „Bepari‟ through „Aratdar‟. The „Paiker‟ sold their entire potatoes to the retailers. In the case of cold stored marketing, „Bepari‟ and „Paiker‟ bought potatoes from cold stores. The amount of potato purchased by „Bepari‟ was again higher (73.2%) than the „Paiker‟ (24.4%). „Aratdar‟ bought all potatoes from the „Bepari‟ and sold 42.1% to „Paiker‟ and 29.3% to the retailers. „Paiker‟ sold maximum amount (68.1%) to the retailers, and very small portion (0.2%) to the consumers. However, Hossain and Mia (2009) did not calculate the marketing costs and margins of the producer and the intermediaries in potato supply chain. Although Hossain and Mia (2009) concluded that „Aratdar‟ buy and sell potatoes, but the statement is confusing. This is also important to note that the „Aratdar‟ (commission agent) is actually do not buy or sell produce rather they act as facilitators and charge a certain percent of commission, and the results of the present study would clarify the confusion. Hossain and Miah (2009) also calculated the disposal pattern of potato at the farm level. They reported that about 2.92% of the produced potatoes was used for home consumption, 0.52%

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was used for gift, 62.04% was sold during harvesting period, 12.73% was kept in cold stores as seed and 23.04% was stored as table potatoes and sold later (cold stores 19.70% and home stores 3.34%) when price became high. In a similar study, Rabbani et al. (2010) reported that most small potato growers sold their produce from the farm gate (78%) followed by from local assemble market (18%) and from cold stores (5%). On the other hand, the large potato growers mainly sold their produce from the farm gate (51%) followed by from cold stores (31%). Market syndicate and fewer traders in the potato supply chain (less bargaining option and more price control) are the major constraints in potato marketing. Hajong (2011) conducted a study on marketing and storage system of potato in selected areas of Rangpur district and reported the presence of intermediaries such as „Faria‟, „Bepari‟, „Paiker‟, retailers and cold store owners in the marketing systems of potato. Hajong (2011) observed ten different types of marketing channels, and the principal channels were farmer-consumers; farmers-„Faria‟-„Bepari‟-„Paiker‟-retailer-consumers; and farmers-cold storage-„Bepari‟-„Paiker‟-retailers-consumers. CPD (2007) reported six major marketing channels and six market intermediaries in potato supply chain. The longest chain involved six nodal points, whereas the dominant channel involved five agents. In both channels, production constituted the major component of the consumers‟ expenditure (53-62% of the retail value). The rest 40-50% accrued to the various intermediaries including wholesalers and retailers, whose rate of return on working capital varied from 12 to 14%. Cold store owners also received considerable share (12-14%) of the retail value. However, the author did not calculate the marketing costs and margins of the intermediaries involved in the marketing of traditionally-stored potatoes. The present study attempted to investigate the marketing costs and margins of the market intermediaries involved in both the traditionally-stored and cold-stored potato channels, especially from producing areas to Dhaka retail markets. Barman (2008) carried out a study about supermarket and conventional marketing channels of winter vegetables in Dhaka city. Results showed that producers of winter vegetables mainly sold their products to the wholesalers and supermarket collected their needed products from wholesalers and ultimately sold to the consumers in the supermarkets. On the other hand, in conventional market, wholesalers purchased their required amount from producers and sold to the retailers and then retailers sold to the consumers. Barman reported several marketing channels. For supermarkets, the marketing channels are producers-wholesalers-supermarket-consumers and producers-supermarket-consumers. For conventional marketing, the identified channels were producers-wholesalers-retailers-consumers and producers-retailers-consumers. 2.3 Seasonality Seasonality refers to the pattern of monthly or seasonal price variation of any commodity over a certain period of time. Hajong (2011) investigated the seasonal price variation of potato in Rangpur district from the year 2000-2010. Results showed that the price of potato was higher in the months of January and July-December. Monalisa (2011) conducted a study on seasonal price variation of chili in Jamalpur District. Results showed that the price of chili was higher in the months of September and October. Ferdous (2007) carried out a study on seasonality of brinjal for the period of 2002-2006 in some areas of Mymensingh district. Results revealed that the price of brinjal was higher in the months of September to November and lower in the months of December to January. Myint (2003) reported the seasonality of tomato in Myanmar, and showed that high price at the start of the season. At the peak season, the tomato price went down due to increase in supplies in the market. Afterwards, the prices again increased but not reached the same level as observed at the start.

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2.4 Price fixation Method of price setting is also an important aspect in marketing of fruits and vegetables. Myint (2003) reported different methods of price setting in fruits and vegetables marketing in Myanmar. Farmers generally rely on the nearest town, bus or boat drivers, extension workers, and neighbouring farmers of the same village come from the nearest town market. Another information source is the agent who comes to village to buy a crop. Farmers compare prices offered by the agents and the primary collectors. Farmers choose the best trading partners based on honesty and reasonable prices offered to them. The wholesalers find out daily market information in the produce exchange centre. They also exchange market information of export demand, prices in major producing areas and supply situation. For price setting, traders gather information from their regular trading partner by telephone including cell phones. In Bangladesh, the common sources of market information are the personal visit to market, other farmers, traders, contractors, extension workers, and market information services (Rahman 2003). In the present days, cell phone is mainly used as an important source of market information. 2.5 Marketing costs and margins Various middlemen perform different functions in the process of marketing and they charge fees for the services they provide. These charges include costs for packaging, loading, unloading, sorting, grading, market fees, commission, etc. In the case of the profit of the middlemen, beginning from the sale of the produce from the farmers till it reaches the consumers, different actors like „Faria‟, „Bepari‟, commission agent, wholesalers, retailers, and so on handle produce and they earn profit by adopting this profession. Their profit is included in the price of the commodity and it also becomes a part of the market margins (Chhina 2009). Producers‟ share is an important indicator of market efficiency. Higher marketing costs indicate less efficient market but it is not always true. Marketing cost depends on various factors. According to Chhina (2009), it can be concluded that low marketing cost expressed as a percentage of the consumers‟ price is not an indicator of high efficient market and similarly the marketing cost expressed as a percentage of the consumers‟ price is always not an indicator of low efficiency market system. The percentage share of the price of farm products in India is higher than the percentage of price in the developed countries of Europe and America. It cannot be concluded that the Indian markets are more efficient than that of developed countries. There can be higher marketing cost in a developed economy (Chhina 2009). The cost of marketing of a particular commodity is influenced by different factors such as quantity of the product, perishability, bulkiness, risk involved, facilities in the market, grading, storage, transportation, regular or irregular supply, advertisement, processing, packaging, retail or wholesale, degree of market information and competition in the market. There are some important points to be considered to reduce marketing cost which include improvement of management, better handling of products, increase in the volume of business, reduction in market charges, creating the conditions for perfect competition, reduction of risk, practice of grading, and provision for market information (Chhina 2009). In terms of marketing margins in vegetables trade, Roy (1992) reported that „Faria‟ was the most beneficiary group among the traders. In contrast, Sabur (1992) reported that the profit margin was the highest for „Aratdar‟ (93%) followed by „Faria‟ (79%), „Paiker‟ (75%), „Bepari‟ (33%) and retailers (20%). However, the marketing costs were higher for „Bepari‟

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followed by retailers, „Paiker‟, „Faria‟, and „Aratdar‟. This is quite common that some people look at prices paid to farmers and compare them with the prices consumers pay for the same product. They accuse traders who are exploiting the farmers because the retail price paid by consumers is higher than the price received by farmers. Simple comparison of farmers‟ prices with retail prices is a poor indicator of marketing efficiency as it does not take into account the cost involved in moving produce along the marketing chain from the farmers to the consumers. Myint (2003) reported from Myanmar that the farm and retail prices of cabbage were Kyat 14.50 and 43.00 piece-1 showing only 34% received by the farmers. When marketing costs were calculated, the net margins of the farmers, collectors and retailers were Kyat 6.96, 1.95 and 13.00 piece-1. Similar up to date information is required for the selected commodities in Bangladesh to prepare policy for the improvement of marketing performance of fruits and vegetables. Mari (2009) investigated the marketing margin and distribution of costs and net returns across the functionaries of selected vegetables. Results revealed that the share of producer in consumer rupee was 58, 66 and 65% for onion, tomatoes and chillies, respectively. The study also reported higher returns on capital employed by the market agents including wholesalers and commission agents, who indicated a collusive oligopoly among the market intermediaries and they were not operating as competitive and efficient institutions. Ferdous (2007) conducted a study on production and marketing of brinjal in selected areas of Mymensingh district and showed two marketing channels, producer-„Paiker‟-„Aratdar‟-Retailers-Consumers and producers-Consumers. The marketing costs for „Piker‟, „Aratdar‟ and retailers were Tk. 650, 100 and 710 ton-1, respectively. The corresponding net marketing margins or profit of were Tk. 350, 710 and 540 ton-1, respectively. Sayem (2001) presents a study on marketing system and price behavior of potato in selected areas of Rangpur district and showed that the average gross marketing margin was Tk. 485 quintal-1, whereas Tk. 117, 182, 109 and 77 quintal-1 for „Bepari‟, cold store owner, „Paiker‟ and retailers in Rangpur Sadar Upazilla. And the average gross marketing margin earned by „Bepari‟, cold store owners, „Paiker‟ and retailers were Tk. 91, 163, 72 and 59, respectively in Taragonj Upazilla. The average net marketing margin per quintal earned by „Bepari‟, cold storage owners, „Paiker‟ and retailers were Tk. 22, 20, 22 and 23, respectively. So, from this study, the average gross marketing margin is higher in Sadar Upazilla than Taragonj, and the average net marketing margin is higher in Taragonj than Sadar Upazilla. Similar information is, however, lacking for other commodities like okra, mango and banana to be examined in the proposed project. According to a CPD report, 6 different marketing chains for brinjal and chili were identified. The major components of the consumers‟ expenditure for brinjal and chili were attributable to the production cost which ranged from 41-43% of the retail value. The market intermediaries received about 60% equivalent value of the retail price. Among the intermediaries the retailers received the highest share (24-28% of the retail value). However, the author explained the reasons for the higher margin of the retailers. Vegetables are perishable, and hence the retailers add premium to the prices to offset the risk of spoilage. Secondly, the consumers generally choose and pick better quality products, and remaining products become gradually inferior in quality and ultimately sold at lower prices. Often, a portion of the products are not sold. That is why, the retailers tend to add premium to compensate the perceived losses (CPD 2007). Nevertheless, the unusual and very high addition of premium by the retailers cannot be ruled out.

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Studying marketing margins is very important for several reasons such as to study marketing efficiency, compare different markets, improve marketing system, study the role of the middlemen, and implement different Government policies. Role of middlemen is an important aspect in influencing the marketing costs and margins. If the results of marketing margins of the different middlemen indicate that there are certain unreasonable charges, and inefficiency in the services of the middlemen, those can be improved accordingly. Another important aspect of marketing margin analyses is the implementation of Government policy. The Government formulates policies with the objective of improving the efficiency of the marketing. The study of market margins indicates the field to adopt and implement the appropriate market policy. The required intervention of the Government is also based on the study of the market margins (Chhina 2009). Barman (2008) investigated the marketing costs and margins in winter vegetables trade in Dhaka city. He reported that the marketing costs for supermarket and conventional markets were Tk. 481 and 453 ton-1, respectively, and the corresponding net returns were Tk. 11988 and 7511 ton-1, respectively, and which results manifested that the margins of supermarkets were higher than that of conventional markets. 2.6 Marketing efficiency There are two types of marketing efficiency, technical efficiency and pricing efficiency. Regarding technical efficiency, different market functions are performed in the process of marketing, and naturally cost is involved to perform these functions. The efficiency is based on the performance of these functions at the lowest cost. It is also based on the concept that there are the lowest physical losses of commodity while performing these functions. During marketing, different functions like storage, transportation, processing, etc. are carried out, and costs are paid for these functions. If changing technology contributes to reduce this cost, it can be assumed that the technical efficiency increased. In the present study, emphasis has been give to examine the pricing efficiency of different marketing channels of the selected vegetables and fruits. Generally, market efficiency is measured on the basis of consumers‟ satisfaction at the minimum cost and the maintenance of high volume of outputs. Marketing efficiency is the ratio of market output (satisfaction) to market input (cost of resources). An increase in ratio indicates improved efficiency and a decrease denotes reduced efficiency. According to Shephered (1972), marketing efficiency is the ratio of the total value of goods marketed to the marketing cost. The higher the ratio the higher the efficiency and vice-versa. There are different expectations of the growers, traders and middlemen in marketing system. The growers wish to sell their produce at the highest possible prices in the shortest period and may realize the quick payment of their sale. The consumers wish to purchase the best quality products at the minimum prices. The traders wish to earn the maximum from their marketing business, and they wish to charge the maximum for their services. The Government is interested in the welfare of the public. So, the Government expects that the interest of all the above stated three sections should be protected with a reasonable proportion. According to Chhina (2009), a market can be said highly efficient if the difference in price of the commodity at the different points of time in a year should not be more than the cost of storage; the difference of price of a commodity at different places should not be more than the cost of transportation to that place; and the price with the change in the form of the commodity (processing) should not be more than the cost of processing. So, the efficiency of a market can be measured with the pricing of the product with the change of time, change of place and change of form.

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The market efficiency measured on the basis of prices is affected by the extent of competition and availability of market information. Broadly, the efficient marketing is based on two components, firstly, the farmers have realised more income (encouragement to more production), and secondly, the consumers have realised more satisfaction (increased satisfaction of the consumers). The change in the environment should have no effects on the farmers‟ income and consumers‟ satisfaction. For instance, in a particular year, there is a bumper production of a crop, there is likelihood that the prices would decrease (happens very often in Bangladesh), the crop would go wasted and the income of the farmers may be affected adversely. But the efficiency of the marketing is based on the fact that the storage system, the transportation, processing should be so effective that there may be no difference to the income of the farmer. The consumers should also receive the goods at the minimum cost of the marketing but the reduction of cost should not affect the satisfaction of the consumers. If the cost of marketing has decreased, but satisfaction of the consumers has increased it can be called the efficient marketing. Even if the degree of satisfaction has increased more than the increase in the cost of marketing it would be called an efficient marketing. But if satisfaction of the consumers has decreased without any decrease in cost of marketing, it would be called an inefficient marketing (Chhina 2009). Marketing efficiency and price behaviour of brinjal was investigated by BARI (2007) in selected areas in terms of growth, instability, annual fluctuation of prices and decomposition of the series components. Both primary and secondary data were used for the study. Six performance indicators were used for measuring marketing efficiency of brinjal. Growth rates of real prices in Chittagong and Jessore were found to increase over the period due to high demand of brinjal. Annual real prices of brinjal in selected areas fluctuated to a great extent, and it was the highest in Comilla followed by Jamalpur, Chittagong and Rangpur. Annual Time Series Data consisted of four components, namely trend, seasonal, cyclical and irregular movement, which were decomposed to see the annual price movement separately. The upward trend of real price was found for Chittagong and Jessore. The length of cycle in real prices was found 3-6 years on an average in the selected areas. It was evident from the seasonal indices that wide seasonal fluctuation occurred in brinjal prices in all the selected markets. The price flexibility was estimated to be -0.2134 in Rangpur. The performance indicators revealed that the channel, Farmer-„Bepari‟ (Local district)-Aratdar (Local district)-Retailer (Local district)-Consumers was the most efficient channel in the selected areas, where the net marketing margin was Tk. 739.15 Quintal-1. Similar reports have also been published by Mankhin (2006), Matin et al. (2008) and Nasrin (2010). There is also a relationship between market efficiency and market competition. In case of perfect competition, there would be the highest market efficiency. The imperfections in the markets lead to the inefficiency. The important features of perfect competition in a market include large number of buyers and sellers, homogenous products, perfect knowledge, free entry and exit, and free mobility (no restrictions on the mobility of the buyers, sellers and products). An inefficient market is characterized by monopoly (a farm or a group of farm forms an organization and they indulge in practice to earn more and more profits, and they create a situation to charge higher prices and monopolise the situation), government interferences (restrictions/obstacles on the movement of products from one place to another, or creation of zones of foods, or rationing of the products), and imperfect knowledge (in terms of demand and supply position of the product and other factors concerned with the marketing cost) (Chhina 2009). In Bangladesh, the above-stated factors widely exist and contribute to inefficient market systems.

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2.7 Marketing constraints Price volatility in fruits and vegetables marketing is an important constraint. Very often it is noticed that price of one commodity is high in one year and less in the following year. This is possibly due to the cyclical nature of production (Myint 2003). If prices in one year are bad, farmers will often respond by planting less in the next year. This will lead to lower production and higher prices, so encouraging more planting in the following year and a consequent fall in prices. This cyclical nature of production and prices is quite common. Successful farmers are sometimes those who do the opposite to what is being done by other farmers. Lack of reliable and up to date information on market prices is an important constraint. For example, farmers rely on time consuming and costly personal market visit to obtain price information, and often they have information only about crops they produce and market they sell to. The traders do not see in their interest to provide accurate information to the farmers. They only know about the crops and the markets with which they deal. Extension workers are rarely trained to assist farmers in marketing (Rahman 2003). Existence of business syndicate is often seen as price controlling body. Rabbani et al. (2010) reported that formation of business syndicate by the traders for price fixation in the market has been mentioned by the respondents from Comilla-Chandpur (26.70%), Jessore-Kushtia (30.00%) and Rangpur-Dinajpur (13.33%) zones. Similarly, presence of few traders in the market in Jessore-Kushtia (13.33%), Rangpur-Dinajpur (16.67%) and Jamalpur-Sherpur (10.00%) zones. The results revealed that 10.34% large, 9.84% medium and 14.75% small potato growers reported the existence of business syndicate in the potato market. On the other hand, 12.07% large, 1.64% medium and 6.56% small potato growers reported the presence of fewer traders in the market channel resulting in less bargaining and more control of the market price of potato by the traders in the market. However solid evidence and how the syndicate operates in the market are not well documented even though public perception is always in favour of this statement. 2.8 Previous policies and recommendations In the NFPPoA (2008-2015), the agricultural marketing and trade has been given due attention. The targets are the reduced marketing costs of agricultural products and the strengthened market integration. The action agenda include strengthening capacities of DAM, BSTI, Hortex Foundation; promoting the expansion of farmers associations; developing efficient food marketing information system through greater reliance on information and communication technology (ICT); and establishing reliable forecasting models (GoB 2008). Agricultural commodities pass through several intermediaries before they reach the consumers, with significant variations in marketing margins and producers‟ share. In many instances, the prices the consumers pay happen to be higher than what they could be, whilst those received by poor farmers are very low. Strengthening of marketing systems shall help in ensuring fair prices. However, several other factors of poor market performance, such as unfair competition, the excessive number of intermediaries, transportation leakage, excessive tolls, etc. need to be addressed through proper market policy and regulations (GoB 2008). Hossain and Miah (2009) recommended that market infrastructures should be developed in terms of quick transportation, proper storage and other physical facilities to reduce postharvest losses of potato and other fresh fruits and vegetables. They also underscored the maintenance of separate space in the cold stores, one for seed potatoes (2-4oC) and the other for table

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potatoes (3-5oC), refinement of traditional methods of potato storage to reduce the cost of storage in cold stores, and price control round the year in all parts of the country. Rahman (2003) emphasized the use of ICT-based marketing system for agricultural commodities. Dhankar (2003) mentioned that modernization of market information system will lead to the efficiency in the markets and increased participation of the farmers. Dhankar (2003) also underscored continued assistance in marketing research to generate marketing information and subsequent dissemination to the farmers and other market actors at the grass root level to create an ambiance good marketing practices in India. Hanemann and Ahmed (2006) put forward 29 recommendations in relation to production, commercialization and consumption of fruits and vegetables in Bangladesh, and amongst them, the important recommendations are: increase investment for improving market infrastructures including postharvest management and processing facilities to reduce wastage and more value addition for enhancing marketing margin and increasing return to farmers; contract farming arrangements should be encouraged and facilitated as a means of reducing the costs of intermediation and integrating horticultural procedures into fresh produce supply chain; and direct farm-to-market programmes as fostered by the NCDP (North West Crop Diversification Programme) should also receive official endorsement and encouragement. Producing and marketing high value horticultural products successfully requires a range of interventions and investments, including a change in policies toward an enabling environment conducive to private trade, infrastructure development, improved access to credit, research and development, capacity building and taking advantage of international trade (Minten et al. 2010). 2.9 Concluding remarks In conclusion, the commodity price is apparently higher at the retailers‟ level. Hassan (2010) reported that the price of fruits and vegetables is increased by 105% at the retailers‟ level. But, Hassan (2010) did not calculate the costs and margins of the market actors. The intermediaries are very often blamed to take the lion share of marketing margins. But, reliable information on this matter is meagre in the scientific literature. Presently, the crying research need is the generation of reliable up to date data on the actual costs and margins of the market intermediaries, and other indicators of marketing performance for the selected commodities. The outputs of the present study would fill up the information gap, and indeed, contribute greatly to find out the most efficient marketing options in order to formulate a meaningful national policy to improve the fragile marketing systems of fruits and vegetables in Bangladesh.

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Chapter 3

Methodology

3.1 Commodity As per the ToR, three important vegetables (potato, brinjal and okra) and two important fruits (banana and mango) were investigated. 3.2 Approaches and methodology The approaches include the use of secondary data and collection of primary data on marketing of the selected fruits and vegetables. The details of the methodology are described in the following. 3.2.1 Collection of secondary data Secondary information, especially with regards to marketing channel, market actors, commodity flows, marketing costs and margins, seasonality and price formation on the selected vegetables and fruits and important cereals were collected from books, journals, reports (BBS, DAM, HIES), documents and online resources. To calculate seasonality of the selected commodities (potato, brinjal, okra, banana and mango) and cereals (rice, wheat and maize), secondary data were collected for at least five years. 3.2.2 Collection of primary data Primary data were collected from the market actors using PRA tools including FGD, questionnaire interviews and Cross-Check interview with Key Informants. Data were collected by trained data enumerators (SAAO and local graduates) and the Research Fellows with direct supervision of the Principal Investigator. For primary data collection, the following steps were followed: 3.2.2.1 Conceptual marketing chains The marketing chains for brinjal, okra, banana and mango were assumed similar (Fig 3.1A), while the marketing chain for potato was different (Fig 3.1B). Hence, data were collected accordingly. 3.2.2.2 Data collection from growers Stratified random sampling was followed to conduct primary survey. Leading 1-2 Districts for each commodity were selected based on production volume. From each District, 1-2 Upazilla, and from each Upazilla, 2 Blocks were selected receiving suggestions from the DAE personnel. Sample sizes for the growers are furnished in Appendix 8. From each Block, names of growers were listed, and from which 25 growers were proportionately selected in terms of marginal (0.02-0.20 ha), small (0.21-1.00 ha), medium (1.01-3.00 ha) and large (> 3.00 ha). The growers, who grow and sell their produce (whole or part), were interviewed. A 5% reserve list was prepared for any absentees. The selected growers were interviewed using structured and pre-tested interview schedules. Data were recorded on age, education, land

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holdings, income, cultivated varieties, production and marketing costs, mode of sales, sale price, gross and net profits and constraints. Data collection from the growers was more marketing oriented rather than production.

Fig 3.1 Conceptual marketing chains for brinjal, okra, banana and mango (A), and potato (B).

3.2.2.3 Data collection from intermediaries including cold store owners The intermediaries refer to those people who act between the growers and consumers. The important intermediaries are „Faria‟, „Bepari‟, „Aratdar‟, „Paiker‟ and retailers. In the case of „Faria‟, from each Block and assemble market, 25 „Faria‟ were selected by using convenience sampling (purposive sampling) and interviewed. Information were collected on trade volume, marketing costs (depreciation on investment capital, interest on running capital, transport cost, office cost, commission, market tolls, wastage, etc.), mode of sales, purchase and sale prices, price formation, gross and net margins and marketing constraints. For „Bepari‟, „Aratdar‟, „Paiker‟ and retailers, similar methods were followed. Sample sizes for the intermediaries including cold store owners are furnished in Annex 7. In addition to questionnaire interview, FGDs were also carried out especially to guide the interview (Annex 8). 3.3 Training of data enumerator The data enumerators were given adequate training so that they would be able to collect required data/information from the selected interviewees with utmost care and accuracy. Training sessions were conducted in Mymensingh (BAU), Jessore, Chapai Nowabgonj, Bogra, Norshingdi and Comilla. The training was provided by the Principal Investigator and Co-Investigator.

Growers

Bepari

Faria

Consumers

Aratdar

Retailers

Paiker

B Growers Fruit ripening (i) Chemical

(ii) Heat chamber

rs

Bepari A Faria

Consumers

Cold Stores Traditional Stores

Paiker

Retailers

Aratdar

Bepari B

A

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3.4 Data analysis Data obtained from questionnaire interviews were coded where appropriate and entered into a database system using Microsoft EXCEL and analysed using SPSS Statistical Software. Descriptive statistics (percentage, mean, range, standard deviation, correlation co-efficient, co-efficient of variation, etc.) were used to describe the variables. Seasonality was calculated as per Moving Average Method. For the estimation of comprehensive marketing costs, the methods described by Dawe et al. (2008) were followed. Appropriate methods (interpolation or extrapolation or average) were followed to address missing data. 3.5 Parameters studied To answer the research questions and to achieve the objectives of the ToR, various parameters were studied, namely annual price fluctuation, seasonality, co-efficient of seasonal indices, costs and margins of growers and intermediaries, and marketing performance. The methods of studying these parameters are given in the following. 3.5.1 Price fluctuation Time Series Analysis was performed to examine the pattern of yearly price fluctuation of the selected commodities. Both nominal and real (deflated) prices were used for examining the pattern of price fluctuation for the selected fruits and vegetables and other important cereals. Real price of commodities in several years was calculated by the formula, Real price = (Nominal price of a given year/CPI of the same year) × CPI of the last year of the series (Dr. David Dawe, Pers. Com.) 3.5.2 Seasonality and co-efficient of variation Seasonality and co-efficient of variation in seasonal price indices were estimated for the selected fruits, vegetables and cereals. There are several methods of studying seasonal price variation, namely simple average, ratio to trend method, ratio to moving average method, and link relative method. However, in the present study ratio to moving average method was used (Acharya and Agarwal 1994). The steps for calculating seasonality are described below (Months: January-December; Year: 2005-2011 as an example): Step 1 12-Month moving total for June = (PJan + PFeb +.......+ PDec) Step 2 12-Month moving average for July = (PJan + PFeb +…..+ PDec)/12 Step 3 12-Month moving average centered = (12-Month moving average, June & July 05)/2 Step 4 %Moving average centered (Jul 05) = (PJul 05/12-Month moving average centered Jul 05) Step 5 Monthly average of price variation for Jan = (PJan 05 + PJan 06 +….+ PJan 2011)/7 Step 6 Correction factor (C.F.) = 1200/Summation of the monthly averages of price Step 7 Adjusted seasonal indices = S.I.*C. The coefficient of variation in seasonal indices was calculated as per the following method: Coefficient of variation (CV) = σ/Χ*100 Where, σ = Standard deviation for seasonal price Χ = Arithmetic mean of the seasonal price

34

3.5.3 Production costs and margins of growers In the present study the costs and margins of the growers of the selected fruits and vegetables were calculated. The methods are briefly described in the following: Production cost Production costs include both variable and fixed costs. The variable costs include costs for seed/seedling, cost of human labour, cost of cultivation, cost of fertilizer, cost of manure per, cost of irrigation, cost of insecticide and pesticide, etc. The fixed costs include mainly land use cost, interest on running capital and depreciation. An explanation of the costs is given in the following: Total variable cost = (Costs for labourer + Costs for manures & fertilizers + Cost for

insecticides and pesticides + Costs for irrigation + Miscellaneous) Total Fixed cost = (Cost due to land use + Interest on running capital) Land use cost = Existing rate of lease of land in the study areas concerned Running capital = (Costs for labourer + Costs for manures & fertilizers + Costs for

insecticides and pesticides + Costs for irrigation + Miscellaneous) Total cost of production = (Total variable cost + Total Fixed cost) Interest on running capital = (Running capital * rate of interest * time consider

(months)/(100*12). The rate of interest would vary from 10-14% Marketing cost = (Transportation cost + Packaging cost + Wastage in value) Total cost = (Production cost + Marketing cost)

Profitability of growers The following profit equation was used to assess the profitability of production of the selected commodities. ∏ =PF.QF – (TVC+TFC) Where ∏ = Profit of producer per unit per year PF = Per unit price of commodity QF = Quantity of commodity TVC = Total variable cost TFC = Total fixed cost Gross returns of producers Gross return was calculated by multiplying the total volume of output by the per unit price of the commodity at the time of harvest. The following equation was used to estimate gross return (GR): GR = ∑Pb. Qb Where GR = Gross return from product Pb = Price of product Qb = Quantity of product Gross margin of producers Gross margin calculation was done to have an estimate of the difference between total return and variable costs. The argument for using gross margin analysis is that the farmers are more

35

interested to know their return over variable cost. The following equation was used to assess the gross margin. GM = TR – VC Where GM = Gross margin TR = Total return VC = Variable cost Net margin of producers Net margin was calculated by deducting all costs (total production and marketing costs) from gross margin. Net price received by producers Net price received by farmer is expressed by the following formula: NPf = GPf – Cf Where, NPf = Net price received by farmers GPf = Gross price received by farmers Cf = Marketing cost of farmers 3.5.4 Marketing margins of intermediaries The net marketing margins of the intermediaries (after physical losses) are calculated by the following formula: Net marketing margin = Sales price - (Purchase price + Marketing cost) The marketing costs mainly include costs for various market operations like transportation, loading and unloading, market toll, rents, staff salary, electricity, generator, commission, wastage, depreciation, and other miscellaneous costs. The items of the marketing costs vary with the type of intermediaries. 3.5.5 Marketing performance

Marketing performance was evaluated using different measures of marketing efficiency as described by Shepherd (1972), Hugar and Hireman (1984), and Acharya and Agarwal (2004). In the present study, the efficiency of marketing was investigated by examining price spread, growers‟ share, Acharya‟s methods for estimating efficiency and return on investment. The methods for studying these estimates are given in the following. 3.5.5.1 Price spread Price spread = Price paid by consumers – Price received by the growers 3.5.5.2 Grower‟s share

Growers‟ share (%) = 100'

Pr

priceConsumersgrowersthebyrecievedice

36

3.5.5.3 Conventional method for estimating marketing efficiency

tmarketingTotalmarketedgoodsofValueefficiencyMarketing

cos

3.5.5.4 Acharya‟s method for estimating marketing efficiency In this method the marketing efficiency was measured using the following formula:

Marketing efficiency = )( MMMC

FP

Where FP = Prices received by the farmers MC = Total marketing cost MM = Net marketing margin RP = Prices paid by the consumers 3.5.5.5 Return on operating capital

Return on operating capital (ROC) is a measure of performance used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. It is one of the ways of considering profits in relation to capital invested. The purpose of calculating return on operating capital is to measure, per period, rates of return on money invested in an economic entity in order to decide whether or not to undertake an investment. There are several ways of to measure ROC but one of the commonly used methods is to divide the net margin by total investment as given below:

Return on operating capital, ROC (%) = 100arg

capitalOperatinginmNet

Where operating capital = (Purchase price + marketing cost)

37

Chapter 4

Results and Discussion Bangladesh produces substantial amounts of nutritious fruits and vegetables every year. Area and production of the top ranking fruits and vegetables are shown in Annexes 9-13. Among the vegetables, potato ranked the first in terms of both area and production followed by brinjal. Among the fruit crops, jackfruit ranked the first followed by banana in terms of area coverage, while in terms of total production, mango ranked the first followed by jackfruit. In accordance with the ToR of the present project, substantial amounts of secondary data on area, production and prices of important cereals (rice, wheat and maize) and selected fruits (mango and banana) and vegetables (potato, brinjal and okra) were collected from different sources including books, journals, periodicals, reports and online resources. The collected secondary data were entered into the Microsoft Excel Spread Sheet, and required tables and graphs were prepared to present and discuss the results. Apart from secondary data, an extensive survey was conducted to collect primary data on the selected fruits and vegetables from various market actors using structured and pre-tested interview schedules. Results obtained from analysis of secondary and primary data are presented and discussed crop-wise in the following. 4.1 Rice Rice is the most important cereal crop in Bangladesh. Presently, Bangladesh ranked the 4th position in terms of total global production. During the year 2010, China produced the highest amount of rice (197 million tons) followed by India (121 million tons), Indonesia (66 million tons) and Bangladesh (49 million tons). Other important rice producing countries are Vietnam, Myanmar, Thailand and the Philippines (Annex 14).

4.1.1 Acreage and production in Bangladesh In Bangladesh, there are three main rice seasons, namely Aus (sowing mid-March to mid April; harvesting mid-July to mid August), Aman (sowing late June to September; harvesting December-January) and Boro (sowing: December to mid February; harvesting mid April to mid June). Analysis of past 10-year data suggested that the area of Aus rice is sharply declining, but production remains more or less same possibly due to the increase in yield (Fig 4.1A). Steady increase in production of Aman rice was observed during the period from 2000-01 to 2011-12 except 2004-05 and 2007-08. The decreases in production of Aman rice in the years 2004-05 and 2007-08 were correlated with the decrease in both Aman areas and yields (Fig 4.1B). Aman is a nature-based crop and the fall in production is influenced by adverse weather condition. For example in 2004-05, at the time of sowing of broadcast Aman, the weather condition was favourable in most of the places of Bangladesh. In the month of April, heavy downpour and rush of water from the overflowing rivers caused significant damages to the broadcast Aman in some Districts including Sunamgonj, Moulvibazar, Sylhet, Hobigonj and Netrokona. In addition, the weather conditions at the time of planting of the local and HYV Aman were not favourable in almost all the places of Bangladesh. From July onwards there was severe flood along with torrential rains in most of the places and it continued till September and submerged large area of the Aman crop. As a result the standing Aman crop and Aman seedbed suffered heavy damage in almost all the areas of Bangladesh and ultimately contributed to the decreased production (BBS 2005).

38

Later from 2008-09, Aman production sharply increased due possibly to the prevailed favourable weather condition, and also due to the fact that late monsoon throughout the country brought low lying area under Aman crop. Apart from that, the Government of Bangladesh paid adequate attention in rural electrification throughout the country and also provided free irrigation in the northern part of Bangladesh (BBS 2011). For Boro, area, production and yield trended to dramatically increase over the last decade (Fig 4.1C). In terms of total rice area, Aman still occupied 49% followed by Boro (39%) and Aus (9%) (Fig 4.23A). However, in case of production, Boro contributed the highest (57%) followed by Aman (37%) and Aus (6%) (Fig 4.2B).

1.0

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Aus production (000 MT)

Yield (MT/ha)

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Aman area (000 ha)Production (000 MT)Yield (MT/ha)

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ld (

mt/

ha)

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ld (

mt/

ha)

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B

39

0.0

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20000

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a an

d p

rod

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Boro area (000 ha)

Production (000 MT)

Yield (MT/ha)

Fig 4.1 Trends in area, production and yield of Aus (A), Aman (B) and Boro (C) rice (2001-02 to 2010-2011; BBS 2011).

9%

49%

42%

Aus Aman Boro

6%

37%57%

Aus Aman Boro

Fig 4.2 Proportion of area (A) and production (B) of Aus, Aman and Boro rice in Bangladesh during the year 2008-09 (BBS 2011). 4.1.2 Trend in rice price in Bangladesh Rice is available in the wholesale and retail markets in three principal types, viz. coarse, medium and fine. Price volatility of rice is one of the major food security issues in the recent years. The fluctuation of rice retail price for the last ten years is shown in Fig 4.3. A clear upward trend in retail price (nominal and real) of coarse, medium and fine rice was observed during the period from 2000-01 to 2008-09. Real (Deflated) price was calculated by a formula: Real (Deflated price) = (Nominal price of a year/CPI of the same year) × CPI of the last year considered (Dr. David Dawe, Pers. Com.) The rate of price increase was very sharp from the year 2007-08 to 2008-09, and which phenomenon would be attributed to the global hike of food price of 2007-2008. During this period food price on the world markets spiked

A B Y

ield

(m

t/ha)

C

40

since the largest rise in 1973-1975. At that time rice price in a number of Asian countries rose precipitously and which revived the fear of the grain problem. The reasons for such food crisis were classified into short-run (droughts, floods, subsidies for biofuels, policies of export restrictions and precautionary imports, energy price increases, depreciation of the US dollars, lower interest rates, and commodity market speculation), medium-run (rapid rise of the economies of the People‟s Republic of China) and long-run (decline in grain yield growth and impacts of climate change) (Dawe 2010; Reardon et al. 2012). Later in 2009-10, a sharp decline in rice price was observed, which was possibly due to the bumper production of rice, especially Aman and Boro in Bangladesh (Fig 4.1 B, C) and also due to the worldwide decline in food prices. 4.1.3 Seasonality An important objective of the present investigation was to examine seasonality in rice price. Ten-year data were used to study seasonality. Data (national average) were mainly sourced from the reports of BBS and DAM. Before going to seasonality, the months with minimum and maximum wholesale and retail prices of rice are presented (Tables 4.1 and 4.2) and discussed here. It was observed that in case of wholesale price the minimum price month was mainly January (postharvest Aman), whereas the maximum price months were November-December (Pre-harvest Aman and Boro). Also global price can have impact on the minimum and maximum price months. In case of retail price, the minimum price months were mainly January-February (postharvest Aman) and the maximum price months were October and December (preharvest Aman) and also in the month of January. January was mainly observed to have minimum price. Contrastingly, in 2009 retail rice price was the maximum in January. These results would be due to the fact that harvests do not happen at exactly the same time every year, and a variation in a particular year in one of the harvests would change the maximum or minimum month for the year. The phenomenon may also be linked with the global price hike in 2007-08. Seasonality was examined by calculating the seasonal price index following moving average method using 10-year price data. In the case of national wholesale price, seasonal price index varied from 95.72-104.66 with co-efficient of variation 2.96% (Fig 4.4A). There were two clear peaks, one in the months of January-March and another in September-October. These results would be due to lower supply of rice in the markets since these periods are considered as the preharvest periods of Aman and Boro rice, respectively (Fig 4.4A). A clear trough was observed during the months of May-July, and which result would possibly be attributed to the abundant supply of both Aman and Boro rice in the markets and a resultant price drop. Similar seasonality of rice price was also reported by Murshid et al. (2009). In case of retail price of rice the seasonal price index ranged from 97.59-101.60 having a co-efficient of variation of 1.22% (Fig 4.4B). These results are very useful to draw conclusion in relation to the underlying causes of the observed seasonal price variation of cereals, and whether this variation is similar or dissimilar to that of the selected fruits (mango and banana) and vegetables (potato, brinjal and okra).

41

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ce (T

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)

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ce (T

k/kg

)

Retail coarse (nominal)

Retail coarse (deflated)

Fig 4.3 Trends in prices (nominal and real) of fine (A), medium (B) and coarse (C) rice over the last decade (2001-02 to 2010-2011; BBS 2011, DAM 2012).

A

B

C

42

Table 4.1 Months with minimum and maximum prices (national average of wholesale price) of rice during the period from 2001 to 2011 (DAM) Year Months with minimum and maximum price

Minimum price month Maximum price month 2001 July April 2002 June November 2003 January August 2004 January November 2005 May November 2006 January December 2007 January December 2008 September November 2009 August August 2010 April December 2011 December January

Table 4.2 Months with minimum and maximum prices (national average of retail price) of rice during the period from 2004 to 2009 (DAM) Year Minimum Maximum

Month Price (Tk. Kg-1) Month Price (Tk. kg-1) 2004 July 18.00 October 20.00 2005 January 20.00 December 26.00 2006 October 24.00 April 26.00 2007 January 25.00 December 35.00 2008 February 40.00 June 45.00 2009 July 34.00 January 38.00

103.68

104.66

103.38

102.01

96.4995.72

96.66

98.59 99.05

100.54

99.07

100.14

y = 0.1746x2 - 2.6774x + 107.95R² = 0.6674

90

92

94

96

98

100

102

104

106

108

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Seas

on

al p

rice

ind

ex

101.60

100.74

101.31

100.58

99.80

99.90

97.59

98.71

98.36

100.46

100.83

100.12

y = 0.0712x2 - 1.0584x + 103.03R² = 0.5712

95

96

97

98

99

100

101

102

103

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Seas

on

al p

rice

ind

icie

s

Fig 4.4 Seasonality in rice price (A, wholesale and B, retail) as ratio to moving average (2001-2011).

CV=2.96% CV=1.22%

A B

43

4.2 Wheat The leading wheat producing countries of the world are China, India, USA and Russia (Annex 15). The position of Bangladesh in terms of global wheat production is unnoticeable. Bangladesh generally meets 70-80% of its demands by the imported wheat, whereas rest of the demands is met through domestic production. 4.2.1 Trend in acreage, production and price in Bangladesh Wheat is the fourth major food grain crop in Bangladesh. Trend in acreage, production and price (nominal and real) of wheat during the period from 2000-01 to 2009-10 are furnished in Fig 4.5. Results showed that total production sharply declined from the year 2000-01 to 2005-06, and then increased very slowly until 2009-10. The sharp decline in wheat production during 2000-01 to 2005-06 would be due to adverse climatic conditions. Wheat crop is very sensitive to prevailing temperature. Dry spell prevailed at the growing stage to harvesting and duration of cold period shortened, which together resulted in decreased growth and reduced yield. Apart from weather factor, the gradual decrease in production was also due to the fact that the growers were more interested to grow Boro, potato and maize by replacing wheat crop (BBS 2005 and 2006). Results showed that wheat price slowly increased from 2000-01 to 2005-06, and then sharply increased and reached the peak in 2007-08 (Fig 4.5). It was also noticed that total wheat production was correlated well with its prices. Evidence of cyclical nature of production was also observed, where the years with higher production (2000-2001 to 2003-04) had lower price and vice-versa. This partially follows the Cobweb model of production. However, since, majority of the wheat demand is met through import, the price is largely dependent on the price behavior in the global markets. The maximum price in 2007-08 was again due to the sudden price hike in the world food markets due to natural disasters, climate change impacts and biofuel production as discussed earlier. In the following year (2008-09), wheat price dropped sharply, and this could be due to the decline in the global price of food commodities (Reardon et al. 2012).

44

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Chart Title

Area (000 ha) Production (000 MT)

Nominal harvest price (TK/kg) Nominal wholesale price (TK/kg)

Real harvest price (Tk/kg) Real wholesale price (Tk/kg)

Fig 4.5 Trends in area, production and prices (nominal and real) of wheat during the period from 2000-01 to 2010-11. 4.2.2 Seasonality Seasonality in wheat prices (wholesale) was investigated using 10-year price data (national average) sourced from the reports of DAM. Months with the minimum and maximum prices during the period from 2001-2011 have been furnished in Table 4.3. The changes in minimum and maximum price months did not follow any specific pattern. The minimum price months were mainly January and April, whereas the maximum price month was predominantly December-February. Similar to that of rice, there exists seasonality in wheat prices. The seasonal price index varied from 94.74-104.43 with a co-efficient of variation of 3.68% (Fig 4.6). There are two clear peaks (January-February and September-November) and a trough (April-July) (Fig 4.6). The peaks were quite similar to that of rice, and where the food price remained higher due to the lower supply of food grains in the markets (preharvest Aman period). The trough during the months of April-July was possibly due to the abundant supply of rice in the market (postharvest Aman). Since majority of the wheat demand is met through imported wheat, the price is mainly influenced by global price fluctuation.

Pri

ce (

Tk/k

g)

45

Table 4.3 Months with minimum and maximum prices (national average of wholesale price) of wheat during the period from 2001 to 20119 (DAM)

Year Month with minimum price Month with maximum price

2001 January October 2002 May February 2003 January October 2004 April December 2005 May December 2006 March December 2007 January December 2008 December March 2009 April February 2010 April December 2011 June January

104.43

104.13

100.85

95.39

94.7495.51

95.93

98.99

102.49

102.55 102.83

102.14

y = 0.2637x2 - 3.3453x + 107.46R² = 0.6284

88

90

92

94

96

98

100

102

104

106

108

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Seas

on

al p

rice

ind

ex

Fig 4.6 Seasonality in wheat prices (wholesale) as ratio to moving average (2001-2011; DAM). 4.3 Maize Global ranking in relation to total maize production has been shown in Annex 17. The leading maize growing countries of the world include the USA, China, Brazil, Mexico, Argentina and Indonesia with the USA being the largest producer (Annex 16).

CV=3.68%

46

4.3.1 Trend in acreage and production in Bangladesh Maize has become an important cash crop in Bangladesh in the recent years, especially for the production of poultry feed. There were clear upward trends in terms of area, production and yield of maize from the year 2000-01 to 2007-08 (Fig 4.7). There was a dramatic fall of area, production and yield of maize during the year 2008-09, and then again started to increase. The reason for such dramatic decline in production and acreage would be due to the corresponding sharp increase in Aus, Aman and Boro areas during the year 2008-09 (Fig 4.1), and this increase in rice area was due the spiked rice price in the preceding year (2007-08) in the domestic and global food markets. In 2007-08, both the area and production of maize were the highest, and which could be due to the decrease in rice area and production, especially Aman and and Boro in 2007-08 (Fig 4.1 A, B).

0

1

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3

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6

7

0100200300400500600700800900

100011001200130014001500

Are

a an

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ion

Area (000 ha) Production (000 MT) Yield (MT/ha)

Fig 4.7 Trends in area, production and yield of maize during the period from 2000-01 to 2009-2010 (BBS). 4.3.2 Seasonality Seasonality in maize prices (wholesale and retail) was investigated using 6-year price data (national average) sourced from the reports of DAM. Months with the minimum and maximum retail prices have been summarized in Table 4.4.

Yie

ld (

mt/

ha

)

47

Table 4.4 Months with minimum and maximum prices (national wholesale average) of maize during the period from 2006 to 2011 (DAM) Year Minimum Maximum

Month Price (Tk. kg)-1 Month Price (Tk. kg-1) 2006 June 11.00 October 13.00 2007 January 13.00 December 17.00 2008 June 10.00 March 15.00 2009 January 12.00 December 16.00 2010 June 16.00 September 18.00 2011 July 18.00 December 23.00

Similar to that of wheat, there also exists seasonality in maize prices (Fig 4.8). Regarding wholesale price the seasonal price index of maize ranged from 80.22 to 111.08 (Fig 4.8). The co-efficient of variation among the seasonal price indices was estimated to be 12.33. There were two clear peaks (January-March and July-September) and clear price drops were observed in two distinct seasons, July and October-December (Fig 4.8). Maize is generally used in Bangladesh for manufacturing poultry feed. The price of poultry feed is greatly influenced by the demands by the poultry farmers. Possibly, the highest demand of poultry feed prevails during the months of January-March and August-October. The two bottoms in June and in October-November could be attributed to the lower demands of poultry feed and also due to the global price fluctuation. It was observed that maize price trended to decrease from the month of March to May followed by a dramatic increase until September and then fall sharply until November (Fig 4.8). In relation to maize retail price, there also exists clear seasonality. The seasonality indices ranged from 82.39 to 108.40. The co-efficient of variation was estimated to be 10.12%. There were two clear price drops, one in the month of February-March and the second in the months of September to October (Fig 4.8). A clear trough was also observed during the period from April to August (Fig 4.8).

108.09

108.02

110.26

107.67

97.87

93.71

109.20

109.61

111.08

83.57

80.22

80.70

y = -0.3882x2 + 2.7023x + 103.46R² = 0.5906

70

75

80

85

90

95

100

105

110

115

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Se

as

on

al p

ric

e in

de

x

Months

Fig 4.8 Seasonality in maize prices (wholesale) as ratio to moving average (2006-2011; DAM).

CV=12.33%

48

4.4 Potato Potato is an important tuber crop all over the world. The highest potato producing country of the world is China (75 million metric tons) followed by India (37 million metric tons). Among the leading potato producing countries, Bangladesh ranked the 8th position (Annex 18). Other major potato producing countries are Russia, Ukraine, USA, Germany, Poland, Belarus and Netherlands (Annex 17). 4.4.1 Trend in acreage and production of potato in Bangladesh Bangladesh produces considerable amounts of potato each year. In 2009-10, potato occupied 65% of the total vegetables area (Fig 4.9), of which 83% was occupied by high yielding varieties (HYV) and 17% was occupied by local varieties (Annex 12). In the years 2009-10 and 2011-12, 7930 and 8326 thousand metric tons of potatoes were produced in the country (Fig 4.9). In general, potato production steadily increased over the last years except 2005-06 and 2008-09 (Fig 4.9). In 2005-06, at the time of planting dry weather prevailed throughout the country and potato cultivation suffered to some extent. During growth stage, potato crop experienced thick foggy weather condition that favoured potato late blight disease (Phytophthora infestans), which caused significant yield loss. Apart from that, farmers of some main potato growing regions in the northern part of the Bangladesh brought large potato areas under maize cultivation, which caused significant decrease in potato area and thereby production. Similarly, in 2008-09, a large part of potato area was brought under rice cultivation due to global food shortage and resulting price hike in the preceding year, 2007-08. Potato price fluctuation is quite common in Bangladesh, and often the farmers are the worst sufferer of low prices of their produce. Relationship between production and price of potato during the period from 2000-01 to 2010-11 was investigated. The retail price of potato increased with time except from 2000-01 to 2001-02 and 2002-03 to 2004-05. It was noticed that when production increased price fell, especially during the years 2004-04, 2007-08 and recently in 2010-11 (Fig 4.9). The year with lower production caused higher prices, which pushed the growers to produce more in the next year with a resultant price drop in the following year (cyclical nature of production), for example during 2009-10 to 2010-11, potato price (nominal and real) fell sharply (Fig 4.9). Even though the present result does not fully at par with the cobweb type model but it certainly partially supports cobweb model. Another important observation was found that the real price (deflated price) of potato in the year 2001-02 (Tk. 14.12 kg-1) was almost the same as the price recorded in the year 2010-11 (Tk. 13.83 kg-1), which indicated that the changes in potato prices in real term were very negligible over the last ten years (Fig 4.9). To safeguard the growers‟ interest potato acreage could be defined. However, this measure would cause the consumers to pay higher prices for potato. On the other hand, the export of surplus potato would be the best option but the limitation is the absence HACCP and other internationally accepted standards, which are actually hindering export promotion, especially in gaining access to the mainstream global markets. Despite limitations, Agri Concern Bangladesh, a NGO, started exporting quality potatoes to different foreign countries, particularly to Malaysia and Singapore (Anon. 2010). So, as a short term option, especially to encourage the growers, defining acreage would be beneficial. Department of Agricultural Extension (DAE) would shoulder this task utilizing its devoted, motivated and trained manpower. But for long-term policy, the production should be increased and the surplus

49

should be exported to earn foreign currency and exploit the suitable agro-climates for potato production in Bangladesh. It is worth to mention that Bangladesh is the 8th largest potato producer in the world and there are enormous potential if export markets are created. At the same time, diversified use of potato (flakes, dry chips, French fries, flours, etc.) should be strengthened both for domestic use and export purposes so that the demands are created and growers are not affected.

0

5

10

15

20

25

30

0

1000

2000

3000

4000

5000

6000

7000

8000

9000P

rod

uct

ion

Production (000 MT)Nominal retail price (Tk/kg)Real retail price (Tk/kg)

Fig 4.9 Trends in potato production and price during 2000-01 to 2010-2011 (BBS, DAM). 4.4.2 Seasonality Seasonality in potato prices was examined. Results revealed that significant seasonality existed in potato prices. Months with the minimum and maximum prices (wholesale and retail) have been summarized in Tables 4.5 and 4.6. In case wholesale price, the price index varied from 59.55-128.20 with co-efficient of variation 24.57%. There was a clear peak during the months of August-October and a clear trough in the months of March and April (Fig 4.10). Seasonal price index (wholesale) was also high in the month of January possibly due to higher prices of the early crops. Later, during February-April, price was the lowest, and this could be attributed to the abundant supply of potato in the market. During these months, potato lands are also cleared by the growers for planting Aus/Boro rice and other summer vegetables. After April, potato price started to climb, and the trend continued up to the month of October (Fig 4.10). In November, the wholesale price of potato fell again possibly due the availability of winter vegetables in the markets. At the same time the cold store owners tend to vacate their cold stores to get ready to store new season potatoes. The retail prices of potato also followed more or less the similar pattern, where the potato prices were lower in the months of February to March and higher thereafter (Fig 4.10). The seasonal

Reta

il p

rice (

Tk

/kg

)

50

index in retail price ranged from 73.89-116.85 having a co-efficient of variation 14.13%. It is very important to note that the seasonality in potato was found to be much more pronounced as compared to those of rice and wheat. The above results together underlined the vital role of potato as a source of macro nutrients because the peak prices of rice, wheat and maize were fairly synchronized (except for the second maize peak which was slightly off-synch) but potato was counter synchronized to these other three staples. Table 4.5 Months with minimum and maximum prices (national average of wholesale) of potato during the period from 2004 to 2009 (DAM) Year Minimum Maximum

Month Price (Tk. kg-1) Month Price (Tk. kg-1) 2004 April 7.00 November 12.00 2005 March 5.00 October 8.00 2006 March 8.00 December 22.00 2007 March 11.00 December 22.00 2008 March 10.00 September 16.00 2009 March 11.00 October 27.00

Table 4.6 Months with minimum and maximum prices (national average of retail) of potato during the period from 2004 to 2009 (DAM) Year Minimum Maximum

Month Price (Tk. kg-1) Month Price (Tk. kg-1) 2004 February 7.00 October 13.00 2005 February 7.00 December 14.00 2006 February 9.00 November 23.00 2007 January 12.00 October 22.00 2008 April 12.00 September 18.00 2009 March 15.00 October 31.00

106.09

88.60

73.14

59.55

69.25

81.74

118.27

116.14

127.58

125.54

105.90

128.20

y = 0.5968x2 - 3.2717x + 88.942R² = 0.5049

40

50

60

70

80

90

100

110

120

130

Jan

Feb

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Seas

on

al P

rice

Ind

icie

s

91.31

85.29

73.89

83.57

93.21

102.01

107.31

109.65

109.50

115.31

116.85

112.11

y = -0.015x2 + 3.6458x + 77.114R² = 0.7759

70

75

80

85

90

95

100

105

110

115

120

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oct

No

v

De

c

Seasonal price indic

es

Fig 4.10 Seasonality in wholesale (A) and retail (B) prices of potato as a ratio to moving average (2004-09).

CV=24.57%

CV=14.13%

A B

51

4.4.3 Results of primary survey The present study attempted to investigate the marketing performance of potato, especially from the leading producing districts (Munshigonj and Bogra) to Dhaka city. The results of the primary survey are presented and discussed in the following. 4.4.3.1 General practices in potato production and marketing Variety A number of potato varieties are cultivated in the surveyed districts. The only commercially important variety grown in Munshigonj is Diamant (Plate 4.1A). The commercial and predominant varieties grown in Bogra are indigenous Lal Pakhri (Plate 4.1D) and modern Granula (Plate 4.1B) and Cardinal (4.1E). Lady Rosetta and Diamant are also grown in Bogra but in small scale. In Munshigonj, the growers do not prefer to grow red-skinned potatoes like Cardinal and Lal Pakhri possibly as part of their culture.

52

Plate 4.1 Important potato varieties grown in Munshigonj and Bogra (A: Diamant; B: Granula; C: Lady Rosetta; D: Lal Pakhri; and E: Cardinal). Postharvest handling Postharvest handling also differs between Munshigonj and Bogra. Washing is an important postharvest operation, and is practiced if potatoes are marketed immediately after harvest to get off the dirt and adherences. The growers of Bogra wash potatoes, especially for early crop to fetch apparent higher profit (Plate 4.2). Early crop may receive higher market price but it is to be remembered that the yield of the early premature potato tubers is less as compared to those of the mature tubers. Since the growers need money, so they can‟t wait and harvest the premature potatoes and sell them. A simple calculation (Table 4.7) was performed to

A B

C D

E

53

demonstrate whether early harvesting was profitable. It was observed that the growers practice this not only for having early income but this seem significantly profitable. However still there remains scope for a detailed economic analysis to explicitly state that the early harvest is profitable than optimum harvesting. However, if the mature potatoes are held in cold stores and prices increases over time, the situation would be changed. In contrast with Bogra, the practice of washing and early harvesting do not exist in Munshigonj. Table 4.7 Comparison between early harvest and optimum harvest of potato in relation to gross income Stage of maturity Yield

(kg ac-1) Unit price (Tk. kg-1)

Gross income (Tk. ac-1)

Gross income (Tk. ha-1)

Early harvest (Dec-Jan) 4000-6000 30.00 120000-180000 296400-444600

Harvest at optimum maturity 8000-10000 10.00 80000-100000 197600-247000

Packaging Packaging is commonly practiced in potato marketing in Bangladesh. Generally, gunny sacks of 80-84 kg capacity are used in packaging of table potatoes (Plate 4.2). Plastic sacks are also used but only for limited scale local transportation. Old and used gunny sacks are used for transportation of early and traditionally-stored potatoes but those potatoes to be held in cold stores are packaged in new gunny sacks. For seed potatoes, some cold store owners use plastic net bags to facilitate more ventilation so that qualities of seed potatoes are maintained. Transportation Most of the agricultural goods are not consumed at the places of their production. They are required to be transported to different destinations. There are various modes of transportation. For potatoes, the modes of local transportation in Bogra were head load, bi-cycle, van, Votvoti, tractor trolley, pick-up van, etc. For long-distance transportation, the predominant modes were mini and large trucks of 7 and 10 ton capacities, respectively (Plate 4.2). Storage Storage is an important function in agricultural marketing. The excess supplies at the harvest time are stored so that they could be supplied in the off-season. Proper storage is required to protect produce from quantitative and qualitative deterioration. The perishable agricultural goods need special type of storage to prolong their usage. The agricultural products are produced in a particular season but more of the products are used throughout the year. Also there is variation in the production of agricultural goods from year to year. Considering the importance of these products, they are stored even for more than a year. For example, potatoes are the items of daily consumption but buffer stocks are maintained (in India) to secure food requirements (Chhina 2009). Similarly, the Government of Tunisia decided to create a buffer stock of 40000 tons of potato in the year 2013 (Tunis Afrique Press 2013). Storage is also required for the stability of prices. Generally there is glut in the markets at the time of harvest, and there can be big fall in prices at that time but there can be very high price in the off season. So, storage of these products at the time of harvest and their supply from the stores in the off season provides the conditions for small variation in prices throughout the year. Storage is required at various stages of marketing like before transportation, before export and after import. The rodents and insects can also spoil products if not properly stored. So, proper and specific storage structure is a must to reduce such loss of perishable goods.

54

Storage can be a source of employment. So many peoples are employed to perform various functions in the stores. Another very important function of storage is preservation of seeds. The farmers require better quality seeds for obtaining more production. This is absolutely necessary for potato seed tubers, and the quality is greatly dependent of the storage conditions and environment. Low temperature storage facility for perishables, especially fruits and vegetables is inadequate in Bangladesh. For most fruits and vegetables no noticeable low temperature storage facilities or cold chain management have been created in the country. However, significant progress has been made in the neighbouring countries like India and in some ASEAN countries like Thailand, Indonesia and the Philippines. In the Badamtali Wholesale Fruit Market of Bangladesh, one multi-chambered fruit storage facility has been established, especially to store the imported fruits. But much more is needed to reduce enormous postharvest spoilage and maintain quality of fruits and vegetables grown in Bangladesh. However, in the case of potato storage, reasonable progress has been made. There are now around 393 cold stores (public and private), with a capacity of 4.0 million metric tons. Potato production in the year 2010-2011 was 8.3 million metric tons, and the target in 2011-2012 was 82.05 million metric tons. So, there are still demands for more cold stores in the country. Presently, the rest of the potatoes are marketed from growers‟ house or traditional storage facilities. In 2011-2012, the cost for cold store was Tk. 300-320 or even more sack-1 of potato (80-84 kg potato sack-1). Potato cold storage facilities in Bogra There are 27 cold stores in Bogra (13 in Shibgonj, 2 in Kahalu and 2 in Dupchachia). Five cold stores were randomly chosen for conducting the present survey to investigate different aspects of potato storage. The details of the cold stores surveyed in Bogra and Munshigonj are summarized in Tables 4.8, 4.9 and 4.10.

55

Plate 4.2 Postharvest handling, marketing and storage practices in potato.

Washing Washing

Packaging Loading

Traditional storage Traditional storage

Traditional storage Commercial cold store

56

General practices followed in potato cold storage Loading of cold storage with newly harvested potatoes starts from the month of March and continues up to April. Potatoes are generally held in the cold stores for 9 months, and delivered gradually until October (seed potato) and January (table potato) (Fig 4.11). Prior to storage, the potatoes are field cured (heaped in the field and covered with straw) to form new periderm layer around the potato tubers so that water loss is minimized and pathogen attacks are reduced. The cured potatoes are then packed in 84 kg capacity jute sacks, which are finally held in the cold stores. A schematic diagram showing the important steps followed in storing potatoes is given in Fig 4.11. Fig 4.11 Schematic diagram showing the sequential steps of storing of potatoes in commercial cold stores in Bangladesh. There are some problems or inefficiencies in storage practices. For example, the growers very often do not properly cure potato tubers, which results in high water loss and pest and disease attacks during storage. In most of the cases potatoes are not properly graded by the growers and the traders, which results in poor stacking of the sacks, and also proper space management becomes difficult. Pre-cooling is an important step in storing potatoes. Sometimes, the grower/traders/cold store owners do not practice this step and hold potatoes only for few hours instead of recommended 2 days pre-cooling period. During storage, proper maintenance of low temperature and high relative humidity is lacking due mainly to the tendency of saving money, which causes low quality potatoes at the end. The practice of pre-heating or pre-normal conditioning is also sometimes not followed to save time and money at the cost of quality. So, the above factors should be duly considered to improve the efficiencies of the cold stores of the country, especially at the private level. Capacity of the cold storage in Bogra The capacity of potato cold stores in Bogra varied widely. The result showed that cold store capacity in Bogra ranged from 4500-21000 metric tons. The Himadri Cold Storage had the

Pre-cooling (At 10-12oC for 24-48 h or no pre-cooling but held under shade for 24 h and then store)

Storing (At 2.2-2.8oC and 85-90% RH; March-January)

Pre-heating (48 h at 10-12oC for 24-48 h before delivery; August-January)

Normal (For table purposes (August-January)

Sorting shade (8 h drying under fan at normal condition before delivery; June-January)

Marketing (For table potato: August-January & and seed tuber: October)

Growers (Supplies field cured potato tubers)

57

lowest capacity (4500 metric tons) because it predominantly store seed potatoes. The cold stores that hold table potatoes are generally of larger capacities. Sometimes the cold stores are overloaded because the growers or traders tend to pack 6-10 kg more sack, and hence the amount of potatoes stored is more as compared to the actual capacity of the cold store. The cold store owners do not take any advance from the growers or traders to make sure that the growers or traders do not move out from their cold store to another one, which indicate high competitiveness in the sector. Sometimes the cold store owners reduce the rent than that fixed by the Cold Storage Owners Association just to attract more customers since the target of the cold store owner is to utilize the entire space of the cold store for maximize profit. Rent of the cold storage in Bogra There exited variation in relation to the rent of cold stores. For example, the Akku Cold Storage of Kichok, Bogra had different categories of rent like Tk. 240.00 sack-1 for 10000 sacks or more, Tk. 250.00 sack-1 for 2000-5000 sacks, and so on. This measure is very confidential and is followed only to provide facilities to the growers and traders so that they store potatoes in this particular cold storage. For seed potato, some cold store owners charge more. For example, the Himadri Cold Storage of Shibgonj, Bogra charge Tk. 350 sack-1 since proper temperature and relative humidity must be maintained for seed potatoes, which costs more due to operation of the machine for longer duration. Table 4.8 Details of cold stores in Bogra surveyed in the present investigation. Sl No

Name & address Capacity Rent (Tk. Sack-1)

Remarks Number of sacks

Metric tons

1 Akku Cold Storage Kichok, Shibgonj Bogra

120000 10080 240-250 Mainly table potato

2 Himadri Cold Storage Kichok, Shibgonj Bogra

62000

4500 300-350 Table potato: 25% Seed potato: 75% Rate is higher for seed potato

3 Shah Sultan Cold Storage Kichok, Shibgonj Bogra

250000 21000 290-300 Farmers: 75% Intermediaries: 25%

4 Agomani Cold Storage Kichok, Shibgonj Bogra

100000 8400 300 Mainly table potato

5 AHZ Cold Storage Kichok, Shibgonj Bogra

100000 8400 300 Mainly table potato

NB: Association rate for the year 2011-12 is Tk. 320.00 sack-1 of 84 kg capacity. Characteristic features and general practices of potato cold stores in Munshigonj Sadar have been furnished in Tables 4.8 and 4.9. Various suggestions from the cold store owners have also been compiled and given in Table 4.11. The standard practice and other important features of the BADC cold store have also been given in Tables 4.8, 4.9 and 4.10.

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Table 4.9 Important features of potato cold stores in Munshigonj and BADC cold store in Gazipur.

Name & address Capacity (bag)

Rent (Tk. sack-1)

Purpose (%)

Users (%) Pre-cooling (PC) & pre-heating (PH)

Allied Cold Storage Mukterpur Munshigonj

80000 300 Seed: 35 Table: 65

Farmers: 30 Traders: 70

PC: Not done PH: At 40-45oF for 3-4 days for seeds and 1-2 days for table purposes

Dewangonj Cold Store West Mukterpur Munshigonj

400000 270 Seed: 50 Table: 50

Farmers: 50 Traders: 50

PC: Not done (1 day under shade and store) PH: At 40-45oF for 3-4 days for seeds and 2 days for table purposes

Bikrampur Multipurpose Cold Storage, Mukterpur, Panchashar, Munshigonj

170000 300 Seed: 20 Table: 80

Farmers: 20 Traders: 80

PC: Not done (1 day under shade and store) PH: At 40-45oF for 3-4 days for seeds and 2 days for table purposes

Messer‟s Kodam Rasul Cold Storage Ltd. Mukterpur Munshigonj

48000 300 Seed: 25 Table: 75

Farmers: 20 Traders: 80

PC: Not done PH: At 40-45oF for 3-4 days for seeds and 2 days for table purposes

Nishan Cold Storage Ltd. West Mukterpur Munshigonj

115000 275 Seed: 40 Table: 60

Farmers: 10 Traders: 90

PC: 24 h PH: 48 h

BADC Cold Store Kashimpur Gazipur

12500 (1000 mt)

- Seed: 100 Own (through contract growers)

PC: 42 h at 10-15oC PH: 42 h at 10-15oC

NB Association rate for the year 2011-12 is Tk. 325.00 sack-1 of 84 kg capacity. PC: Pre-cooling, PH: Pre-heating. Table 4.10 Storage practices generally performed in potato cold stores in Munshigonj Sadar and in BADC cold store.

Name & address Temp RH (%) Turnover Fresh air Position of sacks

Allied Cold Storage, Mukterpur Munshigonj

35-36oF (1.7-2.2oC)

85-90 4-5 Daily for 2 h at late night

Horizontal

Dewangonj Cold Store West Mukterpur Munshigonj

34-35.5oF (1.1-1.9oC)

85-90 4-5 Daily Horizontal

Bikrampur Multipurpose Cold Storage, Mukterpur Panchashar, Munshigonj

35-36oF (1.7-2.2oC)

85-90 4-5 Daily Horizontal

Messer‟s Kodam Rasul Cold Storage Ltd., Mukterpur Munshigonj

35-36oF (1.7-2.2oC)

85-90 4 Daily Horizontal

Nishan Cold Storage Ltd. West Mukterpur Munshigonj

36-37oF (2.2-2.8oC)

85-90 6 Daily (12:00 midnight)

Horizontal

BADC Cold Store Kashimpur Gazipur

2.2-2.8 > 90 6 (dormancy first 3 months)

Every 3 days Upright

59

Table 4.11 Suggestions for better cold storage practices to improve service and maintain quality of potato in cold storage (Munshigonj Sadar).

Name & address Limitations & suggestions

Allied Cold Storage, Mukterpur Munshigonj

Uninterrupted electricity during loading period (March-April) 50 kg net bags to facilitate handling

Dewangonj Cold Store, West Mukterpur, Munshigonj

Uninterrupted electricity during loading period (March-April)

Bikrampur Multipurpose Cold Storage, Mukterpur Panchashar, Munshigonj

Electricity 50 kg net bags to facilitate handling by labours

Messer‟s Kodam Rasul Cold Storage Ltd., Mukterpur Munshigonj

Uninterrupted electricity in loading time (Mar-Apr) Timely supply of committed electricity (70-75 mW instead of 40-45 mW) Training for all stakeholders to produce and market good quality potato Explore overseas markets Introduction of 50-kg net bags Construction of BADC cold stores only for seed purposes Arranging seminar, symposium, meetings with potato growers and traders Development of a policy on potato

Nishan Cold Storage Ltd. West Mukterpur Munshigonj

Quality potato production Training and motivation Soil testing lab Government subsidy Explore export market BADC cold stores for seed. Farmers can use seeds for at least 2 seasons Provision for loan facility for potato production and trade Potatoes held in cold stores (6 months) cannot be fully consumed (3

months from field, 3 months from home and 6 months from cold storage). Permission for further cold storage should be stopped

Development of policy on potato BADC Cold Store Kashimpur, Gazipur

New local varieties with nutritionally rich and disease resistance needed Increasing the use of BADC potato seeds through motivation of the users Only 5% of total requirement is supplied by BADC but often some seeds

remained unsold because of ignorance and less motivation of growers BADC potato seed production is a profitable programme (production cost

14 Tk/kg, storage cost 3 Tk/kg and net return 10 Tk/kg) More BADC cold stores could be established provided that the growers

become more interested to buy BADC seeds Cold storage cost Attempt was made to estimate the cost and profit of the private and BADC cold stores (Tables 4.12 and 4.13). The operating cost of the privately owned cold stores of Munshigonj Sadar was estimated to be Tk. 186.52 sack-1 (84 kg capacity) during the year 2011-2012 with the net profit of Tk. 107.13 sack-1 (Table 4.13). The net profit of the BADC seed potato (own production through contract growers) was Tk. 10.00 kg-1 (Tk. 500.00 bag-1 of 50 kg capacity) (Table 4.11). The predominant costs were due to the sources of energy (electricity and diesel), which accounted for 42-44% of the total cost. The second highest cost for cold storage facilities was due to labour and employees, which accounted for 26-33% (Tables 4.12 and 4.13). Similar results were also reported by Reardon et al. (2012), who found that energy formed 63% and 71% in potato cold stores in Bangladesh and Indian, respectively, and about 80% of the energy cost was due to electricity. This underlined the important link between energy costs and food security, and is a concern regarding the increase in costs for energy and the implications for carbon emissions. The total operating costs for cold storage facilities in Bangladesh and India were USD 340000.00 and 262000.00, respectively. The difference was

60

due to higher costs for energy used by CSFs in Bangladesh. This could be due to higher rates per kilowatt hour in Bangladesh and/or less efficient cold units or use of cold units. Moreover, while the utilized capacity averages were the same in both the countries, the yearly energy outlay in India was USD 185000.00 but in Bangladesh it was USD 215000.00 (16% higher). This could be from higher unit costs of energy and use of more energy to achieve the same degree of cooling, or both. Interestingly, there was a two-fold difference in energy expenditures between large and small CSFs in India, although there was only a 1.25-fold difference in utilized capacity. Table 4.12 Operating costs and profit of a commercial potato cold storage (Bogra). Items of expenditure Cost (Tk. Sack-1) Tk. kg-1 % of total cost Electricity 65 0.77 30.31 Diesel 30 0.36 14.17 Labour 25 0.30 11.81 Employees 30 0.36 14.17 Repair/maintenance 20 0.24 09.45 Miscellaneous (Donation, Tax, contingency, etc.)

20 0.24 09.45

Interest on running capital 23 0.27 10.63 Total 213 2.54 100.00 Gross return 300 3.57 - Net Return 87 1.04 -

Source: Monjurul Alam, Manager, Akku Cold Storage, Kichok, Shibgonj, Bogra (Fixed cost was not considered). Table 4.13 Operating costs and profit of commercial potato cold storage (Munshigonj). Items of expenditure Cost of storage in Munshigonj Sadar (N=4)

Average (Tk. Sack-1) Stdev % of total cost Electricity 66.29 12.91 35.54 Diesel 11.47 4.96 6.15 Gas 4.27 0.10 2,29 Labour 35.48 18.82 19.02 Employees 26.07 8.26 13.98 Repair/maintenance 18.56 9.43 9.95 Interest on running capital 19.99 4.05 10.72 Miscellaneous 5.56 3.23 2.98 Total cost 186.52 37.79 100.00 Gross return (rent) 293.75 12.50 - Net profit 107.13 35.16 -

NB. Fixed cost was not considered. Financial facilities provided by cold store owners to the growers and intermediaries The cold store owners provide financial supports to their customers at rate of 16-18% year-1, which includes 2-4% service charge. The interest at the source is generally 14%. They provide loan mainly to the traders (Bepari) and also to the growers. They do not take any security deposit for the loan but the potato itself in the cold storage is considered as security. The rate of interest, however, seems quite high. The cold store owner actually obtain loan

61

from different commercial banks and disburse to the traders and growers at higher rate i.e. they add 2-4% service charge (spent for getting loan from the banks as per their statement). Constraints/shortfalls in cold stores Potatoes are perishables and are held in specialized cold stores for long-term preservation. Some important limitations have been emerged during the primary survey which results in quality deterioration. Some of the important constraints/shortfalls are given in the following. Non-delivery due to fall in potato prices: During 2010-11 the cold store owners had to sell the stored potatoes at very low prices like only Tk. 50.00-100.00 sack-1, and huge amounts of potato remained undelivered since the customers (growers or traders) did not turn up to take delivery of their potatoes. In the Akku Cold Storage of Shibgonj, 18000 sacks of potato remained undelivered during 2010-11, and similar scenario was in most of the cold storage in the country. This phenomenon actually results in loss of the growers, traders as well as the cold store owners. Wastage or weight loss in cold storage: Wastage or weight loss or shrinkage is a natural phenomenon in cold stores. This is attributed to poor packaging and fluctuation in storage environment. Potato contains very high amount of water, and if proper temperature and high relative humidity are not maintained, weight loss increases with the duration of storage. Average loss in weight is 2-5%. For example, a 84 kg potato sack becomes 80-82 kg when brought out from the cold stores. This loss is adjusted with the price by the growers or traders, and ultimately the consumers pay it. Erratic supply of electricity: Uninterrupted supply of electricity is crucial for effectively running a cold store. For table potato, the temperature and relative humidity of the cold stores should be 35-37oF and 85-95%, respectively. For seed potato, the above conditions must be ensured. The most important problem in cold stores is the erratic supply of electricity and serious load shedding. In general, machine should be in operation for at least 17-18 h day-1 but the present status of electricity supply is only for 10-12 h day-1. For rest of the day, generator is used to supply power. The cost of generator is approximately 72-100 L diesel h-1. To avoid this huge cost, very often they do not run the generator or run for shorter duration that results in degraded quality of potatoes (shrinkage and weight loss). Physiological disorders: Sometimes, the cold store owners do not run generator to save money, which results in reduced quality of table potato. Ventilation or flushing with fresh air is required everyday at least for 2-3 times for 1.5 to 2.0 h. This helps reduce carbon dioxide build up inside the cold store and inhibit sprouting. This is generally practiced in the dawn or early morning. Sometimes this practice is not done in order to save labour cost, which again results in increased sprouting and other quality deterioration. The quality of seed potato is also deteriorated, and often failed to germinate upon planting in the field. Another important practice in the potato cold storage is the change in position (turn over or “Palat”) of potato sacks every 21-28 days during entire storage period. However, again this practice is not properly followed to save cost, which in turn causes quality deterioration. Steps for improving cold storage facilities in Bangladesh To improve cold storage services and to improve quality of stored potatoes, the respondents placed some important suggestions during course of primary survey. Some of the important suggestions are given in the following.

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Improving the conditions of electric supply: The most critical problem in cold storage sector in Bangladesh is the failure of uninterrupted supply of electricity. So, measures should be taken so that the commercial cold stores of the country are brought under prioritized sectors in terms of uninterrupted electricity supply. Safeguarding the interests of the growers and traders: During 2011-2012, the growers were less interested to store their potatoes in commercial cold stores due to the huge loss incurred in the previous year as the potato prices were very low. Many growers did not take delivery of their potatoes from the cold stores due to sharp decline in potato prices. Therefore, necessary measures should be taken so that growers‟ and traders‟ interests are secured to keep up the potato production and marketing steady in the future. Capacity strengthening of the growers: The growers very often lack adequate technical knowledge in growing the best quality potato. They are also ignorant about the quality of potato tubers. Therefore, the growers should be adequately trained and motivated by the government and non-government organizations in relation to the production of good quality potato (production, harvesting, curing, washing, grading, transportation and storage) in order to improve the domestic and international potato trades. Some cold store owner like Akku Cold Storage of Shibgonj, Bogra organizes Farmers‟ and Bepari day to motivate the growers and traders in relation to the maintenance of quality of potato from the source to shelf. This private initiative should be strengthened. Capacity strengthening of the staff of cold storage: The staffs and labour of the cold storage play an important role in maintaining quality of potato. They should have adequate knowledge and skills in handling potatoes. They need special skills on loading, unloading, storage atmosphere, ventilation, pre-cooling, pre-heating, stacking, turn over (“Palat”), sanitation, etc. So, capacity strengthening of the staff of the cold storage should also be considered. Maintenance of multi-chambered cold storage: Potatoes are stored in commercial cold storage for either table or seed purposes. The storage atmospheres for table and seed potatoes are different. Ideally, the table and seed potatoes should not be stored at the same conditions. The ideal storage conditions for table and seeds potatoes are 6-10oC and 85-90% and 2-4oC and 85-90% relative humidity, respectively. Therefore, commercial cold store should have different chambers with different temperature controlling facilities. However, in Bangladesh, most of the cold storage does not have such facilities. So, for the maintenance of high quality of potatoes for table and seed purposes, and for possible export, multi-chambered storage facilities should be considered. Himadri Cold Storage Group is planning to establish such facility in Dinajpur. Increasing the number of BADC cold storage: BADC (Bangladesh Agricultural Development Corporation) cold stores have been performing quite well, especially for the storage of seed potatoes. According to the results of the primary survey, the growers have strong demands for the establishment of more BADC cold storage in the country so that they can store their own seeds for at least 1-2 seasons, and thereby import of potato seed tubers is reduced and hard-earned foreign currencies are saved. As an alternative, the growers also have demand to introduce at least one chamber in each private cold storage specifically for seeds.

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Strengthening potato processing in Bangladesh: Potato price volatility is very common in Bangladesh. Cyclical nature of production has been observed to be the major reason for such price fluctuation of potato from year to year. In addition, import can also affect price. For example, during 2009-10, 9009 and 7357 metric tons of seed and fresh potatoes were imported, which may be negligible in terms of total production in Bangladesh but may have some implications on price (BBS 2011). These factors together greatly affect the interests of the growers and other stakeholders in running potato production/trade. Diversified use of potatoes could be helpful in resolving these problems. For this, establishment of small, medium and large scale processing plants could be encouraged. For example, some potatoes of the Bogra region are being used in the production of potato chips, and this has great potential in the country. For example, the Kashem Group and Nasir Group purchase sugar free potato tubers from the cold store owners (e.g. Himadri Cold Storage, Shibgonj) for the production of potato chips. The method of making sugar free tubers is shown in Fig 4.12.

Fig 4.12 Treatment of potato tubers with CIPC to make them sugar free required to produce potato chips. The PRAN-RFL Group has their own fogging facility (CIPC treatment facility) to make sugar free potato tubers for the production of potato chips. Hence, they purchase untreated potato tubers from the growers or the traders to produce potato chips. CIPC also known as Chlorpropham {isopropyl-N (3-chlorophenyl) carbamate} is widely used as sprout inhibitor for ware and processing potatoes (Brandt et al. 2003). CIPC inhibits sprout formation by interfering with the spindle formation during cell division (Mahajan et al. 2008). Potato tubers treated with CIPC are suitable for making potato chips and French fry since the upper tolerable limit of reducing sugars should not exceed 0.25% for making chips and 0.50% for making French fries (Burton 1990; Snadhu et al. 2002; ELBashir et al. 2011). CIPC is applied after the potatoes are subjected to curing in the form of aerosol (fogging) at a rate of 1 lbp a.i. per 600 cwt of unwashed potatoes (Lewis et al. 1997). 4.4.3.2 Marketing channels of potato Marketing channels and market actors of potatoes grown in Bogra and Munshigonj districts were investigated. Marketing channels and market actors vary with production locations. The Bogra-Dhaka channel was longer than Munshigonj-Dhaka. The actors in Bogra-Dhaka channel were growers, Faria, Bepari, Aratdar, wholesalers, retailers and consumers. The Faria purchase potatoes from different places like growers‟ field (Annex 18) or growers‟ house (traditional store) or assemble markets (Plate 4.2). The Faria mainly sell potatoes to Bepari. All the early potatoes (loose skinned and non-cured) reach Dhaka markets, especially in January, are mainly from the North Bengal, especially from Bogra. The traditionally-stored potatoes are marketed until the month of May. The cold stored potatoes come to the markets after May and remain until January. The actors in Munshigonj-Dhaka channel included growers, Bepari, Aratdar, wholesalers, retailers and consumers. In contrast with Bogra, no Faria was found to operate business in Munshigonj-Dhaka channel. The growers of

Potato Tubers (Potatoes purchased from the growers or traders)

Fogging (Treatment with CIPC to make the tubers sugar free @ 1 kg CIPC/32 tons tubers; 5000/- per kg CIPC)

Processing Plants (Production of potato chips)

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Munshigonj do not sell potato as early crop, and they sell only mature potatoes after field curing. No assemble markets were found in Munshigonj for potato, and the Bepari generally purchase potatoes from the growers‟ field or from the traditional stores at the growers‟ house (February-May) or from commercial cold stores (June-January). The net margin of potato growers of Bogra was Tk. 1.99 kg-1 (price of March, variety Diamant, traditionally stored). Along the marketing channel (Shibgonj, Bogra-Karwan Bazar, Dhaka), the highest value was added by the retailers of Karwan Bazar of Dhaka city (31.10%) followed by the Bepari (29.50%). By contrast, the Aratdar of Karwan Bazar added the lowest value of 4.01% (Fig 4.13). The values added by the Faria and the wholesalers along the chain were 12.15% and 23.16%, respectively. In the case of cold stored potatoes, net margins of growers/trader group, significantly increased. For example, it was Tk. 8.76 kg-

1 in 2001-12 season (Fig 4.13). In case of Munshigonj-Dhaka channel, the highest value was added by retailers of Karwan Bazar of Dhaka city (40.20%) followed by wholesalers (29.94%) and Bepari (24.58%) (Fig 4.14). Again, along the marketing channel, the lowest value was added by the Aratdar of Karwan Bazar (5.28%). Results indicated that the retailers of Dhaka city are actually adding more values in the marketing channel. The Bepari, especially of Bogra was also found to add high value along the chain, and this was possibly due to the risks taken by them. The value addition by Bepari of Munshigonj was lower than those of Bogra, and this could be attributed to the shorter distance (50-60 km) travelled as compared to that of Bogra (200-250 km). Though not significant, but some amounts of potatoes from Bogra are used in the production of potato chips, and this has great potential in the country. For example, the Kashem Group and Nasir Group purchase sugar free potatoes from the cold storage owners (e.g. Himadri Cold Storage, Shibgonj) for the production of potato chips. The added value here was approximately Tk. 0.20 kg-1. Potato value chain of Bangladesh was also investigated by Reardon et al. (2012), who reported four types of potato value chain including (i) geographically short and intermediationally short (the most traditional potato value chain where the local supply of potato from the farmer that was sold fresh at harvest or, within a few months and after traditional on-farm storage, to the local village market for local consumption, (ii) geographically long and intermediationally long (the rural–urban traditional potato value chain, which included selling potatoes fresh at harvest or, after a few months of traditional on-farm storage, to local brokers/village traders who then sold potatoes to rural wholesale markets where wholesalers from cities bought potatoes, then resold them to semi-wholesalers who in turn sold to retailers and/or traditional retailers, (iii) geographically long (the intermediate/transitional potato value chain, which featured the potato farmer selling both fresh at harvest and after storage in modern cold storage facilities directly to city wholesale market traders, and (iv) the modern potato value chain, which was geographically long and intermediationally short, featured the potato farmer selling both fresh at harvest and after modern cold storage directly to processing firms or supermarkets).

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Fig 4.13 Marketing channel of potato starting from Bogra to Karwan Bazar, Dhaka (marketing of early potato or traditionally stored and cold stored potatoes). Apart from the above channel, the following channels were also identified for potatoes produced in Bogra as per the results of the primary survey: Channel I: Farmer Consumer Channel II: Farmer Faria 2 Retailer Consumer Channel III: Farmer Cold storage Bepari Wholesaler Retailer Consumer Channel IV: Farmer Faria 3 Consumer Channel V: Farmer Bepari Aratdar Wholesaler Retailer Consumer Channel VI: Farmer Bepari Wholesaler Retailer Consumer Channel VII: Farmer Faria1 Bepari Wholesaler Retailer Consumer Channel VIII: Farmer Faria1 Wholesaler Retailer Consumer Channel IX: Farmer Faria1 Bepari Aratdar Wholesaler Retailer Consumer Channel X: Farmer Faria 2 Bepari Aratdar Wholesaler Retailer Consumer

Farm (Bogra)

Dhaka

Dhaka

Farmer (net income Tk. 4.78 kg-1)

Bepari (sells to wholesaler via Aratdar); net margin: 29.50%

Faria (sells to Bepari) Net margin: 12.15%

Consumers

Retailer (sells to consumers) Net margin: 31.10%

Wholesaler (sells to retailers) Net margin: 23.16%

Aratdar (sells to wholesalers) Net margin: 4.01%

Farmer (traditional storage) Feb-May

Farmer/Trader group (cold store) Jun-Jan (net income Tk. 8.76 kg-1)

Processing Unit

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Fig 4.14 Marketing channel of potato starting from Munshigonj, the most leading potato growing district of Bangladesh, to Karwan Bazar, Dhaka city. Apart from the above marketing channel as observed in the marketing of potatoes produced in Munshigonj, the following channels were also identified as per the results of the primary survey. Channel I: Farmer Consumers Channel II: Farmer Retailer Consumer Channel III: Farmer Cold storage Bepari Wholesaler Retailer Consumer Channel V: Farmer Bepari Aratdar Wholesaler Retailer Consumer Channel VI: Farmer Bepari Wholesaler Retailer Consumer Channel VII: Farmer Bepari Wholesaler Retailer Consumer Channel VIII: Farmer Wholesaler Retailer Consumer Channel IX: Farmer Bepari Aratdar Wholesaler Retailer Consumer Channel X: Farmer Bepari Aratdar Wholesaler Retailer Consumer From the above results and discussion it was observed that the market actors in potato channel in Bangladesh mainly included growers, Faria, Bepari, wholesalers (local and city), retailers and consumers. Reardon et al. (2012) also reported that potato growers of Bangladesh sold potatoes to village traders (Faria), wholesalers in wholesale markets and traders at the cold stores. The buyers from potato farmers of China were very diverse and

Farm (Munshigonj)

Dhaka

Dhaka

Bepari (sells to wholesaler via Aratdar); Net margin: 24.58%

Consumers

Retailer (sells to consumers) Net margin: 40.20%

Wholesaler (sells to retailers) Net margin: 29.94%

Aratdar (sells to wholesalers) Net margin: 5.28%

Farmer/Trader group (commercial cold store) June-Jan

Processing Unit

Farmer (Traditionally stored potatoes) Feb-May

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included village brokers, wholesalers, collection centres belonging to company, processing company, government, wholesalers of potato association, farmers‟ cooperative and consumers. The buyers in India were those of the village traders, wholesalers on wholesale markets, cold store owners, traders at the cold store, supermarket and miscellaneous. 4.4.3.3 Monthly price variation Monthly price variation of potato at different levels of marketing from two leading growing districts to Dhaka was documented. The trend of producers‟ price of potato during 2011-2012 has been shown in Fig 4.15. The main commercial varieties grown in Bogra were Lal Pakhri (indigenous variety), Granula and Cardinal. Primary survey revealed that wide price variation existed among the varieties (Fig 4.15). However, such variety-wise information was not found available in the BBS/DAM reports where only the prices of local and modern (Holland) varieties are found. For improving the market information, the monthly/yearly price of the most commercially important cultivated varieties could be included for better understanding of potato price behavior, and could be useful for all the stakeholders including researchers and policy makers. Results also showed that the prices of all the potato varieties in January were higher, which declined sharply in the month of February, which was also manifested in the seasonal price indices as discussed earlier. From February onwards, the prices of potato, irrespective of variety, started to increase (Fig 4.15). The price of Lal Pakhri was the highest followed by Cardinal and Granula (Fig 4.15). The lowest price of the variety Granula could be due to comparatively lower postharvest quality (high moisture, low dry matter, high perishability, poor texture and poor taste). However, this variety is gaining popularity among the farmers mainly because of its tolerance to late blight (the most serious disease of potato) and higher yield. Results also showed that the farmers of Bogra were not found interested to grow Diamant. On the contrary, the farmers of Munshigonj did not show interest to cultivate red-skinned potatoes like Cardinal or Lal Pakhri. They only grow Diamant in commercial scale. This contrasting feature was due to the fact that there were no buyers or no demands for red skinned varieties in Munshigonj and vice-versa.

600

300

400

625

665690

715

760

500

300

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560

620

620665

715

300

200

300

465

475 475500

475

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350

450

550

650

750

Jan Feb Mar Apr May June Jul Aug

Pota

to p

rice (

Tk/m

ound

)

Lal PakhriCardinalGranula

Fig 4.15 Farmers‟ sale prices in 2012 of the predominant potato varieties grown in Bogra.

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4.3.3.4 Marketing costs and margins of potato intermediaries Marketing costs and margins of the market actors were calculated on the basis of primary data. Results obtained are presented and discussed in the following. Production and marketing costs of potato producers The cost of production of potato in Bogra was observed to be Tk. 49024.56 ha-1. Marketing costs of the potato producers were also calculated. Marketing costs included mainly the costs for transportation and packaging (Table 4.13). The total cost of marketing of potato producers in Bogra was estimated to be Tk. 0.62 kg-1 (Tk. 12547.92 ha-1), and the major cost was due to transportation (56.18%) followed by packaging (43.77%) (Table 4.14). This cost analysis was for the traditionally-stored potatoes. Table 4.14 Marketing costs for potato producers (Kichok, Bogra, N=25; Diamant; March)

Items of cost Cost (Tk. kg-1) Stdev % of total cost Transportation 0.3461 0.07670 56.18 Packaging 0.2696 0.30300 43.77 Miscellaneous (depreciation) 0.0003 0.0003 0.05 Total 0.616 0.1804 100

The gross return of potato producers was calculated based on the average yield ha-1 and prevailing market price. The gross return from production of potato in one ha of land was Tk. 152775.00 (Average yield × prevailing market price = 20.37 tons ha-1 × Tk. 7500.00 ton-1). Average net return from production of potato was Tk. 91202.52 ha-1 [(Gross return- Gross cost (production cost + marketing cost)]. This return was equivalent to Tk. 4.48 kg-1. The net return varies with price variation of potato with time. Marketing costs of Faria In Bogra, Faria are active, who purchase potatoes from the farmers and sell mainly to the Bepari. They are small-scale traders with or without own working capital. They act as broker in the markets. Marketing cost of Faria has been calculated and presented in Table 4.15. The total marketing cost of the Faria was Tk. 0.55 kg-1, and the major costs incurred for loading and unloading (51.19%) followed by transportation (45.37%) (Table 4.15). Table 4.15 Marketing cost of Faria in potato trade (Shibgonj, Bogra; N=25) Items of cost Cost (Tk. kg-1) Stdev % of total cost Transportation 0.25 0.06 45.37 Loading/unloading 0.28 0.09 51.19 Depreciation (gunny sack) 0.02 0.02 3.44 Total 0.55 0.10 100.00

Marketing costs of Bepari Bepari are the large-scale traders who may be from the local area or from different cities or districts of Bangladesh. The Bepari purchase potatoes, especially from the local assemble

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markets with the assistance from local Arat/Faria and sell to the wholesalers through Arat (commission agent) at the destination markets. Two types of Bepari are involved in potato trade. The first category Bepari purchase potatoes from the growers and sell directly in the city markets (early crop and traditionally-stored potatoes). The other category Bepari purchase potato from the cold stores and sell in the city markets. Marketing costs for the first category Bepari have been calculated and presented in Table 4.15. The second category Bepari (may also be the same persons as first category) generally starts their business from the end of May or June when the traditionally-stored potatoes are completely consumed, and they continue trade until the next season potatoes arrives in the market. Marketing costs of Bepari involved transportation, loading, unloading, commission, damage, depreciation, and so on. The total marketing costs of the Bepari of Bogra and Munshigonj were Tk. 1.07 and Tk. 1.04 kg-1, respectively. The comparatively lower marketing cost of the Munshigonj Bepari was possibly due to the shorter distance travelled (Table 4.15). Again, the major costs of Bepari were due to transportation (48.41-54.60%) and loading and unloading (23.27-36.40%) (Table 4.16). Table 4.16 Marketing costs for Bepari for potato trade Items of cost Cost (Tk. kg-1) Stdev % of total

cost Bogra-Dhaka (N=25) Transportation 0.52 0.24 48.41 Loading/unloading 0.25 0.04 23.27 Local commission 0.19 0.03 17.69 Wastage 0.03 0.01 2.33 Depreciation (gunny sacks) 0.03 0.02 2.98 Depreciation (string) 0.03 0.01 2.89 Miscellaneous (other commission/toll) 0.03 0.01 2.43 Total 1.07 0.29 100.00 Munshigonj-Dhaka (N=25) Transportation 0.57 0.16 54.60 Loading/unloading 0.38 0.11 36.40 Aratdar commission 0.04 0.01 3.95 Wastage 0.03 0.01 2.39 Depreciation (gunny sacks) 0.03 0.02 2.68 Total 1.04 0.21 100.00

Marketing costs of Aratdar (commission agent) Aratdar is an important actor in potato marketing channel. There were two types of Aratdar, one in the assemble markets in the growing areas and another in the wholesale markets in Dhaka city. In the present investigation, only the Aratdar of Dhaka city was considered. There were different types of costs for the Aratdar such as rent, costs for unloading, electricity bill, staff salary, security guards, etc. The total marketing cost of the Aratdar of Dhaka city was estimated to be Tk. 0.81-0.87 kg-1 (Table 4.17). The major cost items of the Aratdar were due to the rent of Arat space (37.17-40.05%) and unloading (43.48-45.85%) (Table 4.17).

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Table 4.17 Marketing costs of Aratdar of Dhaka Items of cost Cost (Tk. kg-1) Stdev % of total cost Karwan Bazar (N=25) Rent 0.350 0.131 40.05 Unloading 0.380 0.130 43.48 Electricity bill 0.060 0.010 6.86 Staff salary 0.080 0.020 9.15 Security guard 0.004 0.002 0.46 Total 0.874 0.160 100 Jatrabari Bazar (N=15) Rent 0.300 0.160 37.17 Unloading 0.370 0.150 45.85 Electricity bill 0.070 0.020 8.67 Staff salary 0.060 0.020 7.43 Cleaner 0.007 0.002 0.87 Total 0.807 0.200 1.000

From the above information, it is clear that transportation contributes greatly to the total marketing cost. In agricultural marketing, the transport cost is paid by the farmer if he sells the produce in the market, but if he sells to the village traders, the cost is paid by the traders. Transport cost is the most important cost in the process of agricultural marketing. It varies with mode of transportation, distance covered, nature of the product, condition of road, risk involved, movement among big cities and development of transport system. The efficiency of marketing is dependent on reducing the cost of transportation. In the rural economy, the truck is not so popular mode of transportation, though it is popular for the transportation from assemble market to different towns and cities. The bullock carts, vans, rickshaws, Votvoti, etc. are the important modes of transportation in the villages to bring the produce in the market. With modernization and use of machinery in agriculture, the use of tractor trolley is increasing in the process of transportation from farm to market. The efficiency of transportation is dependent on the cost of transportation and the speed with which the goods reach the destinations. It also depends on the care with which the goods are handled. From the present survey, the main problems in transportation were related to the lack of farm roads, broken and uneven roads and highways, lack of coordination in transport agencies, high damages during transportation and slow movement in transportation due to traffic congestions.

Marketing costs of wholesalers There are local wholesalers and wholesalers in Dhaka city. In the present study, only the wholesalers of Dhaka wholesale markets were considered. The wholesalers generally purchase potatoes from the Bepari through Arat (commission agent). The marketing costs of the wholesalers involved in potato trade in Dhaka city are furnished in Table 4.18. The total marketing cost was found to be Tk. 1.20-1.29 kg-1 (Table 4.18). The items of costs of the wholesalers included transportation, loading and unloading, rent for space in the Arat, commission paid to the Aratdar and wastage. Amongst them, the principal cost items were due to transportation, loading and unloading and rent for space.

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Table 4.18 Marketing costs of wholesalers (Dhaka city) Items of cost Cost (Tk. kg-1) Stdev % of total cost Karwan Bazar (N=25) Transportation 0.470 0.190 36.49 Loading/unloading 0.350 0.080 27.17 Cost for place in Arat 0.340 0.090 26.40 Aratdar commission 0.100 0.000 7.76 Wastage 0.024 0.007 1.86 Depreciation (gunny sacks) 0.004 0.002 0.31 Total 1.288 0.236 100.000 Jatrabari Bazar (N=15) Transportation 0.410 0.110 34.18 Loading/unloading 0.370 0.080 30.85 Cost for place in Arat 0.310 0.070 25.84 Aratdar commission 0.100 0.000 8.34 Wastage 0.003 0.007 0.21 Depreciation (gunny sacks) 0.007 0.002 0.58 Total 1.200 0.120 100.00

Marketing costs of retailers Retailers play an important role in delivering potatoes to the consumers. The retailers obtain potatoes mainly from the wholesalers (retailers of Dhaka city) or Faria/wholesalers (retailers of local markets in the production areas). The marketing costs for the retailers of the production area and Dhaka city varied widely (Tables 4.19 and 4.20). In Dhaka city, marketing costs of the retailers varied with markets and ranged from Tk. 1.23-1.45 kg-1 (Tk. 1.38, 1.23 and 1.45 kg-1 in Karwan Bazar, Mahakhali Kancha Bazar and Gulshan D.C.C. Market, respectively ) (Table 4.19). On the other hand, the marketing costs of the retailers of Bogra and Munshigonj Sadar were Tk. 0.76 and 0.96 kg-1, respectively, which were much lower than those of the retailers of Dhaka City (Table 4.20). The main marketing costs of the retailers were due to rent, transportation and loading and unloading.

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Table 4.19 Marketing costs of retailers of different retail markets of Dhaka city. Items of cost Cost (Tk. kg-1) Stdev % of total cost Karwan Bazar (N=5) Rent 0.830 0.260 60.145 Loading/unloading 0.330 0.120 23.913 Electricity bill (incl. generator) 0.070 0.060 5.072 Cleaner 0.020 0.010 1.449 Damage/wastage 0.010 0.010 0.725 Security guard 0.010 0.010 0.725 Packaging (shopping bags) 0.050 0.020 3.623 Depreciation (bamboo basket) 0.040 0.020 2.899 Depreciation (weighing machine) 0.020 0.005 1.449 Total 1.380 0.350 100.000 Mohakhali Kacha Bazar (N=5) Transportation 0.410 0.130 33.358 Rent 0.350 0.150 28.476 Loading/unloading 0.250 0.098 20.340 Electricity bill 0.020 0.010 1.627 Generator 0.017 0.010 1.351 Cleaner 0.020 0.010 1.627 Damage/wastage 0.023 0.017 1.831 Security guard 0.020 0.010 1.627 Packaging (shopping bags) 0.050 0.020 4.068 Depreciation (bamboo basket) 0.050 0.020 4.068 Depreciation (weighing machine) 0.020 0.010 1.627 Total 1.229 0.280 100.000 Gulshan D.C.C. Market (N=5) Transportation 0.450 0.150 30.949 Rent 0.390 0.180 26.823 Loading/unloading 0.270 0.100 18.569 Electricity bill 0.020 0.010 1.376 Salary/wages 0.075 0.058 5.158 Generator 0.025 0.038 1.719 Cleaner 0.020 0.010 1.376 Damage/wastage 0.064 0.068 4.402 Security guard 0.020 0.004 1.376 Packaging (shopping bags) 0.050 0.020 3.439 Depreciation (aluminum plate) 0.020 0.010 1.376 Depreciation (weighing machine) 0.050 0.020 3.439 Total 1.454 0.570 100.000

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Table 4.20 Marketing costs of potato retailers of Bogra and Munshigonj Items of cost Cost (Tk. kg-1) Stdev % of total cost Mahasthan Bazar, Bogra (N=5) Rent 0.086 0.063 11.363 Loading/unloading 0.405 0.177 53.315 Electricity bill 0.100 0.043 13.151 Packaging 0.055 0.016 7.233 Cleaner 0.019 0.012 2.472 Security guard 0.019 0.013 2.499 Damages/wastage 0.002 0.013 0.197 Depreciation (bamboo basket) 0.026 0.014 3.404 Depreciation (weighing machine) 0.048 0.023 6.365 Total 0.760 0.571 100.000 Munshigonj Sadar (N=5) Rent 0.150 0.080 15.578 Transportation 0.290 0.120 30.118 Loading/unloading 0.270 0.144 28.041 Electricity bill 0.090 0.040 9.347 Packaging 0.055 0.016 5.712 Cleaner 0.019 0.013 1.973 Security guard 0.019 0.013 1.973 Damages 0.026 0.014 2.688 Depreciation (bamboo basket) 0.025 0.013 2.596 Depreciation (weighing machine) 0.019 0.008 1.973 Total 0.963 0.290 100.000

Costs and margins of the potato intermediaries One of the important objectives of the present study was to explicitly calculate the costs and margins of the market intermediaries. Results on costs and margins of the potato intermediaries are presented in Tables 4.21, 4.22 and Fig 4.16. The marketing costs were the highest for the retailers of Dhaka city (Tk. 1.2-1.5 kg-1), and the corresponding net margins of the retailers ranged from Tk. 0.8-1.2 kg-1 (Fig 4.16). The highest net marketing margin (Tk. 1.2 kg-1) was received by the retailers of Mahakhali Kacha Bazar followed by the Karwan Bazar retail market (Tk. 1.1 kg-1). The second highest net marketing margin was made by the Bepari (Tk. 1.0 kg-1). The net marketing margins of the Aratdar were the lowest (Fig 4.16). The retailers of Dhaka city received very high net margin than the retailers of Bogra, and which result could be due to the less marketing cost of the retailers of Bogra (Tables 4.21, 4.22 and Fig 4.16). Among the market intermediaries, Aratdar received the lowest net margin (Tk. 0.2-0.4 kg-1) followed by the Faria (Tk. 0.6 kg-1). This calculation of cost and margin was based on the price of March 2012 for the variety, Diamant. The costs and margins of the intermediaries would vary with variety and time. The results of the present study were in agreement with those of CPD (2007) who reported that the potato market intermediaries received about 60% equivalent value of the retail price. Among the intermediaries the retailers received the highest share (24-28% of the retail value). The reasons for the higher margin of the retailers may be due to the fact that the potato is perishable, especially as compared to food grains, and hence the retailers add premium to the prices to offset the risk of spoilage. Secondly, the consumers generally choose and pick better quality products, and remaining products become gradually inferior in quality and ultimately sold at lower prices. Often, a portion of the products are not sold. That is why, the retailers tend to add premium to

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compensate the perceived losses. Nevertheless, the unusual and very high (unlimited) addition of premium by the retailers cannot be ruled out, and which need to be monitored and researched to suggest or guide the minimum and maximum levels of net margins for the retailers of Dhaka city. Table 4.21 Costs and margins of intermediaries in potato marketing channels (Bogra-Dhaka) Intermediaries Purchase

price (Tk. kg-1) Sale Price (Tk. kg-1)

Gross margin (Tk. kg-1)

Marketing cost

(Tk. kg-1)

Net margin

(Tk. kg-1) Faria, Bogra (N=25) Mean 7.00 7.96 0.96 0.55 0.41 Stdev 0.61 1.23 0.74 0.10 0.74 Bepari, Bogra (N=25) Mean 7.82 9.89 2.07 1.07 1.00 Stdev 0.55 0.06 0.92 0.29 0.99 Aratdar, Karwan Bazar, Dhaka (N=25) Mean (commission) - - 1.01 0.88 0.14 Stdev - - 0.06 0.16 0.17 Aratdar, Jatrabari, Dhaka (N=25) Mean (commission) - - 1.02 0.81 0.22 Stdev - - 0.07 0.2 0.19 Wholesaler, Karwan Bazar, Dhaka (N=25) Mean 10.00 12.07 2.07 1.29 0.78 Stdev 0.95 0.66 0.87 0.23 0.94 Wholesaler, Jatrabari, Dhaka (N=25) Mean 10.10 12.03 1.93 1.20 0.73 Stdev 0.95 0.97 0.77 0.07 0.91 Retailer, Karwan Bazar, Dhaka (N=5) Mean 12.04 14.47 2.43 1.38 1.05 Stdev 0.96 0.93 0.53 0.38 0.97 Retailer, Mahakhali Kancha Bazar, Dhaka (N=5) Mean 12.06 14.51 2.45 1.23 1.22 Stdev 0.97 0.98 0.53 0.38 0.97 Retailer, Gulshan D.C.C. Market, Dhaka (N=5) Mean 12.00 14.54 2.54 1.45 1.09 Stdev 0.86 1.02 0.49 0.57 0.96 Retailer, Mahasthan Bazar, Bogra (N=5) Mean 10.00 11.69 1.69 0.88 0.82 Stdev 0.71 0.96 0.52 0.21 0.67

NB. Aratdar generally do not purchase or sell and they do not have any gross margin. So, in case of Aratdar, gross margin is cited as commission.

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Table 4.22 Costs and margins of intermediaries in potato marketing channels (Munshigonj-Dhaka) Intermediaries Purchase

price (Tk. kg-1) Sale Price (Tk. kg-1)

Gross margin (Tk. kg-1)

Marketing cost

(Tk. kg-1)

Net margin

(Tk. kg-1) Bepari, Munshigonj (N=25) Mean 8.08 9.76 1.68 1.04 0.64 Stdev 0.81 0.66 0.95 0.24 0.95 Aratdar, Karwan Bazar, Dhaka (N=25) Mean - - 1.01 0.88 0.14 Stdev - - 0.06 0.16 0.17 Aratdar, Jatrabari, Dhaka (N=25) Mean - - 1.02 0.81 0.22 Stdev - - 0.07 0.2 0.19 Wholesaler, Karwan Bazar, Dhaka (N=25) Mean 10.00 12.07 2.07 1.29 0.78 Stdev 0.95 0.66 0.87 0.23 0.94 Wholesaler, Jatrabari, Dhaka (N=25) Mean 10.10 12.03 1.93 1.20 0.73 Stdev 0.95 0.97 0.77 0.07 0.91 Retailer, Karwan Bazar, Dhaka (N=5) Mean 12.04 14.47 2.43 1.38 1.05 Stdev 0.96 0.93 0.53 0.38 0.97 Retailer, Mahakhali Kancha Bazar, Dhaka (N=5) Mean 12.06 14.51 2.45 1.23 1.22 Stdev 0.97 0.98 0.53 0.38 0.97 Retailer, Gulshan D.C.C. Market, Dhaka (N=5) Mean 12.00 14.54 2.54 1.454 1.086 Stdev 0.86 1.02 0.49 0.57 0.96 Retailer, Munshigonj Sadar (N=5) Mean 9.64 11.8 2.16 0.875 1.197 Stdev 0.71 0.96 0.52 0.21 0.89

NB. Aratdar generally do not purchase or sell and they do not have any gross margin. So, in case of Aratdar, gross margin is cited as commission.

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0.6

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Faria (Shibgonj, Bogra)

Bepari (Shibgonj, Bogra)

Bepari (Munshigon Sadar)

Aratdar (Karwan Bazar, Dhaka)

Aratdar (Jatrabari Bazar, Dhaka)

Wholesaler (Karwan Bazar, Dhaka)

Wholesaler (Jatrabari Bazar, Dhaka)

Retailer (Karwan Bazar, Dhaka)

Retailer (Mahakhali Kancha Bazar, Dhaka)

Retrailer (Gulshan D.C.C. Market, Dhaka)

Retailer (Mahasthan Bazar, Bogra)

Retailer (Munshigonj Sadar)

Marketing cost (Tk/kg) Net marketing margin (Tk/kg)

Fig 4.16 Marketing costs and margins of potato intermediaries involved in marketing channel from Bogra to Dhaka. 4.4.3.5 Volume of trade of intermediaries The present study attempted to find out the daily volume of trade of potato to understand the magnitude of daily or monthly income of the intermediaries. Results revealed that the quantity of potatoes traded by Faria, Bepari, Aratdar, wholesalers and retailers were 707-1638, 1922-10943, 1984-3432, 2231-2311 and 9-55 kg day-1, respectively (Table 4.23). The highest quantity of potato was traded by the Bepari, followed by the Aratdar and wholesalers. In contrast, the retailers traded the lowest amount per day. This is worth to mention that, the Bepari, wholesalers and Aratdar were involved in trading the only selected item, i.e. potato, whereas the retailers were involved in trading more than one items (14-16).

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Table 4.23 Trade volume of various intermediaries in marketing channels from main producing areas to Dhaka retail markets Intermediaries Traded volume (kg day-1) Stdev Faria

Bogra Shibgonj (N=25) 707.00 241.00 Kahalu (N=25) 1025.00 328.00 Munshigonj Tongibari (N=25) 1638.00 240.00

Bepari Bogra Shibganj (N=25) 4892.00 137.00 Kahalu (N=25) 10943.00 98.00 Munshigonj Munshiganj Sadar (N=25) 1922.00 56.00 Tongibari (N=25) 2747.00 121.00

Aratdar Karwan Bazaar (N=25) 3432.00 372.00 Jatrabari (N=25) 1984.00 147.00

Wholesalers Karwan Bazar (N=25) 2231.00 217.00 Jatrabari (N=25) 2311.00 290.00

Retailers Bogra Shibganj (N=25) 26.00 2.68.00 Kahalu (N=25) 20.00 3.21.00 Munshigonj Munshiganj (N=25) 18.00 2.19.00 Tongibari (N=25) 55.00 2.76.00 Dhaka Karwan Bazar (N=5) 27.00 1.26 Mohakhali Kacha Bazar (N=5) 30.00 2.35 Gulshan D.C.C Market (N=5) 29.00 1.47 Badda Kacha Bazar (N=5) 17.00 2.04 Mohakhali Bou Bazar (N=5) 12.00 1.62 Amtola Bazar (N=5) 9.00 1.25 Mirpur Boro Bazar (N=5) 11.00 2.34 Jatrabari Kacha Bazar (N=5) 15.00 2.56

4.4.3.6 Efficiency of different potato marketing channels To examine the efficiency of different marketing channels of potato, some important measures of efficiency like price spread, growers‟ share and Acharya‟s formula of marketing efficiency were used. The results obtained are presented and discussed in the following.

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Price spread Price spread is an important measure of marketing efficiency. In the present study, price spread was calculated using the formula: Price Spread = (Price paid by consumers – Price received by the growers). Results revealed that the price spread was higher in the Bogra-Dhaka channel (Tk. 5.75-13.50 kg-1) than the Munshigonj-Dhaka channel (Tk. 2.12-11.32 kg-

1) (Table 4.24). To make comparisons among different channels, the price spread of all other possible channels were calculated and presented in Table 4.23. The average price spread of all the channels from Bogra-Dhaka (Tk. 8.11 kg-1) was much higher than that observed in the channels from Munshigonj-Dhaka (Tk. 4.89 kg-1). Table 4.24 Price spread in marketing channel of potato starting from Bogra and Munshigonj to Dhaka city

Marketing channel Price received by farmers (Tk.

Kg-1)

Price paid by consumers (Tk. Kg-1)

Price spread (Tk. kg-1)

Bogra-Dhaka Shibgonj-Karwan Bazaar 7.50 13.80 6.30 Shibgonj-Jatrabari Bazar 7.50 15.00 7.50 Shibgonj-Mohakhali Kacha Bazar 7.50 15.00 7.50 Shibgonj-Gulshan D.C.C. Market 7.50 21.00 13.50 Shibgonj-Badda Kacha Bazar 7.50 13.25 5.75 Kahalu-Karwan Bazar 7.50 13.80 6.30 Kahalu-Jatrabari Bazar 7.50 15.00 7.50 Kahalu-Mohakhali Kacha Bazar 7.50 15.00 7.50 Kahalu-Gulshan D.C.C. Market 7.50 21.00 13.50 Kahalu-Badda Kacha Bazar 7.50 13.25 5.75 Mean 7.50 15.61 8.11 Munshigonj-Dhaka Munshigonj Sadar-Karwan Bazar 11.68 13.80 2.12 Munshigonj Sadar-Jatrabari Bazar 11.68 15.00 3.32 Munshigonj Sadar-Mohakhali Kacha Bazar 11.68 15.00 3.32 Munshigonj Sadar-Gulshan D.C.C. Market 11.68 21.00 9.32 Munshigonj Sadar-Badda Kacha Bazar 11.68 13.25 1.57 Tongibari-Karwan Bazar 9.77 13.80 4.03 Tongibari-Jatrabari 9.77 15.00 5.23 Tongibari-Mohakhali Kacha Bazar 9.77 15.00 5.23 Tongibari-Gulshan D.C.C. Market 9.77 21.00 11.23 Tongibari-Badda Kacha Bazar 9.77 13.25 3.48 Mean 10.73 15.61 4.89

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Growers‟ share Growers‟ share is one of the important measures of marketing efficiency. Results showed that growers‟ share of the marketing channels Mushigonj-Dhaka was higher (46.52-88.15%) than that of the Bogra-Dhaka channels (35.71-56.60%). The average share of growers in the channels from Bogra-Dhaka was much lower (49.33%) than that of the share of Munshingonj-Dhaka channels (70.55%) (Table 4.25), which indicated that the former channel was more efficient than the later one. In another study Reardon et al. (2012) investigated the shares of rewards of growers in potato value chain in Bangladesh (Bogra-Dhaka). In both seasons (harvest and off-harvest season), the Bogra farmers took the preponderant share of the urban retail price, reaching 69.00% in harvest season and 77.00% in off-harvest season, which partially supports the results of our study. The main reason for increase in share in the off-harvest season was the farmers‟ reward for storage. In the present study, growers‟ shares of all the channels originated from Bogra were much lower as compared to those of Munshigonj-Dhaka channels, which recognized the importance of giving more attention to lift growers‟ share in the Bogra-Dhaka channels in order to make potato production and trade in that areas a sustainable venture. The highest growers‟ shares in the channels Munshigonj-Dhaka were mainly due to the absence of Faria in the channels. Table 4.25 Growers‟ share in potato marketing.

Marketing channel Price received by farmers (Tk. Kg-1)

Price paid by consumers (Tk.

Kg-1)

Growers share (%)

Bogra-Dhaka Shibgonj-Karwan Bazaar 7.50 13.80 54.35 Shibgonj-Jatrabari Bazar 7.50 15.00 50.00 Shibgonj-Mohakhali Kacha Bazar 7.50 15.00 50.00 Shibgonj-Gulshan D.C.C. Market 7.50 21.00 35.71 Shibgonj-Badda Kacha Bazar 7.50 13.25 56.60 Kahalu-Karwan Bazar 7.50 13.80 54.35 Kahalu-Jatrabari Bazar 7.50 15.00 50.00 Kahalu-Mohakhali Kacha Bazar 7.50 15.00 50.00 Kahalu-Gulshan D.C.C. Market 7.50 21.00 35.71 Kahalu-Badda Kacha Bazar 7.50 13.25 56.60 Mean 7.50 15.61 49.33 Munshigonj-Dhaka Munshigonj Sadar-Karwan Bazar 11.68 13.80 84.64 Munshigonj Sadar-Jatrabari Bazar 11.68 15.00 77.87 Munshigonj Sadar-Mohakhali Kacha Bazar 11.68 15.00 77.87 Munshigonj Sadar-Gulshan D.C.C. Market 11.68 21.00 55.62 Munshigonj Sadar-Badda Kacha Bazar 11.68 13.25 88.15 Tongibari-Karwan Bazar 9.77 13.80 70.80 Tongibari-Jatrabari 9.77 15.00 65.13 Tongibari-Mohakhali Kacha Bazar 9.77 15.00 65.13 Tongibari-Gulshan D.C.C. Market 9.77 21.00 46.52 Tongibari-Badda Kacha Bazar 9.77 13.25 73.74 Mean 10.73 15.61 70.55

80

Acharya‟s marketing efficiency Marketing efficiency of two main potato marketing channels (Bogra-Dhaka and Munshigonj-Dhaka) was calculated by the method described by Acharya. The Marketing efficiency was calculated by the formula: Marketing efficiency = Price received by farmers/(Total marketing cost + Net marketing margin). Results revealed that the marketing channel, Munshigonj Sadar to Dhaka (1.094) was more efficient than the channel Shibgonj, Bogra to Karwan Bazar, Dhaka (0.816) (Table 4.26). This result could be attributed to the absence of Faria in Munshigonj Sadar-Dhaka channel, and the less marketing cost due to the shorter distance from Munshigonj to Dhaka. By contrast, the marketing channel of Bogra-Dhaka is longer, and it involves Faria along with other intermediaries. This is also possibly due to the longer distance from Bogra-Dhaka, i.e. higher marketing cost and corresponding lower marketing efficiency. This result indicates that, if the number of middlemen could be reduced from the marketing channel, the efficiency of marketing would certainly be improved. Table 4.26 Acharya‟s marketing efficiency of various channels in potato trade (Bogra-Dhaka and Munshigonj-Dhaka)

The return on operating capital (ROC) was calculated separately for each of the intermediaries in the marketing channel and summarized in Table 4.27. The ROC of potato intermediaries ranged from 5.53-17.37% (Table 4.27). Results also showed that the highest ROC was received by the Aratdar (17.35%) followed by the Bepari (11.02%). In contrast, the lowest ROC was received by the Faria (5.81%). This result indicated that income of Aratdar of potato was observed to be the highest with corresponding high investment. CPD (2007)

Marketing channels Marketing efficiency

Stdev

Bogra-Dhaka Channel Shibgonj-Karwan Bazar 0.816 0.15 Shibgonj-Jatrabari 0.794 0.07 Shibgonj-Mohakhali Kacha Bazar 0.727 0.13 Shibgonj-Gulshan D.C.C. Market 0.695 0.08 Shibgonj-Badda Kacha Bazar 0.824 0.24 Kahalu-Karwan Bazar 0.819 0.19 Kahalu-Jatrabari 0.807 0.11 Kahalu-Mohakhali Kacha Bazaar 0.776 0.08 Kahalu-Gulshan D.C.C. Market 0.709 0.14 Kahalu-Badda Kacha Bazar 0.842 0.20 Munshigonj-Dhaka Channel Munshigonj Sadar-Karwan Bazar 1.094 0.51 Munshigonj Sadar-Jatrabari 1.161 0.77 Munshigonj Sadar-Mohakhali Kacha Bazar 1.004 0.74 Munshigonj Sadar-Gulshan D.C.C. Market 0.996 0.07 Munshigonj Sadar-Badda Kacha Bazar 1.190 0.84 Tongibari-Karwan Bazar 1.260 0.68 Tongibari-Jatrabari 1.300 0.52 Tongibari-Mohakhali Kacha Bazar 1.190 0.34 Tongibari-Gulshan D.C.C. Market 1.160 0.29 Tongibari-Badda Kacha Bazar 1.210 0.68

81

reported that the return on operating capital of the potato wholesalers and retailers varied from 12-14%. Table 4.27 Return on operating capital of various intermediaries in marketing channels of potato (Bogra-Dhaka and Munshigonj-Dhaka)

4.5 Brinjal Brinjal (eggplant) is an important vegetable crop all over the world. The leading brinjal producing countries are China, India, Egypt, Iran and Turkey (Annex 19).

Marketing channels Return on operating capital (%) Faria Bepari Aratdar Wholesaler Retailer

Bogra-Dhaka Channel Shibgonj-Karwan Bazar 6.19 10.84 15.77 6.93 7.82 Shibgonj-Jatrabari 6.19 10.84 26.89 6.47 7.60 Shibgonj-Mohakhali Kacha Bazar 6.19 10.84 15.77 6.93 9.19 Shibgonj-Gulshan D.C.C. Market 6.19 10.84 15.77 6.93 8.07 Shibgonj-Badda Kacha Bazar 6.19 10.84 15.77 6.93 5.95 Shibgonj-Mohakhali Bou Bazar 6.19 10.84 15.77 6.93 5.09 Shibgonj-Mirpur Boro Bazar 6.19 10.84 15.77 6.93 6.06 Kahalu-Karwan Bazar 5.43 11.20 15.77 6.93 7.82 Kahalu-Jatrabari 5.43 11.20 26.89 6.47 7.60 Kahalu-Mohakhali Kacha Bazaar 5.43 11.20 15.77 6.93 9.19 Kahalu-Gulshan D.C.C. Market 5.43 11.20 15.77 6.93 8.07 Kahalu-Badda Kacha Bazar 5.43 11.20 15.77 6.93 5.95 Kahalu-Mohakhali Bou Bazar 5.43 11.20 15.77 6.93 5.09 Kahalu-Mirpur Boro Bazar 5.43 11.20 15.77 6.93 6.06 Mean 5.81 11.02 17.35 6.86 7.11 Munshigonj-Dhaka Channel Munshigonj Sadar-Karwan Bazar - 7.04 15.77 6.93 7.82 Munshigonj Sadar-Jatrabari - 7.04 26.89 6.47 7.60 Munshigonj Sadar-Mohakhali Kacha Bazar - 7.04 15.77 6.93 9.19 Munshigonj Sadar-Gulshan D.C.C. Market - 7.04 15.77 6.93 8.07 Munshigonj Sadar-Badda Kacha Bazar - 7.04 15.77 6.93 5.95 Munshigonj Sadar-Mohakhali Bou Bazar - 7.04 15.77 6.93 5.09 Munshigonj Sadar-Mirpur Boro Bazar - 7.04 15.77 6.93 6.06 Tongibari-Karwan Bazar 5.53 10.90 15.77 6.93 7.82 Tongibari-Jatrabari 5.53 10.90 26.89 6.47 7.60 Tongibari-Mohakhali Kacha Bazar 5.53 10.90 15.77 6.93 9.19 Tongibari-Gulshan D.C.C. Market 5.53 10.90 15.77 6.93 8.07 Tongibari-Badda Kacha Bazar 5.53 10.90 15.77 6.93 5.95 Tongibari-Mohakhali Bou Bazar 5.53 10.90 15.77 6.93 5.09 Tongibari-Mirpur Boro Bazar 5.53 10.90 15.77 6.93 6.06 Mean 5.53 8.97 17.37 6.86 7.11

82

4.5.1 Trend in acreage and production of brinjal in Bangladesh In Bangladesh, brinjal is found available in the markets round the year. Presently, Bangladesh produces substantial amounts brinjal annually. During 2011, 341 thousand metric tons of brinjal (summer and winter) were produced in the country (BBS 2011). Production of summer brinjal showed slightly increasing trend except 2004-05 and 2006-07 (Fig 4.17A). By contrast, the production of winter brinjal showed a decreasing trend (Fig 4.17B). Regarding area coverage both summer and winter brinjal showed decreasing trend (Fig 4.18). The gradual decrease in production of winter brinjal could be attributed to the corresponding increase in rice (Boro) and maize areas over the last several years (Figs 4.1C, 4.7). Nevertheless, yield of both summer and winter brinjal significantly increased possibly due to the introduction of new high-yielding and hybrid varieties and also due to the use of improved production technology. Brinjal production would have been further increased but the biggest threat is the havoc caused by shoot and fruit borer (Leucinodes orbonalis). Recently, Bt brinjal, resistant to shoot and fruit borer, has been developed in which a gene called Cry1Ac from naturally occurring bacterium (Bacillus thuringiensis) has been introduced. The Cry1Ac gene is responsible for producing an insecticidal protein that protects brinjal plants from shoot and fruit borer. Attempt has been made to introduce Bt brinjal into Bangladesh but its introduction has been under serious challenge due to perceived health risk since insecticidal proteins are synthesized inside the plant body. Prior to its introduction into Bangladesh, extensive investigation and adequate data and information are necessary to demonstrate that Bt brinjal is equivalent to the currently-grown non-Bt brinjal varieties in relation to agronomic performance; eating, marketing and nutritional qualities; and safety standards. Since Bt brinjal is a transgenic crop, it also requires environmental clearance.

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Fig 4.17 Trends in area, production and yield of summer (A) and winter (B) brinjal in Bangladesh (BBS 2011). 4.5.2 Trend in brinjal price The harvest and retail prices (nominal and real) have been shown in Fig 4.19. Both the prices increased over the last years from 2000-01 to 2009-10. There was a price drop in the year 2002-03, and the highest brinjal price (retail) was noticed in the year 2007-08 (Fig 4.18). The relationship between production and price of brinjal was not quite clear. Irrespective of production volume, brinjal price, especially the retail price climbed except in 2002-03. The magnitude of increase of harvest price was comparatively lower than those of the retail price (Fig 4.18). The highest price peak was observed in 2007-08 which can be linked with the global hike of food price in 2007-08.

A

B

84

y = 0.879x + 7.7147R² = 0.7336

y = 1.2539x + 18.919R² = 0.6559

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Harvest (nominal) price (TK/kg) Harvest (real) price (Tk/kg)

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Linear (Harvest (real) price (Tk/kg)) Linear (Retail (real) price (Tk/kg))

Fig 4.18 Trends in prices of summer brinjal during 2001-02 to 2009-10 (BBS 2011). 4.5.3 Seasonality Seasonality in brinjal price was investigated. The months with the minimum and maximum wholesale and retail prices have been summarized in Tables 4.28 and 4.29. The minimum price months remained during March-April and December-February (Tables 4.28 and 4.29), and these durations are generally the peak harvesting seasons of various other summer and winter vegetables, respectively. Similarly, the maximum price months remained during September-October, which is known as „lag period‟ of vegetables supply in the market. Therefore, varietal improvement could be sought so that adequate supply can be ensured during the lag period in order to stabilize the price of vegetables including brinjal round the year. The seasonal price indices were calculated as ratio to moving average. Results revealed that there existed pronounced seasonality, and it was found identical for both the wholesale and retail prices. In terms of wholesale price, seasonal price indices varied from 59 to 174 with a co-efficient of variation 35.75% (Fig 4.19A). In the case of retail price, seasonal price indices ranged from 73 to 172 with an estimated co-efficient of variation 31.67%. There was a sharp peak during September-October. Summer brinjal reaches the markets from February with oversupply during April-July. Then, there is a shortage of brinjal supply in the markets that may have caused higher prices and seasonal peak during September-October. Seasonal indices were lower during April-June, and then start to climb until October followed by a dramatic fall in December (Fig 4.19A). During December, again market becomes oversupplied with winter brinjal along with several other winter vegetables. So, there seems a very clear marketing and pricing patterns of brinjal over the last years. The lowest price was found in the month of April and the highest in the month of October. The seasonality was again much more pronounced as compared to those observed in rice and wheat (Figs 4.4, 4.6).

Price (

Tk/k

g)

85

Table 4.28 Months with minimum and maximum prices (wholesale) of brinjal during the period from 2004 to 2009 (DAM) Year Minimum Maximum

Month Price (Tk. kg-1) Month Price (Tk. kg-1) 2004 March 9.00 October 20.00 2005 January 8.00 October 26.00 2006 April 12.00 October 35.00 2007 April 10.00 September 32.00 2008 March 10.00 September 40.00 2009 December 11.00 October 32.00

Table 4.29 Months with minimum and maximum prices (retail) of brinjal during the period from 2004 to 2009 (DAM) Year Minimum Maximum

Month Price (Tk. kg-1) Month Price (Tk. kg-1) 2004 February 12.00 October 34.00 2005 January 13.00 October 39.00 2006 February 14.00 October 45.00 2007 March 16.00 September 41.00 2008 April 15.00 October 40.00 2009 December 21.00 September 47.00

86

69

78

59

7067

112 117

152

174

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104

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R² = 0.4878

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73

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85

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Fig 4.19 Seasonality in brinjal prices wholesale (A) and retail (B) prices as ratio to moving average (Sources: DAM).

CV=35.75

CV=31.67

A B

86

4.5.4 Results on primary survey 4.5.4.1 Variety Different varieties/types of brinjal are available in the markets. The principal types/shapes are shown in Plate 4.4. The predominant variety in Norshingdi is Bombai (Plate 4.4C) and in Jessore is Chaga (Plate 4.4B).

Plate 4.4 Different types of brinjal (A: Globose; V: Round green; and C: Elongated).

4.5.4.2 Postharvest handling Various postharvest operations like sorting, grading, packaging, etc. are followed in brinjal supply chain. Sorting is generally practiced to remove diseased, insect infested and damaged brinjal. In terms of packaging, the growers use bamboo baskets to bring brinjal to the assemble markets. For long distance transportation, large Dhope (made of bamboo basket and gunny sacks) is used. Plastic net bags are the recent introduction and are used principally to sell brinjal to the wholesalers and in limited scale to the customers (5-kg bag; Plate 4.5B). Very often, brinjals are carried in open trucks without any packaging, especially from Norshindgi-Dhaka (Plate 4.5A).

Plate 4.5 Unpackaged brinjal on open truck (A) and brinjal packaging in plastic net bags (B), Karwan Bazar, Dhaka (22.00 PM to 06:00 AM). 4.5.4.3 Marketing channel and market functionaries The primary marketing channels of brinjal from Norshingdi and Jessore to Dhaka city have been furnished in Figs 4.20 and 4.21. Cost margin analysis revealed that the highest net margin was received by the retailers of Dhaka city (49.64%) followed by Bepari (16.77%). In contrast, the lowest net margin was received by Faria (10.07%) (Fig 4.20).

A B C

A B

87

Fig 4.20 Marketing channel of brinjal (Norshingdi-Dhaka) with percentage of net margins of the market intermediaries. In Jessore, huge amounts of brinjal are produced round the year. The major brinjal growing Upazillas in Jessore are Jessore Sadar and Chougacha. The most commercial brinjal vareties in Jessore are Islampuri (Vangorh) for the winter season and BARI Begun 1 (Chaga) in the summer season. The Upazilla, Chougacha is the leading brinjal producing Upazilla in Jessore. According to FGD, the average cost of production of brinjal is around Tk. 50000.00 bigha-1, and the growers‟ net profit is around Tk. 10000.00-20000.00 bigha-1. The sale price of the Bepari of Barinagar Bazar of Jessore Sadar is just double of the purchase price, and they make net profit of Tk. 2.00-5.00 kg-1. Faria in Jessore Sadar also make a net profit of approximately Tk. 0.50-1.00 kg-1. In Jessore Sadar, the primary channel is similar to that of Norshingdi to Dhaka, but the Chougacha to Dhaka channel is quite different (Fig 4.21), where there is no or very little existence of Faria. Another unique trading system has been observed in Chougacha Upazilla that the growers do not have any chance to sell their brinjal directly to the buyers. The growers generally bring their brinjal to the assemble market and keep in the local Arat (commission agent), who receive a commission of Tk. 0.50 kg-1 from

Farm (Norshingdi)

Dhaka

Dhaka

Farmer (sells to Faria or Bepari)

Faria (sells to Bepari); Net margin: 10.07%

Consumers

Retailer (sells to consumer); Net margin: 49.64%

Wholesaler (sells to retailers or consumers); Net margin: 8.50%

Aratdar (commission agent); Net margin: 14.73%

Bepari (sells to wholesalers via Aratdar); Net margin: 16.77%

88

the growers and make a net margin of Tk. 0.3 kg-1 (cost is Tk. 0.20 kg-1). Then the commission agents make necessary arrangement to sell brinjal to the primary buyers (Bepari). For this service, the commission agents take a commission of Tk. 0.50 kg-1 of brinjal. This indicates that there is a little option for competition in the market. There also have risk of unusual agreement between the commission agent and the primary buyers, which may result in less bargaining option of the growers and a resultant reduced price. By contrast, the local commission agent and the primary traders may make unusually higher profits in the business. The traders also charge 2 kg extra (Dholta) per mound (40 kg) by convincing the growers that this extra is to adjust weight loss and wastage during marketing. Fig 4.21 Marketing channel of brinjal (Chougacha, Jessore-Dhaka city) showing the involvement of local Arat (commission agent). 4.5.4.4 Monthly price variation Monthly variations in harvest and retail prices have been shown in Fig 4.22. Price remains the highest in March, and it lower during May-June (Fig 4.22).

Local Aratdar (commission agent)

Bepari (sells to wholesalers via Aratdar)

Farm Jessore

Dhaka

Dhaka

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Fig 4.22 Harvest price (Norshingdi) and retail price (Dhaka) of summer brinjal (variety Bombai) during March-July 2012. 4.5.4.5 Production and marketing costs and returns of brinjal producer Production and marketing costs of brinjal growers of Norshingdi were calculated. The price of March of 2012 was considered for the calculation. Production cost of brinjal producers Average value was taken from 25 brinjal producers of Raipura Upazilla of Norshingdi district. Average yield of brinjal in Raipura Upazilla was 78506 kg ha-1. Marketing cost of brinjal producers The costs for marketing of brinjal producers were calculated and presented in Table 4.30. The calculated marketing cost was Tk. 0.27 kg-1 (Table 4.30). The major cost was due to the cost for transportation (71.00%). Table 4.30 Marketing cost brinjal producers Items of cost Cost (Tk. kg-1) % of total cost Transportation 0.19468 71.00 Packaging 0.07933 28.92 Depreciation (gunny sacks) 0.00023 0.08 Total 0.27423 100

Gross and net margins of brinjal producer Gross margin = Average yield per hectare × prevailing market price = 78506 kg brinjal ha-1 × market price Tk. 22.00 kg-1 = Tk. 1727132 ha-1. The net margin = Gross margin - Cost

90

(production cost + marketing cost) = Tk. 1727132- Tk. (46683 + 21528) = Tk. 1720321 ha-1. Marketing cost for 1 kg brinjal = Tk. 0.274229 Tk. So, marketing cost for 78506 kg brinjal produced in 1 ha of land = Tk. 21528.

4.5.4.6 Marketing costs and margins of brinjal intermediaries Marketing costs of intermediaries involved in marketing channel from Norshingdi to Dhaka were calculated from primary data. Price of the month July 2012 was considered to calculate costs and margins of brinjal intermediaries. Details of estimation of marketing costs of intermediaries have been given in Annex 20. Purchase and sale prices, gross margin, marketing costs and net margins of intermediaries are presented in Table 4.31 and Fig 4.24. Table 4.31 Marketing margins of brinjal intermediaries (Norshingdi to Dhaka) Intermediary Purchase

price (Tk.kg-1)

Sale price (Tk.kg-1)

Gross margin (Tk.kg-1)

Marketing cost (Tk.kg-1)

Net margin (Tk.kg-1)

Faria (Norshindi) 21.40 22.50 1.10 0.38 0.72 Bepari (Norshingdi) 22.30 24.60 2.30 1.11 1.20 Aratdar (Dhaka) - - 2.40 1.35 1.05 Wholesalers Karwan Bazar 25.40 27.80 2.40 1.77 0.63 Jatrabari Bazar 25.25 28.00 2.75 1.17 1.58 Retailers Raipura 24.00 29.48 5.48 1.37 4.12 Karwan Bazar 27.60 32.20 4.60 1.05 3.55 Mohakhali Kacha Bazar

28.00 33.00 5.00 1.35 3.65

Gulshan D.C.C. Market

28.00 32.40 4.40 1.66 2.74

Badda Kacha Bazar 27.67 30.00 2.33 0.89 1.44 Results revealed that net marketing margins of retailers of Mahakhali Kacha Bazar was the highest (Tk. 3.65 kg-1) followed by those of the Karwan Bazar retail market (Tk. 3.55 kg-1). Overall, net margins of retailers were much higher than those of other intermediaries (Fig 4.24). Another contrasting result was observed that net marketing margins of brinjal intermediaries were much higher than those of potato intermediaries as described earlier. This is probably attributed to the less perishablity and existing storage facility of potato and corresponding high perishablity and no storage facility of brinjal. The marketing cost and net marketing margins of Bepari were Tk. 1.11 and 1.20 kg-1, respectively (Fig 4.24). This result would be attributed to the shorter distance between Norshingdi and Dhaka.

91

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Bepari (Norshingdi)

Aratdar (Karwan Bazar)

Wholesaler (Karwan Bazar)

Wholesaler (Jatrabari Bazar)

Retailer (Karwan Bazar)

Retailer (Mahakhali Kancha Bazar)

Retailer (Gulshan DCC Market)

Retailer (Badda Kancha Bazar)

Marketing cost (Tk/kg) Net marketing margin (Tk/kg)

Fig 4.23 Marketing cost and net marketing margins of brinjal intermediaries involved in Norshingdi-Dhaka channel. 4.5.4.7 Volume of trade of intermediaries Daily volume of trade of intermediaries was recorded to know the magnitude of their income. The amounts of brinjal traded by Faria, Bepari, Aratdar, wholesalers and retailers were 148-518, 431-522, 1984-2104, 193-200, 15-40 kg day-1, respectively (Table 4.32). The highest amount was traded by Bepari, followed by Aratdar and wholesalers. In contrast, the retailers traded the lowest amount per day. This is worth to mention that, Bepari and wholesalers are involved in trading only selected item, i.e. brinjal, whereas Aratdar and retailers are involved in trading more than one item. Each retailer generally handles 14-16 vegetables simultaneously.

92

Table 4.32 Trade volume of various intermediaries in brinjal marketing channel from main producing areas to Dhaka retail markets Intermediaries Traded volume (kg day-1) Stdev Faria

Norshingdi Raipura (N=25) 518 78 Belabo (N=25) 500 69 Jessore Chougacha (N=25) 148 58

Bepari Norshingdi Raipura (N=25) 522 81 Belabo (N=25) 422 74 Jessore Barinagar Bazar (N=25) Chougacha Bazar (N=25) 431 92

Aratdar Karwan Bazaar (N=25) 2104 138 Jatrabari (N=25) 1984 178

Wholesalers Karwan Bazaar (N=25) 200 38 Jatrabari (N=25) 193 17

Retailers Norshingdi Raipura (N=25) 21 8 Dhaka Karwan Bazar (N=5) 26 5 Mohakhali Kacha Bazar (N=5) 21 6 Gulshan D.C.C Market (N=5) 18 2 Badda Kacha Bazar (N=5) 19 3 Mohakhali Bou Bazar (N=5) 21 2 Amtola Bazar (N=5) 40 4 Jatrabari Kacha Bazar (N=5) 25 9 Mirpur Boro Bazar (N=5) 15 4

4.5.4.8 Percentage of net margins of the intermediaries Percentage of net margins of various intermediaries in brinjal marketing (Norshingdi-Karwan Bazar, Dhaka) were calculated. It was exceptionally high at retail level in Karwan Bazar, Dhaka (49.64%) followed by Bepari of Norshingdi (16.77%) (Table 4.33). Net margins were lower at wholesale level in Karwan Bazar and at Faria level in Norshingdi (8.80 and 10.07%, respectively) (Table 4.33).

93

Table 4.33 Value addition by brinjal intermediaries (Raipura, Norshingdi-Karwan Bazar) Intermediary Net margin (Tk/kg) % of value addition Faria 0.720 10.07 Bepari 1.199 16.77 Aratdar 1.053 14.73 Wholesaler (Kawran Bazar) 0.629 8.80 Retailers (Karwan Bazar) 3.550 49.64 Total 7.152 100

4.5.4.9 Marketing efficiency Performance of brinjal marketing from the major growing regions to Dhaka city was assessed as per the following estimates. Price spread and growers share Price spread is an important measure of marketing efficiency. Price spread was calculated using the formula: Price Spread = (Price paid by consumers – Price received by the growers). Results revealed that price spread was very high in Jessore-Dhaka channel (Tk. 24.13-29.93 kg-1) than Norshingdi-Dhaka channel (Tk. 9.76-17.20 kg-1) (Table 4.34). Growers‟ share is another important measure of marketing efficiency. Results showed that growers‟ share in Norshingdi-Dhaka channel was higher (54.74-69.69%) than that of Jessore-Dhaka channel (21.24-25.06%) i.e. around only one-third (Table 4.33), which indicated that the former channel is more efficient than the later one, and which may be due to the fact that Norshingdi-Dhaka channel is shorter than Jessore-Dhaka channel. So, there are scopes to augment growers‟ share in the Jessore-Dhaka channel, especially by improving transport system so that brinjal reaches Dhaka markets quickly. This is also influenced by the Ferry crossing at the Doulatdia-Aricha.

94

Table 4.34 Price spread and growers‟ share in marketing channel of brinjal starting from Norshingdi and Jessore to Dhaka city

Acharya‟s marketing efficiency Marketing efficiency of brinjal was also assessed by using the formula of Acharya. Results demonstrated that the channels originating from Norshingdi to different retail markets of Dhaka were efficient (0.92-0.98) as compared to those originated from Jessore (0.80-0.89) (Table 4.35). This may because of several reasons, which include easy access to transport facilities, shorter distance between Norshingdi and Dhaka, easily available market information, and low risk of spoilage because of shorter distance and no requirement of river crossing through Ferry.

Marketing channel Price received by farmers (Tk. Kg-1)

Price paid by consumers (Tk. Kg-1)

Price spread (Tk. Kg-1)

Growers‟ share (%)

Jessore-Dhaka Chougacha-Karwan Bazar 8.07 32.20 24.13 25.06 Chougacha-Jatrabari Bazar 8.07 33.75 25.68 23.91 Chougacha-Mohakhali Kacha Bazar 8.07 33.75 25.68 23.91 Chougacha-Gulshan D.C.C. Market 8.07 32.40 24.33 24.91 Chougacha-Badda Kacha Bazar 8.07 38.00 29.93 21.24 Mean 8.07 34.02 25.95 23.81 Norshingdi-Dhaka Belabo-Karwan Bazar 20.80 32.20 11.40 64.60 Belabo -Jatrabari Bazar 20.80 33.75 12.95 61.63 Belabo-Mohakhali Kacha Bazar 20.80 33.75 12.95 61.63 Belabo-Gulshan D.C.C. Market 20.80 32.40 11.60 64.20 Belabo-Badda Kacha Bazar 20.80 38.00 17.20 54.74 Raipura-Karwan Bazar 22.44 32.20 9.76 69.69 Raipura-Jatrabari Bazar 22.44 33.75 11.31 66.49 Raipura-Mohakhali Kacha Bazar 22.44 33.75 11.31 66.49 Raipura-Gulshan D.C.C. Market 22.44 32.40 9.96 69.26 Raipura-Badda Kacha Bazar 22.44 38.00 15.56 59.05 Mean 21.62 34.02 12.40 63.78

95

Table 4.35 Acharya‟s marketing efficiency of various channels in brinjal trade (Norshingdi-Dhaka and Jessore-Dhaka)

Return on operating capital The return on operating capital (ROC) is considered another way to understand the performance of marketing. ROC was calculated separately for each of the intermediaries in the marketing channels of brinjal. Results showed that the highest ROC was received by the Aratdar (73.73%) followed by the Bepari (16.72%). In contrast, the lowest ROC was received by the wholesalers (8.77%) (Table 4.36). In the present study, only the wholesalers of Dhaka city were included because the present study emphasized those marketing channels that were originated from leading production Districts and ended at Dhaka city. Therefore, the local wholesalers were not included since they principally operate business with the local and regional retailers.

Marketing channels Marketing efficiency Stdev Norshingdi-Dhaka Norshingdi-Karwan Bazar 0.94 0.34 Norshingdi-Jatrabari 0.98 0.71 Norshingdi-Mohakhali Kacha Bazar 0.98 0.38 Norshingdi-Gulshan D.C.C. Market 0.92 0.51 Narshingdi-Badda Kacha Bazar 0.98 0.72 Jessore-Dhaka Chougacha-Karwan Bazar 0.89 0.33 Chougacha-Jatrabari 0.89 0.17 Chougacha-Mohakhali Kacha Bazar 0.83 0.53 Chougacha-Gulshan D.C.C. Market 0.80 0.13 Chougacha-Badda Kacha Bazar 0.84 0.26

96

Table 4.36 Return on operating capital (ROC) of various intermediaries in marketing channels of brinjal (Norshingdi-Dhaka and Jessore-Dhaka)

4.5.4.10 Marketing constraints Scores of marketing constraints were mentioned by the respondents (growers and intermediaries). One of the constraints was that in the assemble markets of Jessore (Barinagar), there possibly exists an indirect price control mechanism. According to the growers, in the morning often the Bepari muck around with cash money, sit idle and do not start purchasing produce for an hour or two. In the mean time, the growers become panicked, and start selling their produce even at very low prices. This artificial crisis results in dramatically reduced margins of the growers, and contrasting high margins of the traders. So, there is a need to monitor the matter, and necessary steps to be taken, especially by local administration so that the growers‟ and the consumers‟ interests are safeguarded. Apart from that, other important constraints were related to transportation and storage. 4.6 Okra Okra is an important vegetable crop, especially in the tropical countries. The leading okra producing countries are India, Nigeria, Sudan and Iraq (Annex 21).

Marketing channels Return on operating capital (%) Faria Bepari Aratdar Wholesaler Retailer

Norshingdi-Dhaka Raipura-Karwan Bazar 14.90 16.51 72.73 8.80 11.46 Raipura-Jatrabari 14.90 16.51 75.16 8.60 10.87 Raipura-Mohakhali Kacha Bazar 14.90 16.51 72.73 8.80 12.71 Raipura-Gulshan D.C.C. Market 14.90 16.51 72.73 8.80 12.44 Raipura-Badda Kacha Bazar 14.90 16.51 72.73 8.80 11.12 Raipura-Mohakhali Bou Bazar 14.90 16.51 72.73 8.80 11.03 Raipura-Mirpur Boro Bazar 14.90 16.51 72.73 8.80 11.12 Belabo-Karwan Bazar 15.89 16.93 72.73 8.80 11.46 Belabo-Jatrabari 15.89 16.93 75.16 8.60 10.87 Belabo-Mohakhali Kacha Bazaar 15.89 16.93 72.73 8.80 12.71 Belabo-Gulshan D.C.C. Market 15.89 16.93 72.73 8.80 12.44 Belabo-Badda Kacha Bazar 15.89 16.93 72.73 8.80 11.12 Belabo-Mohakhali Bou Bazar 15.89 16.93 72.73 8.80 11.03 Belabo-Mirpur Boro Bazar 15.89 16.93 72.73 8.80 11.12 Mean 15.39 16.72 73.07 8.77 11.53 Jessore-Dhaka Chougacha-Karwan Bazar 17.12 20.29 72.73 8.80 11.46 Chougacha-Jatrabari 17.12 20.29 75.16 8.60 10.87 Chougacha-Mohakhali Kacha Bazar 17.12 20.29 72.73 8.80 12.71 Chougacha-Gulshan D.C.C. Market 17.12 20.29 72.73 8.80 12.44 Chougacha-Badda Kacha Bazar 17.12 20.29 72.73 8.80 11.12 Chougacha-Mohakhali Bou Bazar 17.12 20.29 72.73 8.80 11.03 Chougacha-Mirpur Boro Bazar 17.12 20.29 72.73 8.80 8.60 Mean 17.12 20.29 73.07 8.77 11.17

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4.6.1 Trend in acreage and production of okra in Bangladesh Okra is an important summer vegetable crop in Bangladesh. Substantial amounts of okra are produced each year. In 2009-10, 42 thousand metric tons of okra was produced from 10.20 thousand ha of land (BBS 2011). Okra contributes greatly in filling up the gaps when the market suffers from adequate supply of both winter and summer vegetables. This is highly nutritious with appreciable amounts of vitamins, minerals and fibres. The important factor is that both the area and production of okra are gradually expanding (Fig 4.24), which indicate that demand of okra is also increasing in the country. 4.6.2 Trend in okra price in Bangladesh Harvest and retail prices of okra (nominal and real) for last ten years were investigated (Fig 25). Nominal prices (wholesale and retail) increased slowly over the years except 2007-08. In terms of retail piece, okra price in real term decreased from 2000-01 to 2005-06. In 2006-07, both harvest and retail prices (nominal and real) reached the peak (Fig 25). In real term, harvest price increased at faster rate than retail price. This could be due to the fact that okra growers may have been receiving reasonable price of their produce since okra has high market demands, especially during the lag period. In contrast, the retailers must sell okra hurriedly to the customers because the quality of okra pods deteriorates fairly quickly due to increased discolouration (blackening) and fibreness of the okra pods. Fig 4.24 Trend in area and production of okra during the period from 2000-2010 (BBS 2011).

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Fig 4.25 Trend in okra prices (nominal and real) during 2000-01 to 2009-10 (BBS 2011). 4.6.3 Seasonality Months with minimum and maximum prices (wholesale and retail) have been shown in Tables 4.37 and 4.38. Minimum price months remained during March-June and September-October, which may be due to the abundant supply of various summer vegetables (cucurbits, brinjal, leafy vegetables, etc.). By contrast, maximum price months were during September-December, and which could explained by the fact that even though okra remains available in the markets round the year but it is basically a summer crop. However, limited scale production of okra is also found in winter season, especially in the Comilla and Chittagong regions. The paucity of okra in winter months may be the reason behind higher prices of okra pods during September-December. However, some exceptions were also noticed, and the reasons for such exceptions were not immediately understood. Table 4.37 Months with minimum and maximum prices (wholesale) of okra during the period from 2006 to 2011 (DAM) Year Minimum Maximum

Month Price (Tk. Kg-1) Month Price (Tk. Kg-1) 2006 September 11.00 February 20.00 2007 May 15.00 September 21.00 2008 October 12.00 March 24.00 2009 June 16.00 February 27.00 2010 June 20.00 December 27.00 2011 June 17.00 July 25.00

Pri

ce

(T

k/k

g)

99

Table 4.38 Months with minimum and maximum prices (retail) of okra during the period from 2006 to 2011 (DAM) Year Minimum Maximum

Month Price (Tk. Kg-1) Month Price (Tk. Kg-1) 2006 September 14.00 April 24.00 2007 April 15.00 September 25.00 2008 June 14.00 November 28.00 2009 June 20.00 November 36.00 2010 June 25.00 December 43.00 2011 March 28.00 June 36.00

Seasonality in okra prices was examined following moving average method. Results revealed that significant seasonality existed in okra prices. For wholesale price, seasonal price indices ranged from 46.80 to 145.67 with a co-efficient of variation 32.71%. There were two clear peaks (one in March and another during July-August) and a trough (May-June) (Fig 26A). Seasonal price index (wholesale) was observed to be the highest in August possibly due to scarcity of other vegetables in markets. Later, during January-February, price was the lowest, and this could be attributed to the abundant supply of various winter vegetables in the markets. Lower price index in May-June could be due to substantial supply of summer vegetables in the markets. Seasonality in okra was found to be much more pronounced as compared to those of rice and wheat. In the case of retail price, two peaks were observed, one during April-May and another during October-December, whereas a bottom was noticed during June-July (Fig 4.26B). The seasonal index in okra retail price varied from 57.12 to 127.00 with a co-efficient of variation 19.90%. Similar to that of wholesale price, a dramatic drop in price was observed in July, and price remained higher during March-May and September-December (Fig 4.26).

y = -1.6638x2 + 27.612x + 10.646R² = 0.7486

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al

price index

y = 0.9816x2 - 10.944x + 117.97R² = 0.4037

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Seasonal price index

Fig 4.26 Seasonality in okra wholesale (A) and retail (B) prices as a ratio to moving average (2006-11; Sources: BBS, DAM).

CV=32.71

CV=19.90

A B

100

4.6.4 Results on primary survey 4.6.4.1 General practices in okra production and marketing Nowadays, hybrid varieties of okra are cultivated. In the surveyed regions, the hybrid variety namely „Namdhari‟ was found to be predominantly grown. Data were also collected on different aspects of okra production and marketing. Sorting, grading and packaging are usually practiced in okra production and marketing. Growers generally use bamboo baskets and plastic sacks to bring okra pods to the assemble markets (Plate 4.6). Larger gunny bags or plastic sacks (made by stitching 2-4 bags together) are used by the Bepari to carry the okra pods to Dhaka city (Plates 4.7).

Plate 4.6 Packaging materials (bamboo baskets, A & B) and (plastic sacks, C) predominantly used by the growers to carry okra from the field to the assemble or primary wholesale markets (Nimshar Bazar, Comilla).

A B

C

101

Plate 4.7 Packaging materials (large plastic sack prepared by stitching 6-8 regular size plastic sacks) predominantly used by the Bepari to carry okra from the assemble or primary wholesale market (Nimshar Bazar, Comilla) to city wholesale markets (Karwan Bazar, Dhaka). 4.6.4.2 Marketing channel of okra Different okra marketing channels were identified during primary survey. A major marketing channel has been shown in Fig 4.28, which starts from Comilla and ended at Dhaka city. This channel is quite similar to that of other channels described earlier. The percentages of net margins of various intermediaries have also been shown in Fig 4.27. As usual, the highest net margin was received by retailers of Dhaka city (39.80%) followed by wholesalers (31.28%) and Bepari (12.75%). The lowest net margin was received by Aratdar (7.21%) followed by Faria (8.97%) (Fig 4.27).

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Fig 4.27 Marketing channel of okra (Comilla-Dhaka) showing the percentage of net margins of various intermediaries. 4.6.4.3 Market price of okra

The monthly price variation of okra at growers‟ and retail levels during the period from April-September of 2012 has been shown in Fig 4.28. Both the harvest and retail price gradually declined from the month of April until August, and then started to climb until the month of September (Fig 4.28).

Farm Comilla

Dhaka

Dhaka

Farmer (sells to Faria or Bepari)

Faria (sells to Bepari); Value added: 8.97%

Consumers

Retailer (sells to consumer); Value added: 39.80%

Wholesaler (sells to retailers or consumers); Value added: 31.28%

Aratdar (commission agent); Value added: 7.21%

Bepari (sells to wholesalers via Aratdar); Value added: 12.75%

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ce a

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ail p

rice

of

okr

a (T

k/kg

)

Months of the year 2012

Farmers' price (Tk/kg)

Retail price (Tk/kg)

Fig 4.28 Harvest price (Comilla) and retail price (Dhaka) of okra during the period from April-September of 2012.

4.6.4.4 Production and marketing costs and margins of okra producers Production cost of okra producer Production cost was calculated by taking the average value from 25 respondents of Chandina, Comilla. Production cost was estimated to be Tk. 9852.50 ha-1. Table 4.39 Marketing cost of okra producer of Comilla district (N=25) Items of cost Cost (Tk. Kg-1) % of total cost Transportation 0.5501 71.528 Packaging 0.2180 28.348 Miscellaneous (depreciation, gunny sacks) 0.0010 0.124 Total 0.7690 100

Gross margin of okra producer The gross margin = Average yield ha-1 × prevailing market price = 2807.50 × Tk. 14.00 kg-1 = Tk. 39305.00. Net margin of okra producer Net margin = Gross margin- Cost (production cost + marketing cost) = Tk. 39305.00- Tk. (9852.00 + 2159.00) = Tk. 27294.00 ha-1.

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4.6.4.5 Marketing cost of okra intermediaries Marketing costs of intermediaries in channels originated from Chandina of Comilla to Dhaka city were calculated from primary data. The price of July 2012 was considered to calculate the marketing costs and margins of okra intermediaries. 4.6.4.6 Marketing cost and net marketing margins of okra intermediaries The details of calculation of marketing costs of intermediaries have been shown in Annex 22. Net marketing margins of retailers and wholesalers of Dhaka city were found to be very high as compared to those of other intermediaries (Table 4.40, Fig 4.29). These results indicated that the retailers and wholesalers of Dhaka city may greatly contribute to the unusually higher prices of vegetables at the retail level. Therefore, monitoring and intervention may help reduce the gap between the harvest price and retail price, which can benefit both the growers and the consumers and ultimately enhance the efficiency in perishables marketing. Table 4.40 Marketing margins of okra intermediaries (Comilla to Dhaka). Intermediary Purchase

price (Tk.kg-1)

Sale price (Tk.kg-1)

Gross margin (Tk.kg-1)

Marketing cost (Tk.kg-1)

Net margin (Tk.kg-1)

Faria (Comilla) 14.20 15.30 1.10 0.30 0.80 Bepari (Nimshar) 15.50 17.90 2.40 1.26 1.14 Aratdar (Karwan Bazar) 18.20 1.82 1.18 0.64 Aratdar (Jatrabari Bazar) 17.86 1.79 1.09 0.70 Wholesalers Karwan Bazar 18.00 22.40 4.40 1.61 2.79 Jatrabari Bazar 17.95 22.00 4.05 1.29 2.76 Retailers Karwan Bazar 23.10 27.70 4.60 1.05 3.55 Mohakhali Kacha Bazar 23.00 27.80 4.80 1.35 3.45 Gulshan D.C.C. Market 22.70 27.70 5.00 1.69 3.31 Badda Kacha Bazar 22.50 26.00 3.50 1.18 2.33

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Wholesaler (Karwan Bazar)

Wholesaler (Jatrabari Bazar)

Retailer (Karwan Bazar)

Retailer (Mahakhali Kancha Bazar)

Retailer (Gulshan DCC Market)

Retailer (Badda Kancha Bazar)

Marketing cost (Tk/kg) Net marketing margin (Tk/kg)

Fig 4.29 Marketing cost and net marketing margin of intermediaries involved in okra supply chain starting from the producing district Comilla to Dhaka city. 4.6.4.7 Percentage of net margins by market intermediaries The percentages of net margins of intermediaries have been summarized in Table 4.41. The share of retailers was the highest (39.80%) followed by the wholesalers (31.28%), whereas the share was the minimal at the Arat level (7.21%). Table 4.41 Percentage of value addition by okra intermediaries (Comilla-Dhaka) Intermediary Net margin (Tk. kg-1) % of value addition Faria 0.80 8.97 Bepari 1.14 12.75 Aratdar 0.64 7.21 Wholesaler (Kawran Bazar) 2.79 31.28 Retailers (Karwan Bazar) 3.55 39.80 Total 8.92 100

4.6.4.8 Volume of trade of intermediaries Results demonstrated that the amounts of okra traded by Faria, Bepari, Aratdar, wholesalers and retailers were 499-509, 391, 1984-2224, 149-156 and 13-32 kg day-1, respectively (Table 4.42). The highest quantity of okra was traded by Aratdar. On the other hand, the retailers traded the lowest amount per day. This is worth to mention that, all the intermediaries in okra marketing are generally involved in trading more than one commodity. The retailers generally handle 10-16 commodities simultaneously.

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Table 4.42 Trade volume of various intermediaries in okra supply chain from main producing areas to Dhaka retail markets Intermediaries Traded volume (kg day-1) Stdev Faria

Comilla Nimshar (N=25) 509 148 Chandina (N=25) 499 157

Bepari Comilla Nimshar (N=25) 391 144

Aratdar Dhaka Karwan Bazar (N=25) 2224 194 Jatrabari (N=25) 1984 207

Wholesalers Dhaka Karwan Bazaar (N=25)

149

45

Jatrabari (N=25) 156 33 Retailers

Dhaka Karwan Bazar (N=5) 32 10 Mohakhali Kacha Bazar (N=5) 27 08 Gulshan D.C.C Market (N=5) 18 02 Badda Kacha Bazar (N=5) 15 07 Mohakhali Bou Bazar (N=5) 13 04 Amtola Bazar (N=5) 19 06 Jatrabari Kacha Bazar (N=5) 25 11 Mirpur Boro Bazar (N=5) 17 05

4.6.4.9 Marketing efficiency The performance of okra marketing from the major growing regions to Dhaka city was assessed as per the following estimates. Price spread and growers share The price spread was found to be higher in Comilla-Dhaka channel (Tk. 18.10-21.10 kg-1) than the Chittagong-Dhaka channel (Tk. 16.70-19.70 kg-1) (Table 4.43). However, the overall growers‟ share of the marketing channels of Comilla-Dhaka was marginally lower (39.38%) than that of the Chittagong-Dhaka channel (43.72%) (Table 4.43).

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Table 4.43 Price spread and growers‟ share in marketing channel of okra starting from Comilla and Chittagong to Dhaka city

Acharya‟s marketing efficiency The performance of marketing was assessed based on the Acharya‟s formula of marketing efficiency. Results showed that marketing channel originated from Shitakundu of Chittagong to Dhaka was relatively less efficient than those channels originated from Nimshar of Comilla and reached Dhaka (Table 4.44). This may be due to relatively shorter distance between Comilla-Dhaka than Chittagong-Dhaka. Table 4.44 Acharya‟s marketing efficiency of various channels in okra trade (Comilla-Dhaka and Chittagong-Dhaka)

Marketing channel Price received by growers (Tk. Kg-1)

Price paid by consumers (Tk/kg)

Price spread (Tk. kg-1)

Growers‟ share (%)

Comilla-Dhaka Chandina-Karwan Bazar 12.70 30.80 18.10 41.23 Chandina-Jatrabari Bazar 12.70 33.50 20.80 37.91 Chandina-Mohakhali Kacha Bazar 12.70 30.80 18.10 41.23 Chandina-Gulshan D.C.C. Market 12.70 30.80 18.10 41.23 Chandina-Mirpur Boro Bazar 12.70 33.80 21.10 37.57 Chandina-Amtola Bazar 12.70 33.80 21.10 37.57 Mean 12.70 32.25 19.55 39.38 Chittagong-Dhaka Shitakundu-Karwan Bazar Shitakundu-Jatrabari Bazar 14.10 30.80 16.70 45.78 Shitakundu-Mohakhali Kacha Bazar 14.10 33.50 19.40 42.09 Shitakundu-Gulshan D.C.C. Market 14.10 30.80 16.70 45.78 Shitakundu-Mirpur Boro Bazar 14.10 30.80 16.70 45.78 Shitakundu-Amtola Bazar 14.10 33.80 19.70 41.72 Mean 14.10 33.80 19.70 41.72 14.10 32.25 18.15 43.72

Particulars Marketing efficiency Stdev Comilla-Dhaka Chandina-Karwan Bazar 1.198 0.741 Chandina-Jatrabari 1.303 0.980 Chandina-Mohakhali Kacha Bazar 1.108 0.657 Chandina-Gulshan D.C.C. Market 1.080 0.501 Chandina-Badda Kacha Bazar 1.350 0.590 Chittagong-Dhaka Shitakundu-Karwan Bazar 1.095 0.692 Shitakundu-Jatrabari 1.116 0.775 Shitakundu-Mohakhali Kacha Bazar 0.987 0.136 Shitakundu-Gulshan D.C.C. Market 0.914 0.215 Shitakundu-Badda Kacha Bazar 1.006 0.357

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The return on operating capital (ROC) was calculated separately for each of the intermediaries in the marketing channel and summarized in Table 4.44. Results showed that the highest ROC was received by the Aratdar (84.05%) followed by the Bepari (5.78%). In contrast, the lowest ROC was received by the Faria (2.76%). Table 4.45 Return on operating capital (ROC) of various intermediaries in okra trade (Comilla-Dhaka and Chittagong-Dhaka)

4.7 Mango Mango is called the „King of All Fruits‟. The leading mango producing countries of the world are India, China, Thailand, Pakistan, Mexico, Indonesia, Brazil and Bangladesh. Bangladesh ranked the 8th position in terms of global mango production (Annex 23). 4.7.1 Trend in acreage and production of mango in Bangladesh In terms of production, mango ranks the top in Bangladesh (BBS 2011). Presently, 1047 thousand metric tons of mango are produced from 32 thousand hectares of land (BBS 2011). Area and production of mango trended to increase over the last years except in 2009-10 in the case of area. This is very interesting to note that nominal price of mango (Gootee) remained static until 2008-09 but mango price in real term sharply decreased until 2009-10. In 2010-11, mango price spiked and reached the peak among all the years investigated, and which result could be due to decrease in production in the same year. A clear trend was observed that the year with good production resulted in sharp fall in price in the same year, for example, in 2009-10 (Fig 4.30).

Marketing channels Return on operating capital (%) Faria Bepari Aratdar Wholesaler Retailer

Comilla-Dhaka Nimshar-Karwan Bazar 2.76 5.78 84.15 4.23 3.60 Nimshar-Jatrabari 2.76 5.78 83.49 4.53 3.31 Nimshar-Mohakhali Kacha Bazar 2.76 5.78 84.15 4.23 3.60 Nimshar-Gulshan D.C.C. Market 2.76 5.78 84.15 4.23 3.94 Nimshar-Badda Kacha Bazar 2.76 5.78 84.15 4.23 3.50 Nimshar-Mohakhali Bou Bazar 2.76 5.78 84.15 4.23 3.31 Nimshar-Mirpur Boro Bazar 2.76 5.78 84.15 4.23 3.66 Mean 2.76 5.78 84.05 4.27 3.56 Chittagong-Dhaka Sitakundu-Karwan Bazar 2.46 8.53 84.87 4.24 4.84 Sitakundu-Jatrabari 2.46 8.53 83.49 4.62 3.31 Sitakundu-Mohakhali Kacha Bazar 2.46 8.53 84.87 4.24 8.11 Sitakundu-Gulshan D.C.C. Market 2.46 8.53 84.87 4.24 3.94 Sitakundu-Badda Kacha Bazar 2.46 8.53 84.87 4.24 3.32 Sitakundu-Mohakhali Bou Bazar 2.46 8.53 84.87 4.24 5.43 Sitakundu-Mirpur Boro Bazar 2.46 8.53 84.87 4.24 4.21 Mean 2.46 8.53 84.67 4.29 4.73

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Fig 4.30 Relationship between area, production and price (nominal and real price of Gootee) of mango in Bangladesh during the period from 2004-05 to 2010-11 (BBS) 4.7.2 Seasonality Price data for mango are not well documented in BBS and DAM reports. There were many missing data. Therefore, the trends (annual and monthly) in mango prices were examined on the basis of available nominal prices (Fig 4.31). The retail prices were higher in the year 2010 as compared to other production years considered (Fig 4.31). The mango prices in July and August were found to be higher. However, the variation was not clear (Fig 4.31). However, the present investigation attempted to clearly report variety-wise price variation during the period of availability (May-September).

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Fig 4.31 Trend in mango prices (wholesale) in Bangladesh in various months during 2005-2011 (Sources: DAM). 4.7.3 General practices by mango producers and intermediaries Mango is the most important fruit crop in Chapai Nowabgonj and Rajshahi Districts of Bangladesh. The most commercial mango varieties are Khirsapati, Himsagar, Fazli, Langra and Aswina. The actors in mango supply chain include growers, Faria, Bepari, Aratdar (commission agent), wholesalers and retailers. An important observation needs to be mentioned here that there is less number of orchard owners/farmers in the regions. The owners of the mango orchards are generally solvent, and they give their orchards lease to another group of traders for a duration ranging from 1-10 years. The rate of lease varies with orchard area or number of plants. The rate also depends on the age and variety of the mango. In general, the rate of lease ranged from Tk. 200000.00-500000.00 bigha-1 (33 decimal) of land for 2-5 years having 10-15 plants bigha-1. So, the actual orchard owners are very hard to find and the day to day activities (land management, manuring, pest and disease control, irrigation, harvesting, and subsequent marketing) are actually performed by the trader group who take lease. Nonetheless, still there are some orchards, which are possessed and managed by the actual owners. Growers still use conventional picking pole or through and catch (by gunny sack) for mango harvest (Annex 24). This would be significantly improved so that harvest damage could be minimized. In this regard, the practice of Thailand would be introduced (Annex 24). Different types of packaging are used for mango marketing. The growers principally use bamboo baskets to bring mangoes to the assemble markets (Annexes 25, 26). On the other hand, the Bepari use mainly the plastic crates but sometimes bamboo basket with gunny top (Plate 4.8). Transportation is an important function of marketing. The growers use bi-cycle, vans, Votovoti to bring mangoes to the assemble market. For long distance transportation, the predominant vehicle is mini and large trucks.

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Plate 4.8 Plastic crates (left) are used for long distance transportation of mango (from assemble market (Kansat, Shibgonj, Chapai Nowabgonj) to city wholesale market (Karwan Bazar, Dhaka). Still, some traders use bamboo basket (bamboo basket with gunny bag top, right), especially for local transportation. 4.7.4 Marketing channel Different types of marketing channels were identified during the primary survey. However, the major marketing channels from Chapai Nowabgonj and Rajshahi to Dhaka city are shown in Fig 4.32. Some green mangoes are also purchased by processing plant to produce pulp for juice and pickles. There are owner of mango orchards and also Boiral who take land or plant lease and perform the day to day orchard management activities and sells mango to Faria or Bepari as those of the actual owners of the orchards. Along the mango marketing channel (Rajshahi and Chapai Nowabgonj to Dhaka), the highest share of net margins was received by retailers of Dhaka city (37.61%) followed by Bepari (25.13%). By contrast, Aratdar of Dhaka city received the lowest share of 6.45% (Fig 4.32). The shares received by Faria and wholesalers were 18.95% and 11.86% respectively (Fig 4.32).

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Fig 4.32 Typical marketing channel of mango (Rajshahi and Chapai Nowabgonj to Dhaka). 4.7.5 Monthly price variation of mango During primary survey, pattern of changes of mango prices of different varieties (during 2012) were documented (Fig 4.33). The variety Khirsapat and Gopalbhog were found available in the market during May-June, and the price spread was Tk. 5.00-10.00 kg-1. The varieties Langra and Bombai were found available during June-July. The variety Fazli remained available from June-August, and the price ranged from Tk. 15.00-60.00 kg-1. The latest variety Aswina remained available in the market until September had price range of Tk. 20.00-60.00 kg-1. The striking result was that price spreads for the variety Fazli and Aswina were the biggest, especially at the later part of availability (August-September) (Fig 4.33). Therefore, even though Aswina is relatively poor quality mango (less nutrition, less sweetness, less taste, less customer appeal), but its sale price is significantly higher due to its late arrival in the market while most other varieties disappeared. This variety also requires less care. Therefore, the number of Aswina orchard is increasing since the growers receive more profit than other varieties that have more suppliers and market competition.

Farm C. Nowabgonj

Dhaka

C C.

Dhaka

Owner (Give their orchard lease to other trader group or produce by themselves and subsequently sell to Faria or Bepari)

Faria (sells to Bepari) Net margin: 18.95%

Retailer (sells to consumer)

Net margin: 37.61%

Wholesaler (sells to retailers or consumers)

Net margin: 11.86%

Producer (produces on leased property as growers and sells mangoes to Faria or Bepari)

Consumers

Aratdar (commission agent)

Net margin: 6.45%

Bepari (sell to wholesalers via Aratdar)

Net margin: 25.13%

Processing unit

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May Jun Jul Aug Sep May Jun Jul Aug Sep

Farmers' price Retail price

Khirshapat 35 45 45 50

Gopalbhog 35 40 40 45

Himsagar 35 40 50 60

Langra 40 45 75 80

Fazli 55 60 90 70 80 150

Bombai 35 30 60 55

Ashwini 30 60 90 50 100 150

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Fig 4.33 Farmers‟ price (Shibgonj, Chapai Nowabgonj) and retail price (Dhaka) of different varieties of mango in different months of the year 2012. 4.7.6 Trade volume The highest amounts of mangoes were traded by Aratdar (2412.00-5225.00 kg day-1) followed by Bepari (850.00-2190.00 kg day-1) (Table 4.45). The Aratdar of Badamtali Bazar traded almost double the amount as compared to those of Karwan Bazar (2412.00 kg day-1) and Jatrabari (2864 kg day-1). The Faria also traded appreciable amounts of mango daily, and which was the highest in Chapai Nowabgonj (1274.00 kg day-1) as compared to those of Rajshahi (523.00-1036.00 kg day-1). Among the intermediaries, the retailers traded the smallest amounts, which were 57.00-92.00, 47.00-56.00, and 59.00 kg day-1 in Dhaka, Rajshahi and Chapai Nowabgonj, respectively (Table 4.46).

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Table 4.46 Trade volume of various intermediaries in mango marketing channel from main producing areas to Dhaka retail markets Intermediaries Traded volume (kg day-1) Stdev Faria

Chapai Nowabgonj Bholahat (N=25) 1274 98 Rajshahi Bagha (N=25) 1036 132 Charghat (N=25) 523 106

Bepari Chapai Nowabgonj Bholahat (N=25) 2190 264 Rajshahi Bagha (N=25) 1214 175 Puthia (N=25) 850 46

Aratdar Karwan Bazaar, Dhaka (N=50) 2412 74 Jatrabari, Dhaka (N=25) 2864 107 Badamtali, Dhaka (N=25) 5225 246

Wholesalers Karwan Bazaar, Dhaka (N=50) 350 57 Jatrabari, Dhaka (N=25) 227 29 Badamtali, Dhaka (N=25) 570 71

Retailers Chapai Nowabgonj Chapai Nowabgonj Sadar (N=25) 59 17 Rajshahi Bagha (N=25) 56 20 Charghat (N=25) 47 21 Dhaka Karwan Bazar (N=5) 61 08 Jatrabari (N=5) 75 40 Mohakhali Kacha Bazar (N=5) 75 15 Badamtoli (N=5) 92 19 Sham Bazar (N=5) 57 08

4.7.7 Marketing efficiency The performance of mango marketing from the major growing regions to Dhaka city was assessed as per the following estimates. Price spread and growers share The price spread was found to be higher in Chapai Nowbgonj-Dhaka channel (Tk. 10.28-22.28 kg-1) than the Rajshahi-Dhaka channel (Tk. 4.60-16.60 kg-1) (Table 4.33). The growers share varied from 62.87-78.581% in Chapai Nowabgonj-Dhaka channel and 72.33-90.42% in the Rajshahi-Dhaka channel (Table 4.47). This is very significant to state that the marketing

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channels of mango irrespective production location are very efficient as the growers‟ shares are very high. This result also indicated that the mango markets are competitive. Table 4.47 Price spread and growers‟ share in marketing channel of mango starting from Chapai Nowabgonj and Rajshahi to Dhaka city

Acharya‟s marketing efficiency Marketing efficiency was assessed by the Acharya‟s formula of estimating marketing efficiency. Results revealed that performances of marketing channel that reached the retail market of Badamtoli and Shambazar from Rajshahi were better (4.21-4.35) as compared those channels originated from Chapai Nowabgonj (Table 4.48). This was again possibly due to the comparatively shorter distance between Rajshahi and Dhaka than Chapai Nowabgonj-Dhaka. This is important to note that the values from Achary‟s formula are significantly higher (4.08-4.35) than those of the vegetables marketing channels (Potato 0.70-1.30; Brinjal 0.80-0.98 and Okra 0.91-1.35) which further suggested that the fruit marketing channels are more efficient than vegetables marketing channels. This can also be linked with the recent significant change in terms of long distance mango transportation with improved packaging (Plastic crates) which greatly minimized wastage and transport damage. Table 4.48 Acharya‟s marketing efficiency of various channels in mango trade (Chapai Nowabgonj-Dhaka and Rajshahi-Dhaka)

Marketing channel Price received by grower (Tk. Kg-1)

Price paide by consumers (Tk. Kg-1)

Price spread (Tk/kg)

Gowers‟ share (%)

Chapai Nowabgonj-Dhaka Volahat-Karwan Bazar 37.72 54.00 16.28 69.85 Volahat-Jatrabari Bazar 37.72 51.00 13.28 73.96 Volahat-Badamtali 37.72 48.00 10.28 78.58 Volahat-Shambazar 37.72 60.00 22.28 62.87 Mean 37.72 53.25 15.53 71.32 Rajshahi-Dhaka Bagha-Karwan Bazar 43.40 54.00 10.60 80.37 Bagha-Jatrabari Bazar 43.40 51.00 7.60 85.10 Bagha-Badamtali 43.40 48.00 4.60 90.42 Bagha-Shambazar 43.40 60.00 16.60 72.33 Mean 43.40 53.25 9.85 82.05

Marketing channels Marketing efficiency

Stdev

Chapai Nowabgonj-Dhaka Bholahat-Badamtoli 4.08 1.31 Bholahat-Shambazar 4.14 1.04 Rajshahi-Dhaka Bagha-Badamtoli 4.35 1.28 Bagha-Shambazar 4.21 1.31

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Return on operating capital Returns on operating capital of intermediaries of mango marketing channels originating from Chapai Nowabgonj and Rajshahi to Dhaka were calculated and summarized in Table 4.48. In a similar fashion, the ROC of the Aratdar (commission agent) was the highest (68.54%) followed by the wholesalers (8.77%) and Bepari (8.51%) (Table 4.49). Table 4.49 Return on operating capital of various intermediaries in marketing channels of mango (Chapai Nowabgonj-Dhaka and Rajshahi-Dhaka)

4.8 Banana Banana is a commercially important fruit of Bangladesh and elsewhere in the world. The leading banana producing countries of the world are India, China, the Philippines, Ecuador, Brazil and Indonesia (Annex 27). Bangladesh is also an important banana growing country, and ranked the 16th position in terms of global production (Annex 27). 4.8.1 Trend in banana acreage, production and price In Bangladesh, banana is available in the market round the year. The important banana varieties in Bangladesh are Amritsagar, Sabri and Champa. Presently, 818 thousand metric tons of bananas are produced from 54 thousand hectares of land (BBS 2011). Trends in area, production and prices of banana have been shown in Fig 4.34. Production of banana increased until 2006-07 and then started to decline (Fig 4.34), which can be due to the fact that during 2007-08 (global food price hike), lands under various crops including banana were possibly brought under rice (Boro) cultivation, and also due to the fact that new fruit variety, especially BAU Kul and Apple Kul area increased substantially during this period. Price behaviour of banana from 2000-01 to 2009-10 has been furnished in Fig 4.35. Results demonstrated that banana retail price in real term gradually decreased from 2000-01 to 2009-10 and the decline was very sharp in 2003-04. However, harvest price in real term remained static until 2007-08 and then suddenly had gone up and reached the maximum among all the years considered (Fig 4.35). This price hike can be linked with the gradual decrease in banana area and thereby production which actually started from 2007-08 and continued till now (Figs 4.34 and 4.35).

Marketing channels Return on operating capital (%) Faria Bepari Aratdar Wholesaler Retailer

Chapai Nowabgonj-Dhaka Bholahat-Karwan Bazar 5.23 6.17 80.83 26.21 7.70 Bholahat-Jatrabari 5.23 6.17 137.57 3.57 9.22 Bholahat-Badamtali 6.19 10.84 27.88 2.64 8.08 Bholahat-Shambazar 6.19 10.84 27.88 2.64 10.00 Mean 5.71 8.51 68.54 8.77 8.75 Rajshahi-Dhaka Bagha-Karwan Bazar 5.51 6.17 80.83 26.21 7.70 Bagha-Jatrabari 5.51 6.17 137.57 3.57 9.22 Bagha-Badamtali 5.51 10.84 27.88 2.64 8.08 Bagha-Shambazar 5.51 10.84 27.88 2.64 10.00 Mean 5.51 8.51 68.54 8.77 8.75

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Fig 4.34 Trends in area, production and yield of banana during the period from 2000-01 to 2009-2010 (BBS).

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Fig 4.35 Trends in banana prices (nominal and real) during the period from 2000-01 to 2009-10 (BBS 2011). 1 Hali = 4 banana fingers.

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4.8.2 Seasonality Seasonality in banana price was also examined in the present investigation. The months with minimum and maximum prices have been furnished in Tables 4.50, 4.51. Table 4.50 Months with minimum and maximum prices (wholesale-Tangail) of banana during the period from 2006 to 2011 (DAM) Year Minimum Maximum

Month Price (Tk. kg-1) Month Price (Tk. kg-1) 2006 January 9.00 October 11.00 2007 December 9.00 June 11.00 2008 January 10.00 December 14.00 2009 January 11.00 September 18.00 2010 December 10.00 February 12.00 2011 January 9.00 September 15.00

Table 4.51 Months with minimum and maximum prices (retail-national) of banana during the period from 2005 to 2011 (DAM) Year Minimum Maximum

Month Price (Tk. Hali-1) Month Price (Tk. Hali-1) 2005 March 7.97 October 8.89 2006 March 8.50 September 9.67 2007 March 9.00 December 11.00 2008 March 10.00 June 14.00 2009 March 11.00 September 18.00 2010 March 11.00 January 13.00 2011 February 9.00 September 15.00

NB. 1 Hali = 4 banana fingers. There existed seasonality with a clear peak in November and a trough in July (Fig 4.36). Wholesale price of banana gradually decreased from January to July, and it was the lowest in July. After July, banana price again started to go up, and the trend continued until November (Fig 4.36). Maximum seasonal price index (163) was found in November, and the index sharply declined in December (Fig 4.36). The trough observed during July-August could be due to the arrival of various seasonal fruits, especially mango, jackfruit, pineapples, litchi and many other indigenous minor fruits in the market. In addition, banana production is higher during summer months because of congenial agro-climate as compared to the winter months when banana plants go to dormancy and yield and production are much lower and quality of banana is also poor. The price peak during November-January could be due to the corresponding lesser availability of various seasonal fruits as mentioned above and also due to less production and supply of banana in the markets. This finding indicates that there is great need to introduce or develop new varieties of banana or other fruit crops which can be successfully grown in the winter season in Bangladesh. Extensive research is needed in this sector since the consumption of fruit in Bangladesh is still far from the minimum requirement.

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Fig 4.36 Seasonality in banana prices (wholesale-Tangail) as a ratio to moving average (Sources: DAM). 4.8.3 Status of preharvest conditions and harvesting of banana Kushtia is one of the leading banana producing districts of Bangladesh. The important cultivated varieties of banana are Sabri, Champa and Amritsagar. However, around 80% of total production is from the variety Sabri, which is the most commercial and popular variety in the region. By contrast, the predominant banana variety grown in Tangail district is Mehersagar, which is also known as Nepali Sagar or Rangin Sagar. The main planting time of banana in Kushtia is March-April. The average planting density is 250 plants per 33 decimal (1 bigha) of land. They practice ratooning for 2-5 years (2 years for Sabri). They mainly apply fertilizers to grow banana crop. In contrast to other banana producing regions, the growers of Kushtia do not use any insecticides and fungicides to control pests and diseases. The average producers‟ cost (production cost + marketing costs) in Kushtia region are Tk. 25000.00 bigha-1, and net margin from a bigha (33 decimal) of banana land is approximately Tk. 50000.00 bigha-1. 4.8.4 Banana marketing channels Marketing channels and market actors in banana marketing (from two major growing districts, viz., Tangail and Kushtia) were investigated. Banana marketing channels with different market actors have been furnished in Fig 4.37. Results suggested that various actors are involved in banana marketing. The principal actors include growers, Faria, Bepari, Aratdar, wholesalers, retailers and consumers. Faria are of different kinds. For example, some Faria do business without any running capital, whereas others do business with their own capital. The principal buyers of banana in the region are the Faria and Bepari. The growers generally bring their bananas in the assemble market (Madhupur Bazar, Kushtia Sadar), and sell either to the Faria or to the Bepari. There are two types of Bepari, local (50%) and the rest 50% from different destination markets like Dhaka and other cities/towns/divisions. The growers and the Bepari do not pay any toll/commission to the market committee. The margin of the Bepari is approximately Tk. 3.00 bunch-1.

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Fig 4.37 Principal marketing channel of banana (Madhupur-Dhaka). From the primary survey, the following marketing channels were also identified: For local consumption: Channel I: Farmers Faria1 Wholesalers Retailers Consumers Channel II: Farmers Faria2 Wholesalers Retailers Consumers Channel III: Farmers Wholesalers Retailers Consumers For consumption in Dhaka city: Channel I: Farmer Bepari Aratdar Wholesalers Retailers Consumers Channel II: Farmer Faria1 Bepari Aratdar Wholesalers Retailers Consumers Channel III: Farmer Faria 2 Bepari Aratdar Wholesalers Retailers Consumers 4.8.5 Production and marketing costs of banana growers The important market functionaries in banana supply chain are growers and intermediaries (Faria, Bepari, commission agent, wholesalers and retailers). The marketing costs and margins of the market functionaries are briefly described in the following. Growers Growers mainly incur production cost, and also there are marketing costs. Production and marketing costs of banana growers of Madhupur of Tangail district were calculated. The production cost of banana for one ha of land is Tk. 125000.00. Marketing costs of banana growers have been shown in Table 4.52.

Farmers

Faria 2

Faria 1 Bepari

Aratdar

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Wholesalers

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Table 4.52 Marketing costs of banana producers of Madhupur Upazilla, Tangail. Items of cost Cost (Tk. ha-1)

Cost (Tk. ha-1) % of total cost Transportation 1870 64.04 Market toll 750 25.68 Miscellaneous (Tips, donation, personal expenses, etc.) 300 10.27 Total 2920 100

Gross and net margins of the growers were determined. Results revealed that the gross margin of banana grower was Tk. 168000.00 ha-1 (Yield ha-1 × Prevailing market price = 2100 Bunch × Tk. 80.00 bunch-1 = Tk. 168000.00). Net margin was Tk. 40080.00 [Gross margin- Gross cost (Production cost + Marketing cost) = 168000.00 - (125000.00 + 2920.00) = Tk. 40080.00]. The net margin greatly varies with sale price of the banana bunch.

4.8.6 Marketing costs of banana intermediaries The details of marketing cost of intermediaries in banana trade have been given in Appendix 32. In banana marketing, especially from Madhupur of Tangail district, two types of Faria were identified. The principal type (Faria-1) buys banana from the growers field or from the assemble market by paying cash money. They have risk of loss. The marketing cost of Faria-1 was estimated to be Tk. 13.50 bunch-1. There is another type of Faria (Faria-2) in banana marketing, who does not have any cash and incur no cost. They make profit through buying and selling bananas in the same market. They purchase banana on credit but sell in cash. Bepari is one of the most important intermediaries, who are mainly from different bigger cities or may be from local areas. Bepari are the large scale traders, who purchase bananas mainly from the rural assemble markets and send to different cities or districts. The marketing cost for Bepari was estimated to be Tk. 23.75 bunch-1. Wholesalers are also important market functionary, who actually purchases bananas from the Bepari via Aratdar (commission agent) by paying a certain percent of commission. The wholesalers further sell bananas to different retail markets to the retail shops. The details of marketing costs of intermediaries have been summarized in Annex 31. The wholesalers mainly sell bananas to different retailers. The retailers are the final stage market functionaries. The retailers mainly purchase fruits from the wholesalers or growers and sell to the consumers. 4.8.7 Marketing margins of banana intermediaries Marketing margins of the intermediaries involved in banana trade have been furnished in Table 4.53 and Fig 4.38. The net margin was found to be the highest for Bepari, whereas the lowest margin was received by the Faria. Table 4.53 Marketing costs and margins of banana intermediaries

Intermediaries Purchase price (Tk. bunch-1)

Sale price (Tk. bunch-1)

Gross margin (Tk. bunch-1)

Marketing cost (Tk. bunch-1)

Net margin (Tk. bunch-1)

Faria 130 150 20 13.50 7.50 Bepari 150 200 50 23.75 26.25 Wholesalers 200 240 40 26.75 10.25 Retailers 240 330 90 59.08 30.92

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14

24

5

27

59

8

26

5

10

31

0 20 40 60 80 100

Faria (Madhupur)

Bepari (Madhupur)

Commission agent (Dhaka)

Wholesaler (Karwan B)

Retrailer (Karwan B)

Marketing cost Net marketing margin

Fig 4.38 Marketing costs and margins of banana intermediaries involved in the marketing channel from Madhupur (production area) to Dhaka city. 4.8.8 Percentage of net margins received by different banana intermediaries Cost and margin analysis suggested that the highest percentage of net margins was received by retailers of Dhaka city (38.69%) followed by Bepari (32.85%) (Fig 4.39). The lowest share of net margin among the intermediaries was received by Aratdar (6.26%) followed by the Faria (9.38%) (Fig 4.39). This result was found at par with those findings obtained in the case of other vegetables and fruits, where the retailers received the highest share of net margins among the intermediaries.

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Fig 4.39 Marketing channel of banana (Madhupur to Dhaka). 4.8.9 Trade volume The quantity of bananas traded by Faria, Bepari, Aratdar, wholesalers and retailers were 72-88, 283, 706-853, 328-333 bunch day-1, respectively (Table 4.54). On the other hand, for retailers, the traded volume ranged from 56-187 Hali (4 fruits) day-1. The highest quantity of banana was traded by Aratdar. On the other hand, the retailers traded the lowest amount per day.

Farm Madhupur

Dhaka

Dhaka

Farmer (sells to Faria or Bepari); net profit: Tk. 19.09 bunch-1

Faria (sells to Bepari); Net margin: 9.38%

Consumers

Retailer (sells to consumer); Net margin: 38.69%

Wholesaler (sells to retailers or consumers); Net margin: 12.38%

Aratdar (commission agent); Net margin: 6.26%

Bepari (sells to wholesalers via Aratdar); Net margin: 32.85%

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Table 4.54 Trade volume of various intermediaries in banana marketing channels from main producing areas to Dhaka retail markets Intermediaries Traded volume (bunch/Hali day-1) Stdev Faria

Tangail (bunch day-1) Madhupur (N=25) 72.00 25.00 Kushtia Kushtia (N=50) 88.00 20.00

Bepari (bunch day-1) Kushtia Kushtia (N=25) 283.00 32.00

Aratdar (bunch day-1) Karwan Bazaar (N=25) 853.00 76.00 Jatrabari (N=25) 706.00 51.00

Wholesalers (bunch day-1) Karwan Bazaar (N=25) 333.00 26.00 Jatrabari (N=25) 328.00 42.00

Retailers (Hali day-1) Dhaka Karwan Bazar 187.00 22.00 Mohakhali Kacha Bazar 152.00 17.00 Gulshan D.C.C Market 124.00 09.00 Jatrabari 70.00 10.00 Badamtali 122.00 13.00 Sham Bazar 56.00 11.00 Street Shops 75.00 15.00

NB: 1 Hali = 4 banana fingers 4.8.10 Marketing efficiency The performance of banana marketing from the major growing regions to Dhaka city was assessed as per the following estimates. Price spread Price spread and growers‟ share were calculated and results are presented in Table 4.55. Price spread ranged from Tk. 55.00-90.00 bunch-1 (Table 4.55). Growers share ranged from 21.36-22.41% (Table 4.56). Growers‟ share in Kushtia-Dhaka channel was found to be marginally higher than Madhupur-Dhaka channel, which may be because of the fact that in Kushtia only the Sabri variety is cultivated which is of high demand and price having longer shelf life than those of Mehersagar variety in Madhupur which is of low price and short shelf life.

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Table 4.55 Price spread in marketing channel of banana starting from Tangail and Kushtia to Dhaka city

Table 4.56 Growers‟ share in banana marketing.

Acharya‟s marketing efficiency The values for marketing efficiency as calculated by the formula of Acharya varied from 2.66 (Madhupur-Gulshan D.C.C. Market) to 3.33 (Kushtia-Street Vendor, Dhaka) (Table 4.57). Generally, the higher the values the higher the performance of the concerned marketing channel.

Marketing channels Price spread (Tk. Bunch-1) Stdev Tangail-Dhaka Madhupur-Karwan Bazar 80.00 7.18 Madhupur-Jatrabari 75.00 6.21 Madhupur-Mohakhali Kacha Bazar 85.00 8.32 Madhupur-Gulshan D.C.C. Market 90.00 8.88 Madhupur-Street Vendor 60.00 5.05 Kushtia-Dhaka Kushtia-Karwan Bazar 75.00 6.13 Kushtia-Jatrabari 70.00 5.41 Kushtia-Mohakhali Kacha Bazar 80.00 7.29 Kushtia-Gulshan D.C.C. Market 85.00 8.62 Kushtia-Street Vendor 55.00 4.98

Marketing channels Growers share (%) Stdev Tangail-Dhaka Madhupur-Karwan Bazar 21.59 2.38 Madhupur-Jatrabari 21.67 2.41 Madhupur-Mohakhali Kacha Bazar 21.51 2.15 Madhupur-Gulshan D.C.C. Market 21.43 2.04 Madhupur-Street Vendor 21.91 2.05 Kushtia-Dhaka Kushtia-Karwan Bazar 22.07 2.13 Kushtia-Jatrabari 22.41 2.41 Kushtia-Mohakhali Kacha Bazar 21.76 2.09 Kushtia-Gulshan D.C.C. Market 21.36 1.98 Kushtia-Street Vendor 22.38 2.71

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Table 4.57 Acharya‟s marketing efficiency of various channels in banana trade (Tangail-Dhaka and Kushtia-Dhaka)

Return on operating capital Return on operating capital (ROC) was found to be the highest for Aratdar (285.59-312.50%) followed by Bepari (4.51-4.77%) (Table 4.58). This result indicated that ROC of Aratdar is consistently the highest for all the fruits and vegetables studied. Furthermore, ROC of Aratdar of fruit trade is much higher than in vegetable trade, which could be attributed to the higher per unit prices of fruits, especially mango than vegetables and also due to the higher perishablity of fruits than vegetables, especially brinjal and okra. Table 4.58 Return on running capital of various intermediaries in banana trade (Tangail-Dhaka and Kushtia-Dhaka)

Marketing channels Marketing efficiency Stdev Tangail-Dhaka Madhupur-Karwan Bazar 2.93 0.75 Madhupur-Jatrabari 3.13 0.13 Madhupur-Mohakhali Kacha Bazar 2.85 0.75 Madhupur-Gulshan D.C.C. Market 2.66 0.95 Madhupur-Street Vendor 3.26 1.05 Kushtia-Dhaka Kushtia-Karwan Bazar 3.17 1.03 Kushtia-Jatrabari 3.08 1.05 Kushtia-Mohakhali Kacha Bazar 2.91 0.91 Kushtia-Gulshan D.C.C. Market 2.86 0.81 Kushtia-Street Vendor 3.33 0.72

Marketing channels Return on investment (%) Faria Bepari Aratdar Wholesaler Retailer

Tangail-Dhaka Madhupur-Karwan Bazar 2.72 4.77 278.87 3.37 2.90 Madhupur-Jatrabari 2.72 4.77 312.50 2.50 3.05 Madhupur-Mohakhali Kacha Bazar 2.72 4.77 278.87 3.37 3.16 Madhupur-Gulshan D.C.C. Market 2.72 4.77 278.87 3.37 5.58 Madhupur-Street Vendor 2.72 4.77 278.87 3.37 1.84 Mean 2.72 4.77 285.59 3.19 3.30 Kushtia-Dhaka Kushtia-Karwan Bazar 1.22 4.51 312.50 2.50 2.90 Kushtia-Jatrabari 1.22 4.51 312.50 2.50 3.05 Kushtia-Mohakhali Kacha Bazar 1.22 4.51 312.50 2.50 3.16 Kushtia-Gulshan D.C.C. Market 1.22 4.51 312.50 2.50 5.58 Kushtia-Street Vendor 1.22 4.51 312.50 2.50 1.84 Mean 1.22 4.51 312.50 2.50 3.30

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4.8.11 Constraints of banana growers and intermediaries

The constraints of growers and intermediaries were investigated. Some important constraints of the growers and intermediaries are highlighted in the following. (a) Panama disease has become a serious threat in Kushtia region, and symptom is

characterized by splitting of pseudostem before flowering and fruiting. The growers mentioned that in 1st year of plantation, approximately 20% of banana plants are affected, and in the following year, infection severity reached 50%. This has been found to be the most serious problem in the region. So, immediate measures should be taken to resolve the problem to safeguard the interest of the growers.

(b) Another important problem at the growers‟ level is a disease called rhizome rot. The symptom is characterized by black spots on the rhizome, which increases in size with the progress of time. The infected rhizome rots and the plants become weaken, and finally broken down from the infected portion. This is also a serious problem, and should be taken care of immediately.

(c) Another important disease has been identified as a major problem in the area, and the disease is known as bunchy top of banana. This is a micoplasmal disease, and infected plants cannot bear flowers and fruits.

(d) Wastage has been reported to be very high. Approximately 20% of the harvested fruits are wasted due to various reasons. So, steps to be taken to minimize the fruit damage.

(e) The constraints of intermediaries are mainly related to inadequate transportation and high wastage during transportation due to vibration, impacts and delay. Establishment of low temperature storage facilities in the production catchments and wholesale markets would be helpful for both the growers and intermediaries in order to have stable price of the commodity and so as to improve quality.

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Chapter 5

Summary and Conclusion

Efficient marketing is important to reduce postharvest loss and deliver quality and safe produce at reasonable prices to the consumers. The important results obtained from the present research are summerized in the following.

Trend in area and production Trends in area and production of important cereals (rice, wheat and maize) and selected fruits and vegetables (potato, brinjal, okra, mango and banana) were investigated based on secondary data. Areas under Aus and Aman rice trended to decrease over the last decade, whereas area under Boro rice showed an increasing trend. Although Boro production was found to be consistently increasing but Aman production did not follow any specific trend over the last several years. A steady increase in Aman production was observed during the period from 2000-01 to 2003-04. The dramatic fall in production in 2004-05 and 2007-08 was linked to the decrease in area and yield in the respective years. In relation to production, Boro contributed the highest percentage (57) followed by Aman (37) and Aus (6). Wheat is the fourth major cereal crop in Bangladesh. It was observed that wheat production sharply declined from 2000-01 to 2005-06 and then slightly increased until 2009-10. The sharp decline could be due to the adverse climate and increase in area of other crops. At this time, the growers showed more interest to grow Boro rice, potato and maize rather than wheat. Maize has become an important cash crop in Bangladesh in the recent years, especially for the production of poultry feed. Clear upward trend in area, production and yield was noticed during 2000-01 to 2007-08. There was a dramatic fall of area, production and yield of maize in 2008-09. This decline was mainly due to the corresponding sharp increase in rice area triggered by the spiked rice price in the preceding year (2007-08) in the domestic and global food markets. Bangladesh produces considerable amounts of potato each year and it ranks the 8th position in global context. Generally speaking, potato production steadily increased over the last years except 2005-06 and 2008-09. In 2005-06, at the time of sowing dry weather prevailed across the country and potato cultivation suffered seriously. Despite adverse weather, the farmers of some main potato growing regions in the northern part of the Bangladesh brought large potato areas under maize cultivation, which caused significant decrease in potato area and production. Similarly, in 2008-09, a large part of potato area was brought under rice cultivation due to global food shortage and price hike in 2007-08. Brinjal is found available in markets round the year. Presently, Bangladesh produces substantial amounts brinjal every year. Production of summer brinjal showed slightly increasing trend. By contrast, the production of winter brinjal gradually fell from the year 2000-01 to 2005-06, and then slightly increased in 2006-07. On the other hand, the area under both summer and winter brinjal showed a decreasing trend. The gradual decrease in production of winter brinjal could be attributed to the increase in Boro and maize areas over the last several years. However, the yield of both summer and winter brinjal significantly increased due possibly to the introduction of new high-yielding and hybrid varieties and also due to the use of improved production technology. Okra is an important summer vegetable crop of Bangladesh. Substantial amounts of okra are produced every year. Okra contributes greatly in filling up the gaps when the market suffers from paucity of supply of vegetables. Okra is highly

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nutritious vegetable with appreciable amounts of vitamins, minerals and fibres. The important factor is that both the area and production of okra are gradually expanding, which indicates that the demand of okra is increasing in the country day by day. In terms of production, mango ranks the top in Bangladesh. Mango production trended to increase over the last years. Production of banana increased until 2006-07 and then started to decline, which can be due to the fact that during 2007-08 lands under various crops including banana were brought under Boro cultivation. During this period, area under newly released jujube variety called BAU Kul, also increased substantially. Fluctuation in commodity price Rice is the number one staple food in Bangladesh. It is found available in the markets in three principal types, viz. coarse, medium and fine. Price volatility of rice is one of the major food security issues in the recent years. The fluctuation of rice price (nominal and real) for the last 10 years was investigated. A clear upward trend in retail price (nominal and real) of coarse, medium and fine rice was observed during the period from 2000-01 to 2008-09. However, the rate of increase was very sharp from 2007-08 to 2008-09 mainly because of the dramatic price hike in the global food markets in 2007-2008 since 1973-1975 crisis. Then rice price declined in 2009-10 possibly due to the bumper production of Aman and Boro and also due to normalcy in food price in the global markets. In the case of wheat, major part of the national demand is met through import, and hence, wheat price largely depends on the price behavior in the global food markets. The maximum price of wheat in 2007-08 was again due to the sudden price hike in the world food markets resulted from natural disasters, climate change impacts and biofuel production. In 2008-09, wheat price dropped sharply, and this could be due to the decline in the global price of food commodities. Potato price fluctuation is quite common in Bangladesh, and often the farmers are the worst sufferer of low prices of their produce. The relationship between production and price (nominal and real) of potato was investigated. The retail price of potato increased with time except from 2000-01 to 2001-02 and 2002-03 to 2004-05. It was noticed that when production increased price fell, especially during 2004-05, 2007-08 and 2010-11. The year with lower production caused higher prices, which pushed the growers to produce more in the next year with a resultant drop in price in the following year (cyclical nature of production). Even though the result did not fully at par with the cobweb type model but it partially supported the cobweb model. Another important observation was found that the real price (deflated price) of potato in 2001-02 (Tk. 14.12 kg-1) was almost the same as the price recorded in 2010-11 (Tk. 13.83 kg-1), which indicated that the changes in potato prices in real term were very negligible over the last ten years. In the case of brinjal, the harvest and retail prices (nominal and real) increased from 2000-01 to 2009-10 except in 2002-03. The highest brinjal price (retail) was noticed in 2007-08. The highest price peak of brinjal was observed in 2007-08 which can again be linked with the global food price hike in 2007-08. In the case of okra, the harvest price trended to gradually increase from 2000-01 to 2009-10. In case of banana, the retail (real) price decreased over the last several years. In 2003-04, banana retail price dropped sharply and the trend continued until 2008-09. However, in 2009-10, the banana harvest price (real) suddenly gone up and reached the peak. This recent price hike of banana can be linked with the gradual decrease in banana area and production which actually started from 2007-08 and still being continued.

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Price variation among the cultivated varieties Attempt was made to investigate price variation among the cultivated varieties of the selected fruits and vegetables. Results of the primary survey demonstrated that there exists wide price variation among varieties. For instance, the price of indigenous potato variety Lal Pakhri in 2011-12 was the highest (Tk. 300.00-760.00 mound-1) followed by Cardinal (Tk. 300.00-715.00 mound-1) and Granula (Tk. 200.00-475.00 mound-1). Similarly, price variation due to variety and time was observed in the case of other selected fruits and vegetables. The mango varieties Khirsapat, Gopalbhog and Himsagar were found available in the market during the months from May-June, and the price ranged from Tk. 45.00-50.00, 40.00-45.00, and 50.00-60.00 kg-1, respectively. One of the most commercial mango varieties called Langra remained available in the market during the period from June-July, and its price ranged from Tk. 75.00-80.00 kg-1. The retail prices the late mango varieties, namely Fazli (June-August) and Aswina (July-September) ranged from Tk. 70.00-150.00 and 50.00-150.00 kg-1, respectively. This is worth to mention that in the BBS and DAM reports, the prices of the local and Holand (possibly the modern) varieties are cited in case of potato. In the case of mango, the prices of gootee (seed-propagated variety) had been in use until 2008-2009 but from 2009-2010, BBS included the prices of some important commercial varieties. In the case of brinjal, no such varietal price information are available, although brinjal price could be categorized in terms of production season (winter and summer) or shape (elongated, round and oval). So, price data as given in the BBS and DAM reports should include the harvest, wholesale and retail prices of the commercially important cultivated varieties of important horticultural produce. This would ensure better use of market information by the growers, intermediaries, researchers, extension workers, and ultimately the policy makers. Method of price setting is also an important aspect in marketing of fruits and vegetables. For price setting, traders gather information from their regular trading partner by telephone including cell phones. The common sources of market information are the personal visit to market, other farmers, traders, contractors, extension workers, and market information services. In the present days, cell phone is mainly used as an important source of market information. The predominant method of price fixation was bargaining. There also exists indirect price control mechanism (so-called syndicate), especially at the assemble markets. Seasonality Seasonality of important cereals and selected fruits and vegetables was examined by calculating the seasonal price index following moving average method. In the case of national wholesale price of rice, seasonal price index varied from 96-105 with co-efficient of variation 2.96%. There were two clear peaks, one in the months of January-March and another in September-October. In case of retail price of rice the seasonal price index ranged from 98-102 having a co-efficient of variation of 1.22%. There exists seasonality in wheat prices with a co-efficient of variation of 3.68%. There were two clear peaks (January-February and September-November) and a trough (April-July). The peaks were quite similar to that of rice, and at which period the food price remained higher due to lower supply of food grains in the markets (preharvest Aman period). The trough during the months of April-July was possibly due to the abundant supply of rice in the market (postharvest Aman period). Regarding wholesale price of maize the seasonal price index ranged from 80.22-111.08 and the co-efficient of variation was estimated as 12.33%. There were two peaks (January-March and July-September) and troughs were observed in two distinct seasons, July and October-December. Maize is generally used in Bangladesh for producing poultry feed. The price of

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poultry feed is greatly influenced by the demands by the poultry farmers. The seasonal price index of maize ranged from 82.39-108.40 having a co-efficient of variation of 10.12%. Seasonality existed in potato prices. The wholesale price index of potato varied from 59.55-128.20 with co-efficient of variation 24.57%. There was a clear peak during the months of August-October and a trough (bottom) during March and April. The retail prices of potato also followed more or less the similar pattern, where the seasonal price index ranged from 73.89-116.85 having a co-efficient of variation 14.13%. It is very important to note that the seasonality in potato was found to be much more pronounced as compared to those of rice, wheat and maize. The above results together underline the vital role of potato as a source of macro nutrients because the peak prices of rice, wheat and maize are fairly synchronized (except for the second maize peak which is slightly off-synch) but potato is counter synchronized to these other three cereals. In the case of brinjal, the minimum price months remained in March-April and in December-February, and these periods are considered the peak harvesting seasons of the summer and winter vegetables, respectively. Similarly, the maximum price months remained between September-October, which is known as the „lag period‟ of vegetables supply. So, varietal improvement could be sought so that adequate supply can be ensured during the „lag period‟ in order to stabilize the price of vegetables round the year. The seasonal price index of brinjal varied from 59-174 with a co-efficient of variation of 35.75%. Significant seasonality also existed in okra prices. The seasonal wholesale price index ranged from 46.80-145.67 with a co-efficient of variation of 32.71%. There were two clear peaks, one in March and another in July-August and a clear trough (bottom) in May-June. The highest wholesale price index of okra in August was possibly due to scarcity of other vegetables in the markets, and the lowest in January-February was due to the abundant supply of various winter vegetables. The seasonal retail price index varied from 57.12-127.00 with a co-efficient of variation of 19.90. The seasonality in okra price was much more pronounced than rice and wheat. In the case of banana, there exists clear seasonality with a sharp peak in November and a trough in July. The wholesale price of banana gradually decreased from January to July. The price was the lowest in July, and after which banana price again started to go up, and the trend continued until the month of November. The maximum seasonal price index (163) was found in November, and the index sharply declined in December. The trough or bottom in July-August is due to the arrival of various seasonal fruits, especially mango, jackfruit, pineapples, litchi and many other indigenous minor fruits in the market. In addition, banana production is higher during summer months because of congenial agro-climate as compared to the winter months where the banana plants go for dormancy and yield is much lower and quality of banana is also poor. The peak price during November-January could be due to the corresponding paucity of seasonal fruits and also due to less production and supply of banana in the markets. This finding indicates that there is great need to introduce or develop new varieties of banana or other fruit crops which can be successfully grown in the winter season in Bangladesh. Extensive research is needed in this sector since the consumption of fruit in Bangladesh is still far from the minimum requirement. In a nutshell, seasonal price variation is lower in rice and wheat as compared to those of other perishable fruits and vegetables. The lower price variation in rice and wheat is possibly due to the year round availability, less perishability and high market integration. On the other hand, the higher price variation in brinjal, okra, mango and banana could be due to high perishability and lack of adequate postharvest handling infrastructures including refrigerated

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transport vehicles and short and long-term storage facilities. Among the investigated commodities (potato, brinjal, okra, mango and banana), the seasonal price variation of potato was relatively lower, which may be attributed to the presence of appreciable number of potato cold stores (393) in Bangladesh and the less perishability of potato. So, strong policy is required to establish adequate numbers of specialized low temperature storage facilities for highly perishable fruits and vegetables like mango, banana, brinjal, okra and other commercially important fruits and vegetables. Refrigerated transport vehicle and other techniques of extending shelf life of perishables should be introduced and popularized. Marketing channels and market actors Marketing channels and market actors were investigated for the selected fruits and vegetables. Marketing channels and market actors varied widely with types of produce and production locations. In majority of the cases, the marketing channel involved various intermediaries, namely Faria, Bepari, Aratdar (commission agent), wholesalers and retailers. However, some channel was found to be relatively shorter, for example, the potato channel, Munshigonj (Sadar)-Dhaka, in which no Faria was found to operate business. The traditionally-stored potatoes were marketed until the month of May. After May, the cold-stored potatoes came in the market. Unlike Bogra, the growers of Munshigonj were not found to sell potato as early crop, and they sold only mature potatoes after adequate field curing (formation of outer protective layer). They were found to sell potatoes either from home (traditionally-stored potatoes from February-May) or from the cold stores (from June-January). The marketing channels and market actors for brinjal and okra were similar to that of potato except for the fact that brinjal and okra were not held in cold stores. In most channels there were no local commission agents except the brinjal marketing channel, Chougacha (Jessore)-Dhaka, where the growers were compelled to sell their produce to the Bepari or other buyers through the local commission agent after paying certain percent of commission. The marketing channels for mango and banana were quite similar, which involved Faria, Bepari, commission agent (destination market), wholesalers and retailers. In general, there were assemble markets from where Bepari purchased produce and delivered to the city wholesale markets. An exception was observed in Munshigonj where there was no assemble markets for potato, and the Bepari purchased potatoes from the growers‟ field or from the traditionally-stored potatoes at the growers‟ house. Status of postharvest handling The performance of marketing greatly depends on the status of postharvest handling. The present study attempted to collect information on some basic and important postharvest handling status for the selected fruits and vegetables. Information was collected on washing, sorting, grading, packaging, transportation and storage. Washing is an important postharvest operation to maintain quality of produce. Potatoes grown in Bogra are washed only if harvested and marketed as early crop to fetch apparent higher profit. In contrast, washing practice does not exist in Munshigonj. The other selected fruits and vegetables were not found to be washed after harvest. However, for maintaining quality and safety, washing (chlorinated water) could be introduced, especially for mango and banana to remove dirt and latex (to avoid sap burn) during harvesting, handling and transportation. Sorting is generally practiced for most fruits and vegetables to discard spoiled items. Grading is seldom practiced other than some limited scale size grading. In Bangladesh, sill no grade standard has been developed for horticultural produce. Grading standard is urgently needed for both the domestic and export markets. For example, because of the paucity of grade standard,

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potential produce like potato, mango, banana, etc. could not be exported into the mainstream global markets. The present export is only destined for the ethnic markets in the overseas. Adequate packaging is also necessary for facilitating handling and marketing of produce. Results of primary survey showed that packaging is commonly practiced in potato. Generally, gunny sacks of 80-84 kg capacity are used in packaging table potatoes. However, the cold store owners and traders showed interest to use 40-50 kg capacity bags which could be much easier to handle and would comply with the labour health and safety issues. Old and used gunny sacks are used for transportation of early potatoes and the traditionally-stored potatoes but new gunny bags are used for those potatoes to be held in cold stores. For seed potatoes, some cold store owners use plastic net bags to facilitate more ventilation so that the quality of the seed potatoes is maintained. For brinjal and okra, voluminous packages made up of bamboo baskets and gunny sacks are used for long distance transportation which causes wastage. For mango, plastic crates of 22 kg capacity are used for long distance transportation. At the retail levels, no improved customer packages are available except polyethyne/plastic bags. So, there is a great need to improve fruits and vegetable packaging in Bangladesh. There are scopes to introduce plastic packages, plastic net bags, foam wrap, tray-pack, corrugated fibreboard boxes, etc. to reduce wastage, maintain quality and safety, and improves marketing. Transportation is an important function in agricultural marketing. There are various modes of transportation. The modes of local transportation include head load, bi-cycle, van, Votvoti, tractor, trolley, etc. For long-distance transportation, mini and large open trucks of 7 and 10 tons capacities without any cooling facilities are used. So, any modifications to the present vehicle or introduction of refrigerated vehicles at least in pilot basis would greatly contribute to enhance marketing. For example, Hortex Foundation recently purchased few REEFER Truck with refrigeration facilities. Storage is the most important function in agricultural marketing. The excess supplies at the harvest time are stored so that they could be supplied in the off-season. Proper storage is required to protect produce from quantitative and qualitative deterioration. The perishable agricultural goods need special type of storage to prolong their use. Storage adds the time utility to the products. Low temperature storage facility for perishables is inadequate in Bangladesh. For most fruits and vegetables, no noticeable low temperature storage facilities are available. However, significant progress has been made in the neighbouring countries like India and in some ASEAN countries like Thailand, Indonesia and the Philippines. In Bangladesh so far I know, in Badamtali Wholesale Fruit Market, multi-chambered fruit storage facilities have been established at private level, especially to store the imported fruits. In the Shahjalal International Airport, similar storage facility has been created by BADC for handling the import and export consignments of perishable fruits and vegetables. But much more is needed to reduce enormous postharvest spoilage and maintain quality. Pilot projects can be undertaken by the Government of Bangladesh and then private firms may come forward to improve the storage sector in Bangladesh. In relation to modern storage, reasonable progress has been made for storing potatoes. There are now around 393 cold stores (public and private), with a capacity of approximately 4.0 million metric tons. Potato production in the year 2011-2012 was 82.05 million metric tons. So, there are still demands for more cold firms to spring up in the country. The rest of the potatoes are marketed from growers‟ house or conventional storage facilities in the first 4-5 months (February-May). Traditional storage technologies are also used for potatoes, especially in Munshigonj, and which could be extended to the other parts of the country after making some refinement or optimization. This conventional store can hold potatoes up to 4-5 months without the use of any refrigeration.

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Another important aspect of postharvest handling is the use of recommended ripening technology for climacteric fruits (mango and banana). In Bangladesh still no such technology has been found available during the survey and various non-recommended ethephon-based plant growth regulators are being used. So, there is a great need to introduce ethylene-induced ripening technology at least at pilot basis to encourage the private sector to come forward. Postharvest technologies like MA (modified atmosphere) storage, heat treatments, recommended chemical dips, ethylene scavengers, etc. are required to prolong the shelf life of fruits and vegetables. This is very important to note that the enhancement of market performance is linked with the improvement of postharvest management. Value addition in agro-produce Fruits and vegetables are highly perishable, and considerable proportion of fruits and vegetables never reach the consumers mainly because of postharvest loss. Very often the growers suffer from low price of their produce due mainly to the lack of adequate storage and processing facilities. For instance, the use of potatoes can be diversified (flours, chips, fries, flakes, etc.), which could help earn foreign currency and also safeguard the interests of growers. Similarly, value addition activities are also possible for mango (canned mango, pickles, jams, jellies, marmalade, leather, bar, juice, etc.) and banana (canned bananas, dry chips, etc.). In this regard, the success of PRAN-RFL group is exemplary, and this company is currently exporting their products to around 100 countries in the world. So, processing plants (small, medium or large) should be patronized to enhance the fruit and vegetable industries in Bangladesh. At the same time, establishment of strong and effective linkage among growers, traders and processing companies would greatly help reduce postharvest wastage and thereby improve marketing performance. Modernization of marketing The present study revealed that modern facilities are largely absent in most of the assemble and wholesale markets visited during the survey. The markets lack basic infrastructures and facilities. There is a great potential to introduce some of the modern facilities, for example, forklift and conveyer belt for large-scale loading and unloading purposes. This would greatly save labour costs and thereby enhance marketing performance. However, this step would result in significant curtail of jobs but the policy of trading-off could be considered here and ample facilities could be created both at the public and private levels so that extra labour forces could be accommodated in other income generating activities. Marketing costs and margins of intermediaries The costs and margins of market intermediaries for the selected crops were studied. In the case of potato, marketing costs were the highest for the retailers of Dhaka city (Tk. 1.2-1.5 kg-1) and the corresponding net margins were also the highest for the retailers (Tk. 0.8-1.2 kg-

1). The net marketing margin of Aratdar (commission agent) was the lowest. Along the marketing channel (Shibgonj, Bogra-Karwan Bazar, Dhaka), the highest value was added by the retailers of Karwan Bazar, Dhaka (31.10%) followed by Bepari (29.50%). The net margin of the brinjal retailers of Mahakhali Kacha Bazar, Dhaka was the highest (Tk. 3.70 kg-1) followed by those of Karwan Bazar, Dhaka (Tk. 3.60 kg-1). The highest value was added by the retailers of Dhaka city (49.64%) followed by Bepari (16.77%), whereas the lowest net margin was received by Faria (10.07%). In the case of okra, the net marketing margin of the retailers of Dhaka city was the highest (Tk. 2.30-3.60 kg-1). The percentage of value addition

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was also the highest (39.80%) at the hands of the retailers, while the lowest value was added by the Aratdar (7.21%). Similarly, along the mango marketing channel (Rajshahi and Chapai Nowabgonj to Dhaka), the highest value was added by the retailers of Dhaka city (37.61%) followed by the Bepari (25.13%). By contrast, the Aratdar of Dhaka city added the lowest value (6.45%). In the case of banana, the highest net margin (Tk. 31.00 bunch-1) was received by the retailers of Dhaka city followed by the Bepari (Tk. 26.00 bunch-1). As usual the highest value was added by the retailers of Dhaka city (38.69%) followed by Bepari (32.85%). Results also demonstrated that the net marketing margins of the intermediaries involved in brinjal, okra and banana trade were much higher than those involved in potato trade. This is possibly due to the less perishablity and cool storage facility for potato, and the corresponding high perishablity and lack of storage facilities for brinjal and okra. From the results, it appeared that irrespective of produce, the net margins of the retailers of Dhaka city were the highest followed by Bepari, whereas the net margins of the Aratdar and Faria were the lowest. The retailers actually charge more price than that they should. Higher net margins for retailers and lower for Aratdar apparently indicate that market may be less efficient at retail level and more efficient at Arat level. It may also indicate that competition is less at retail level and high at Arat level. It is also important to note that for perishables like fruits and vegetables retailers assume more risk, and their per unit marketing as well as operating costs are higher compared with Aratdar. Again, as Aratdar handled large quantity of produce, and their total profit must be much higher than retailers. Results also exhibited that the Aratdar and Bepari traded the largest quantity of produce, whereas the traded quantity was smaller at the Faria level, and it was the smallest at the retail level. Marketing performance To study marketing performance, price spread, growers‟ share, marketing efficiency using Acharya‟s formula and return on operating capital were investigated. In the case of potato, price spread was higher in Bogra-Dhaka channel (Tk. 8.11 kg-1) than Munshigonj-Dhaka (Tk. 4.89 kg-1). Growers‟ share of the Mushigonj-Dhaka channel was higher (70.55%) than Bogra-Dhaka channel (49.33%). As per the formula of Acharya, the marketing channel, Munshigonj (Sadar)-Karwan Bazar (Dhaka) was more efficient (1.094) than the channel Shibgonj (Bogra)-Karwan Bazar (Dhaka) (0.861). This result could be attributed to the absence of Faria in the Munshigonj-Dhaka channel, and the less marketing cost due to the shorter distance from Munshigonj-Dhaka. By contrast, the marketing channel, Bogra-Dhaka was longer, and it involved Faria along with other intermediaries. In the case of brinjal, price spread was higher in Jessore-Dhaka channel (Tk. 25.95 kg-1) than the Norshingdi-Dhaka channel (Tk.12.40 kg-1). The growers‟ share of the marketing channel Norshingdi-Dhaka was higher (63.87%) than that of the Jessore-Dhaka channel (23.78%), which indicated that the former channel was more efficient, and which might be due to shorter distance between Norshingdi-Dhaka than Jessore-Dhaka. In the case of okra, price spread was found to be higher in Comilla-Dhaka channel (Tk. 19.55 kg-1) than the Chittagong-Dhaka channel (Tk. 18.15 kg-1). In contrast, growers‟ share was of Comilla-Dhaka channel was marginally lower (39.38%) than Chittagong-Dhaka channel (43.72%). In the case of mango, price spread was found to be higher in Chapai Nowbgonj-Dhaka channel (Tk. 10.28-22.28 kg-1) than Rajshahi-Dhaka channel (Tk. 4.60-16.60 kg-1). The growers share varied from 62.87-78.58% in Chapai Nowabgonj-Dhaka channel and 72.83-90.42% in the Rajshahi-Dhaka channel. This result demonstrated that marketing channels of mango originated from both Chapai Nowabgonj and Rajshahi are efficient and the mango markets are competitive. In relation to Acharya‟s values, the performances of marketing

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channels that originated from Rajshahi were better (4.21-4.35) as compared those channels originated from Chapai Nowabgonj (4.01-4.14). This was again possibly due to the comparatively shorter distance between Rajshahi and Dhaka than Chapai Nowabgonj-Dhaka. In the case of banana, price spread ranged from Tk. 55.00-90.00 bunch-1. The values for marketing efficiency as calculated by the formula of Acharya varied from 2.66 (Madhupur-Gulshan D.C.C. Market) to 3.33 (Kushtia-Street Vendor, Dhaka). This is also important to note that the values from Achary‟s formula are significantly higher in fruits (Mango 4.08-4.35 and Banana 2.66-3.33) than those of the vegetables marketing channels (Potato 0.70-1.30; Brinjal 0.80-0.98 and Okra 0.91-1.35) which further suggested that fruit marketing channels are more efficient than vegetables marketing channels. Generally, the higher the values the higher the performance of the concerned marketing channels. In the case of mango, this phenomenon can also be linked with the recent significant change in terms of long distance mango transportation with improved packaging (Plastic crates) which greatly minimized wastage and transport damage. Results also indicated that return on operating capital (ROC) of Aratdar was found consistently the highest for all the fruits and vegetables studied. Furthermore, the ROC of Aratdar of fruits was much higher than those involved in vegetable trade, and which findings could be attributed to the higher per unit price of fruits than vegetables and also due to the higher perishablity of the examined fruits than vegetables. There are further scopes to elevate the rate of the share of the growers. Contract farming would greatly help in this regard. Currently, many importers, Hortex Foundation and City Super Shops are procuring some of their required fruits and vegetables from contract growers. Overall, results demonstrated that marketing efficiency was mainly influenced by distance covered and condition of transportation. However, even though some marketing channels were found to be more efficient than the other channels based on the estimates but still basic market infrastructures are absent, and which need to be adequately addressed in order to improve the performance of fruits and vegetables marketing in Bangladesh. Marketing constraints Scores of constraints were identified in the existing marketing channels of perishables. Firstly, almost all the channels were long with many middlemen. Only few channels were found to be slightly shorter, for example, the Munshigonj Sadar-Dhaka channel. The other important constraints were mainly related to inadequate market infrastructures, paucity of uninterrupted electric supply in potato cold stores, unauthorized tolls and commission throughout the channels, restricted entry of vehicles into Dhaka city, existence of syndicate/price control, hegemony of middlemen in the marketing channel, absence of modern marketing tools and equipments, lack of market information, lack of knowledge and skills, and lack of specialized training. In running potato cold stores there were scores of problems which include: lack of power supply, especially during the peak loading period (April-May) and lack of proper management in relation to turn over („Palat‟), ventilation, positioning (horizontal in place of upright), intake of fresh air, etc.

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Chapter 6

Policy Implications and Recommendations On the basis of the foregoing discussion, the following recommendations are suggested for the policy makers. The recommendations are presented following the sequential order in perishables marketing.

SAFEGURDING GROWERS‟ INTEREST

Encourage contract farming to increase growers‟ income: The results of the present study demonstrated that growers‟ shares particularly for vegetables were very less. Hence, to elevate growers‟ share in horticultural supply chain, contract farming should be encouraged and facilitated as a means of reducing the costs of intermediation and integrating growers into the fresh produce supply chain. Contract farming is already in operation in Bangladesh but in limited scale. For example the importers through BFVAPEA (Bangladesh Fruits, Vegetables and Allied Products Exporters Association), Hortex Foundation and some super shops in the town/city procure some of their required fruits and vegetables from the contract growers. So, Direct farm-to-market programmes should be strengthened.

Conduct farmers training: Even though DAE is mandated to disseminate technology and provide training to growers on various contemporary problems but still there exists scores of constraints. For example, rhizome rot and panama disease (pseudostem splitting) of banana in Kushtia are the most serious problems (20% infection in 1st year and 50% infection in the following year). The problems should be researched and appropriate solution should be provided so that production is not affected and growers‟ interests are safeguarded.

Avoid immediate postharvest sales: It is a general trend in the agricultural commodity that the farmer is interested or forced to dispose of his products just after harvesting. But if the producers wait for some time he can get higher prices than the cost of storage. Farmers should not sell immediately and they should wait for some period. This option could be for farmers having greater real-time market information and greater access to cold storage and other traditional storage, either on-farm or off-farm, in order that farmers can optimize the timing of the sale of their produce.

Research and extension on traditional storage: Research and extension could be done to optimize and improve traditional storage methods. This is given that cold storage expansion is going to take time, might not be always cost effective and might not be always in every farmer‟s interest.

Market policy: To reduce loss and maintain quality and safety of fruits and vegetables both for domestic and export markets, a marketing policy would be helpful to comply with the domestic and global marketing requirements and standards. For instance, in Sri Lanka, the National Committee on Postharvest Technology and Value Addition Research in Agriculture (NCPHT) prepared a research priority list, where the top most priority is the quality management and prevention of losses in marketing channels of fruits and vegetables and value addition activities for income generation (NCPHT 2011).

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MONITORING/REDUCTION OF INTERMEDIARIES FROM SUPPLY CHAIN

Unusually high marketing margins of retailers: Results revealed that the net margins of the retailers are consistently and unusually higher (31-50% of the net margins) than other intermediaries regardless of the crop. So, regular monitoring and more competition at the retail level, especially in Dhaka city are required, and which would certainly help significantly reduce commodity prices at the retail levels.

Low price received by farmers due to price control by organized traders: Control of commodity price is a much-talked issue in marketing. The public perception is that there exists syndicate in market which actually controls prices. Our study revealed that even though there is no official or visible syndicate but there exists some sort of indirect price control mechanism in horticultural supply chain. This sometime happens in the rural assemble markets where Bepari collectively shows artificial reluctance to buy products for a while to create panic among farmers, which ultimately force the growers to sell their produce at lower prices. Proper steps should be taken to eliminate the existence of the so called syndicate. There should have more oligopolistic markets with high completion. Growers‟ organizations and cooperatives should be encouraged. As short term measure, regular monitoring by the relevant government departments may help eliminate syndicate from the markets which will safeguard the growers‟ interest and also help satisfy the consumers who would need to pay less for the same produce.

MAINTENANCE OF QUALITY AND SAFETY IN SUPPLY CHAIN

Quality and grading standard: Bangladesh lacks standardized quality assurance systems for horticultural produce. Therefore, proper arrangement should be made to develop national quality management system to train, and ultimately to accredit, growers and traders in the major international certification such as HACCP, ISO, GAP and GMP. BAU, Hortex Foundation and BSTI can jointly perform this assignment. Assistance can also be sought from the Government of India or Thailand who already have their own standard quality management systems known as IndoGAP and ThaiGAP, respectively.

Safe use of chemicals: Delivery of high quality and safe produce to customers is the ultimate goal of efficient marketing. There is public outcry on food safety due to perceived health risk. Therefore, use of recommended pesticides, plant growth regulators and ripening agents must be ensured. Research, training, motivation and strong media campaign are urgent to improve the situation.

CAPACITY STRENGTHENING IN POSTHARVEST TECHNOLOGY

Dissemination of appropriate technology: Government may assist disseminate technical information, e.g. cauliflower, broccoli, apples, grapes, etc. can be stored with potato due to compatibility while mango, papaya, banana can‟t. This is probably more important than providing improved access to capital. In addition, low-cost, effective technologies like earthen cooling pot, zero energy cool chamber, home fruit ripening, etc. need quick dissemination.

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Collection, refinement and optimization of traditional storage technology: Bangladesh is facing tremendous crisis in power sector, and hence different traditional storage methods of perishable fruits and vegetables s would be researched, refined, optimized and extended.

Strengthening research on marketing: Continuous research is crucial to mitigate multifarious problems prevailing in perishables‟ supply chain in Bangladesh. Capacity strengthening in terms research on postharvest management and marketing of the important research organizations including universities (BAU, SAU and BSMRAU) and research organizations (BARI and BINA) is needed.

Training and technology transfer: Development of appropriate training manual by experts and conduction of training by appropriate trainers on different aspects of postharvest management including harvesting, grading, sorting, packaging, transportation, storage (conventional and modern), processing (small and large-scale) and nutrition is required. All the stakeholders including women in the supply chain should be given adequate training. Bangladesh Agricultural University may play a leading role in collaboration with BARC, DAE, BARI and BSTI.

IMPROVEMENT OF TRANSPORTATION SYSTEM

Relocation of wholesale markets from Dhaka city: Huge wastage occurred due to restricted movement of trucks into Dhaka city. Currently, the trucks are not allowed to enter into Dhaka after 6:00 AM. If a vehicle gets late due to some unforeseen reasons, the entire products are spoiled. Even though these products reach the markets after illegal negotiation, they are too late, and the products are sold at very low prices or remain unsold because the peak buying and selling time is the very early morning. Smooth movement of perishables carrying trucks should be ensured to reduce wastage. Therefore, relocation of wholesale markets from the centre of Dhaka city to the nearby places would be considered.

Improvement of traffic congestion: Even though traffic congestion is a national problem but the problem is much more serious for perishable horticultural commodities. The problem is further compounded by the absence of cold chain management. Traffic jam in the Ferry Ghat is the most serious problem and should be resolved. Goods train for carrying bulk volume of fruits and vegetables could be considered.

Improvement of transport vehicle: Transportation is the key to efficient marketing. Generally, trucks with no colling facilities are used for long-distance transportation, and therefore, the wastage is very high. So, trucks with cooling facilities should be used for long-distance transportation of produce from the farm or assemble markets to the wholesale market. By this time, the Hortex Foundation introduced very limited number of the refrigerated REEFER Truck to transport horticultural produce.

IMPROVEMENT OF PACKAGING SYSTEM

Introduction of affordable plastic package: Packaging sector for perishables has not been developed in Bangladesh. For long-distance transportation, still voluminous package made of bamboo baskets and gunny sacks are predominantly used, which result in high spoilage due to impact, vibration and heat generation. Recently, mango traders adopted plastic crates in transportation which has created positive impacts in minimizing loss and maintain quality. The plastic crates currently being used in Bangladesh are mainly the

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Indian crates infiltrated into with imported fruits, and later sold to the traders. Hence, there is a great potential to manufacture plastic crates and other suitable packaging materials by the companies of Bangladesh like the Bengal Polymers Wares Ltd and others.

Introduction of 50-kg net bags for potato storage: There is strong demand from the potato cold stores to introduce 50-kg plastic net bags replacing the 84-kg jute bags to facilitate handling and maintain quality due to more ventilation. The presently used 84-kg jute bags are very difficult to carry by individual labourer, and would be hazardous to their health in longer term. So, immediate introduction of 50-kg net bags in all the potato cold stores would be considered.

ESTABLISHMENT OF LOW TEMEPARTURE STORAGE FACILITIES

Pronounced seasonality in fruits and vegetables than cereals: Seasonal price index was observed to be lower in rice (CV 2.96%) and wheat (CV 3.68%) as compared to those of other perishables like potato (CV 24.57%), brinjal (CV 35.75%) and okra (CV 32.71%). The seasonal price variation of the fruits and vegetables was much more pronounced than those of cereals. The lower price variation of rice and wheat was mainly due to their less perishability. By contrast, the higher price variation of perishable fruits and vegetables was due to their high perishability and lack of adequate storage facilities. So, to reduce seasonal variation in perishables adequate storage facilities should be created.

Low temperature storage facility in assemble markets: Undertaking pilot projects to establish limited number of low temperature storage facilities in production catchments for high-value produce. Recommended locations for specific fruits and vegetables are Chapai Nowabgonj for mango; Madhupur of Tangail for banana; and Jessore, Comilla and Bogra for vegetables.

Establishing central distribution centre: In many countries, central distribution centre has been established, where produces are temporarily stored and exposed to postharvest treatments for prolongation of shelf life and maintenance of quality and safety. These centres generally possess different compartments with different temperatures, from where produces are distributed to retail outlets through cold chain. Such centres can be constructed at the vicinity of Karwan Bazar, Jatrabari, Sayedabad and Badamtali of Dhaka.

Inviting world-wide recognized chain shops for perishables: World-wide recognized chain shops (like Woolworths, Kmart, Lotus) can be encouraged to take foot in Bangladesh if there is no government restriction on such foreign investment. Because these chain shops maintain optimal conditions for storage (temperature and relative humidity) of various perishable items in their warehouse.

Improvement of power supply: The most important problem in potato cold stores is the paucity of uninterrupted supply of electricity and frequent load shedding. Special attention should be given for potato sector so that electricity supply remains uninterrupted, especially during the loading period (March-May). Research to produce alternative energy (conversion of agro-waste to power) should also be given the top priority considering the present power crisis and future demands.

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Increase the number of BADC cold stores: There is high demands of BADC cold stores, especially for seeds. Presently, there are 18 BADC cold stores and 5 under construction. There are scopes to further increase the number of BADC cold stores, especially in leading growing areas. For instance, there are no BADC cold stores in Munshigonj (the largest producer). Establishment of BADC cold store in Munshigonj would help further augment potato production in the region. This is worth noting that the BADC potato seed programme is one of the very few profitable programmes of the Government of Bangladesh (A net profit of 10.00 kg-1 in 2012). Since, 80% of the potato seeds are the farmers own seeds that are held in commercial cold stores the BADC staff may monitor the private cold stores and issue certificates of good storage practices.

Policy on potato cold stores: Potato is a highly potential crop in Bangladesh. Incentives and government policies are required so that more private cold firms with standard systems would spring up. The cold storage charge should also be reasonably fixed so that the cold stores could render good services to its customers.

ADOPTION OF MODERN MARKETING

Adoption of modern marketing facilities is required: Adoption of modern facilities in agricultural marketing is important. However, there is a debate on this issue whether modernization can curtail jobs. In this regard, the results of a study conducted by Peter Trimmer (1973) in Indonesia, who categorically showed that modernization does not affect the jobs. Trade-off would be a very useful alternative where the extra work force can find better option and contribute to the overall economic development of the country. While discussing the obstacles in the adoption of new technology, the low level of income and lack of awareness are assigned as the big causes. Supports from the GOs and NGOs are needed. Nevertheless, an extensive economic investigation should be carried out to understand whether and how market modernization affect jobs in a country like Bangladesh to foster modernization of marketing in Bangladesh. However, the economic feasibility of the new facility needs to be carefully examined prior to its introduction into Bangladesh.

Introduction of modern loading and unloading: In the peak season, there is rush in the market. The produce is required to be filled up in the bags. Then loading of vehicles is required so that produce may reach the market after going through various marketing activities. Loading and unloading by manual labour is time consuming and costly. Forklifts can be introduced in the local assemble and big wholesale markets.

Introduction of modern weighing machine: Still in Bangladesh, beam balances are used to weigh produce in the market. This method is very time consuming and may lead to have incorrect weight. More modern and sophisticated weight bridge would be introduced to weight big lot of produce. It saves time and cost of weighing.

STRENTHENING PUBLIC-PRIVATE PARTNERSHIP

Public private partnership is urgent to introduce new and modern postharvest technologies like refrigerated transport vehicle, low temperature storage and ethylene-induced ripening chamber for the improvement of marketing system of perishables. For example, in the case of low temperature storage facilities for fruits and vegetables (except potato), the government could start one or two in order to encourage the private sectors to do more.

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VALUE ADDITION FOR DIVERSIFIED USE

Value addition of agro-produce: The present status of value addition in Bangladesh is still negligible. Adequate number of small and large-scale processing plants should be established. The use of potatoes could be diversified to safeguard the growers‟ interest. Very often growers do not obtain reasonable price of their produce because of high production, less price and wastage due to inadequate storage. So, various value added products like potato flakes, dried chips, French fries, potato powder, etc. could be produced and used for domestic and international marketing. However, to access the mainstream export markets the food enterprises must comply with the application of good manufacturing practices (GMP), good hygienic practices and Hazard Analysis and Critical Control Point (HACCP) systems. These quality assurance (QA) systems are lacking in Bangladesh and should be developed immediately.

Alternative of rice and wheat during peak price months: The result on seasonal price variation underlined the vital role of potato as a source of macro nutrients (alternative of rice and wheat) because the peak prices of rice and wheat were fairly synchronized but potato is counter synchronized to rice and wheat. So, there are ample scope to popularize potato and potato products as the viable alternatives of rice and wheat.

RAPID ACCESS TO MARKET INFORMATION

Easy access to market information: Access to right information on market price and trend in market price is very important. Nowadays, information about prices is published in newspaper announced in radio and television regularly. The farmer must be familiar with the prevailing prices and trend of the prices. Even though, Upazilla Information Centre is established but getting daily prices from the internet is still difficult. In this regard, board may be used to display daily prices of agricultural commodities in the market. Also DAM can send price information of important agricultural commodities to the farmers by SMS.

Upgrading the price data in BBS and DAM: Results of primary survey demonstrated that there exists wide price variation among varieties. For instance, the price of indigenous potato variety Lal Pakhri in 2011-12 was the highest (Tk. 300.00-760.00 mound-1) followed by Cardinal (Tk. 300.00-715.00 mound-1) and Granula (Tk. 200.00-475.00 mound-1). However, in the BBS and DAM reports, there are paucity of such valuable details in relation to the price of most fruits and vegetables. Therefore, price data as cited in the BBS and DAM reports should at least include the harvest, wholesale and retail prices of the commercially important cultivated varieties of horticultural produces. This could ensure better use of market information by the growers, intermediaries, researchers, extension workers, and ultimately the policy makers.

MINIMIZE MALPRACTICE IN MARKETING

Though there are government departments to watch and observe the activities in the markets. But still due to certain compulsions of the farmers and lack of retention of power, they are being exploited by the middlemen through their malpractices. Sometimes, the undue deductions are made. In this regard, taking ‘Dholta’ can be mentioned. Generally, traders take five kilograms more per mound convincing that there may be loss due to rots and shrinkage. The government should also strengthen their assistance to farmers to reduce the added costs of informal tolls levied against fresh produce as it is carried from farm-gate to the market.

143

Acknowledgments

The Project entitled “Improvement of Marketing System Performance of Fruits and Vegetables in Bangladesh” has been implemented jointly by the FAO and FPMU of the Ministry of Food with the financial supports from USAID and EU. The author is grateful to all the concerned organizations towards the successful completion of the project. The author recognizes the help, cooperation and inspiration of Mr. Dominique Burgeon, FAO Representative in Bangladesh for conducting and completion of the present research project. The author acknowledges the valuable contribution of Mr. Ciro Fiorillo, Chief Technical Advisor (CTA), NFPCSP-FAO at all stages of the project implementation. The valuable and timely criticism and suggestion received from Mr. Fiorillo greatly contributed to the successful completion of the project and enrichment of the research report. The author extends his sincere appreciation to the members of the Technical Assistance Team, Prof. Dr. Sheikh Abdus Sabur and Dr. Shahin Yaqub, and to Dr. David Dawe for their technical support, scholarly suggestions and valuable criticism in the different stages of project planning and design, research conduct, data analyses and finally in preparation of the research report and booklets. The author would like to express his sincere gratitude to Dr. Nur Ahmad Khondaker, Research Grant Administrator, NFPCSP-FAO for his help and cooperation during the entire period of the project implementation. Dr. Khondaker was very methodical and competent with high administrative ability, which help in timely furnishing the entire responsibilities associated with the roject. The author would like acknowledge the contribution of the respected teachers of the Department of Horticulture and other academic Departments of BAU, Mymensingh towards successful completion of the Project. The author also extends his sincere appreciation to Prof. Dr. Shankar Kumar Raha, Department of Agribusiness and Marketing (the collaborating institute), BAU and the Co-Investigator of the project, who carefully assisted in data analysis and preparation of the report. The Upazilla Agriculture Officers, Upazilla Nirbahi Officer, Sub-Assistant Agriculture Officers, Data Enumerators and many others of the surveyed Upazillas who extended their cordial cooperation in conducting survey. Their support and contribution are gratefully acknowledged. Research Assistant Ms. Nasrin Akhther and Research Fellows Mr. A .F. M. Abdullah Al Mukit, S.M. Sajedul Islam, Raihanul Fardaus Shahreen, Sheikh Touhidul Islam and Provash Mondal, competently furnished their duties and responsibilities in successful completion of the Project. They deserve sincere appreciation and congratulations. Professor Dr Md Kamrul Hassan (The Principal Investigator of the Project)

144

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Annexes Annex 1: Consumption of fruits, vegetables and rice in Bangladesh (HIES 2010) Food items

Consumption of fruits, vegetables and rice in Bangladesh (g day-1 capita-1)

1995 2000 2005 2010 Fruits 27.60 28.35 32.54 44.80 Vegetables 152.50 140.47 157.02 166.08 Potato 49.50 55.45 63.30 70.50 Rice 464.30 458.54 439.64 416.01

Annex 2: Availability of fruits (g day-1capita-1) in different countries of the world (FAOSTAT 2012)

149

Annex 3: Availability of vegetables (g day-1capita-1) in different countries of the world (FAOSTAT 2012)

150

Annex 4: Availability of potato (g day-1capita-1) in different countries of the world (FAOSTAT 2012)

151

Annex 5: Availability of vegetables (g day-1capita-1) including potato in different countries of the world (FAOSTAT 2012)

152

Annex 6: Availability of rice (g day-1capita-1) in different countries of the world (FAOSTAT 2012)

153

Annex 7: Detailed sampling plan for the respondents Sampling plan: Growers

Commodity Locations Sample size Potato Munshigonj

Bogra 50 50

Brinjal Jessore Norshingdi

50 50

Okra Chittagong Comilla

50 50

Banana Tangail Kushtia

50 50

Mango Rajshahi Chapai Nowabgonj

50 50

Total sample size 500 Sampling plan: „Bepari‟

Commodity Locations Sample size Potato Munshigonj

Bogra 50 50

Brinjal Jessore Norshingdi

50 50

Okra Chittagong Comilla

50 50

Banana Tangail Kushtia

50 50

Mango Rajshahi Chapai Nowabgonj

50 50

Total sample size 500 NB. The „Bepari‟ were selected from two principal assemble markets of the above-mentioned locations for each of the selected crops.

154

Sampling plan: „Faria‟

Commodity „Faria‟ (farm, assemble market) Sample size Potato Munshigonj

Sadar Tongibari Bogra Sadar Shibgonj

25 25

25 25

Brinjal Jessore Sadar Chougacha Norshingdi Raipura Shibpur

25 25

25 25

Okra Chittagong Sitakundu Mirersarai Comilla Sadar Chandina

25 25

25 25

Banana Tangail Madhupur Ghatail Kushtia Sadar

25

25 25

Mango Rajshahi Charghat Bagha Chapai Nowabgonj Shibgonj Bholahat

25 25

25 25

Total sample size 475

155

Sampling plan: „Aratdar‟ (Commission Agent) Commodity Locations Sample Size Potato Karwan Bazar

Shambazar Jatrabari Bazar

50 25 25

Brinjal Karwan Bazar Shambazar Jatrabari Bazar

50 25 25

Okra Karwan Bazar Shambazar Jatrabari Bazar

50 25 25

Banana Karwan Bazar Shambazar Jatrabari Bazar

50 25 25

Mango Karwan Bazar Shambazar Jatrabari Bazar Badamtali

25 25 25 25

Total sample size 500 Sampling plan: „Paiker‟ (Wholesalers) Commodity „Paiker‟ (wholesale markets) Sample size

Potato Karwan Bazar Shambazar Jatrabari Bazar

25 25 25

Brinjal Karwan Bazar Shambazar Jatrabari Bazar

25 25 25

Okra Karwan Bazar Shambazar Jatrabari Bazar

25 25 25

Banana Karwan Bazar Shambazar Jatrabari Bazar

25 25 25

Mango Karwan Bazar Shambazar Jatrabari Bazar Badamtoli

25 25 25 25

Total sample size 400

156

Sampling plan: Retailers Commodity Locations Sample Size Potato Munshigonj

Dhaka 50 50

Brinjal Jessore Norshingdi Dhaka

25 25 50

Okra Chittagong Comilla Dhaka

25 25 50

Banana Tangail Kushtia Dhaka

25 25 50

Mango Rajshahi Chapai Nowabgonj Dhaka

25 25 50

Total sample size 500 NB. The retail markets in the Dhaka city were selected from all areas (low, medium and high income consumer areas). The selected retail markets were from Karwan Bazar, Shambazar, Jatrabari Bazar, Mirpur, Mohammadpur, Swarighat, Badamtali, Mahakhali and Gulshan areas. Sampling plan: Potato cold stores Commodity Cold stores Sample size

Potato Munshigonj Bogra

5 5

Total sample size 10

157

Annex 8: Questionnaire interview (A: Madhupur, Tangail and B: Nimshar Bazar, Comilla) and FGD (C: Shibgonj, Bogra and D: Munshigonj Sadar)

A B

C D

158

Annex 9: Proportion of area coverage by important vegetable crops in Bangladesh during 2009-10 (BBS 2011)

159

Annex 10: Proportion of production of important vegetable crops in Bangladesh during 2009-10 (BBS 2011)

Potato

79%

Brinjal3%

Radish3%

Arum2%

Cabbage2% Pumpkin

2%

Cauliflower2%

Tomato2%

Watergourd1%

Beans1%

Pointed gourd1%

Snake gourd

1%

Cucumber1%

Ribbed goud0%

Okra0%

160

Annex 11: Proportion of HYV and local varieties of potatoes in terms of area coverage (2009-10; BBS 2011)

Local variety

17%

HYV83%

Annex 12: Acreage (000 ha) of top ten fruits of Bangladesh (2009-10; BBS 2011)

Mango14%

Jackfruit 46%

Banana 24%

Coconut

1%

Watermelon

6%

Pineapple

7%Citrus

1%

Papaya0% Ber

0%Litchi

1%

161

Annex 13: Production (000 mt) of top ten fruits of Bangladesh (2009-10; BBS 2011)

Mango25%

Jackfruit 24%

Banana 20%Coconut

9%

Watermelon6%

Pineapple6%

Citrus3%

Papaya3%

Ber2%

Litchi2%

Annex 14: Global ranking in rice production in 2010 (FAOSTAT 2012)

197

121

66

49

4033 32

1611 11 11 8 7 6 5 4 4 4 3 3

0

20

40

60

80

100

120

140

160

180

200

Pro

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n (m

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n m

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162

Annex 15: Global ranking in wheat production in 2010 (FAOSTAT 2012)

115

81

60

4238

24 23 23 2220

17 15 15 15

10 97 7 7 6

0

20

40

60

80

100

120

140

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du

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n (m

illio

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163

Annex 16: Global ranking in maize production in 2010 (FAOSTAT 2012)

164

Annex 17: Global ranking in potato production in 2010 (FAOSTAT 2012)

Annex 18: Harvesting, washing, packaging of potato in the field by Faria (Bogra)

165

Annex 19: Global ranking in brinjal production in 2010 (FAOSTAT 2012)

0

5000

10000

15000

20000

25000

Ch

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Ind

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Turk

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Jap

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166

Annex 20: Estimation of marketing costs of brinjal intermediaries

Marketing cost of Faria Items of cost Cost (Tk. Kg-1) % of total cost Loading & Unloading 0.32 91.43 Depreciation (gunny sack) 0.03 8.57 Total 0.35 100

Marketing cost of Bepari Items of cost Cost (Tk. Kg-1) % of total cost Transportation 0.56 50.57 Loading/ Unloading 0.22 19.41 Local Commission 0.13 11.29 Truck Broker Commission 0.02 1.67 String 0.12 10.39 Damage/Wastage 0.05 5.00 Gunny bags (Depreciation) 0.02 1.75 Total 1.11 100

Marketing cost of Aratdar (Dhaka) Items of cost Cost (Tk. Kg-1) % of total cost Rent 0.760 56.44 Unloading 0.450 33.42 Electric bill 0.060 4.46 Employees salary 0.064 4.76 Security 0.008 0.59 Cleaner 0.005 0.34 Total 1.347 100

Marketing cost of brinjal wholesalers Items of cost Cost (Tk. Kg-1) % of total cost Karwan Bazar (N=10) Transportation 0.95 53.64 Loading & unloading 0.25 14.12 Rent of Arat 0.35 19.76 Aratdar commission 0.10 5.65 Damage/wastage 0.09 5.30 Depreciation (gunny sacks) 0.03 1.69 Total 1.77 100 Jatrabari Bazar Transportation 0.78 66.92 Loading & unloading 0.20 17.16 Aratdar commission 0.10 8.58 Damage/wastage 0.06 5.00 Depreciation (gunny sacks) 0.03 2.34 Total 1.166 100

167

Marketing cost of retailers of production area (Raipura, Norshingdi) Items of cost Cost (Tk. Kg-1) % of total cost Transportation (incl. loading/unloading) 0.78 57.14 Rent of shop 0.29 21.25 Electricity bill 0.06 4.40 Cleaner 0.08 5.86 Damage/wastage 0.07 5.00 Packaging 0.06 4.40 Depreciation (bamboo basket) 0.01 0.73 Depreciation (weighing machine) 0.02 1.22 Total 1.365 100

Marketing cost of retailers of Dhaka city Items of cot Cost (Tk. Kg-1) % of total cost Karwan Bazar Rent of shop 0.47 44.76 Loading & unloading 0.18 17.14 Electricity bill (incl. generator) 0.13 12.38 Cleaner 0.06 5.71 Damage/wastage 0.05 4.76 Guard 0.08 7.62 Packaging (polybags) 0.05 4.76 Depreciation (bamboo basket) 0.01 0.95 Depreciation (weighing machine) 0.02 1.91 Total 1.05 100 Mohakhali Kacha Bazar Transportation 0.41 30.39 Rent of shop 0.38 28.13 Loading & unloading 0.25 18.53 Electricity bill 0.11 8.15 Generator 0.02 1.23 Cleaner 0.02 1.48 Damage/wastage 0.02 2.00 Guard 0.02 1.48 Packaging (polybags) 0.05 3.71 Depreciation (bamboo basket) 0.05 3.71 Depreciation (weighing machine) 0.02 1.48 Total 1.35 100 Gulshan D.C.C Market Transportation 0.45 27.04 Rent of shop 0.39 23.44 Loading & unloading 0.30 18.03 Electricity bill 0.20 12.02 Staff salary/wages 0.075 4.51 Generator 0.025 1.50 Cleaner 0.02 1.20

168

Damage/wastage 0.06 3.80 Guard 0.02 1.20 Packaging (polybags) 0.05 3.00 Depreciation (aluminum plate) 0.02 1.20 Depreciation (weighing machine) 0.05 3.00 Total 1.66 100 Mohakhali Bou Bazar Transportation 0.409 29.31 Rent of shop 0.382 27.39 Loading & unloading 0.311 22.33 Electricity bill 0.074 5.295 Cleaner 0.080 5.740 Damage/wastage 0.075 5.380 Packaging (polybags) 0.054 3.838 Depreciation (basket) 0.008 0.561 Depreciation (weighing machine) 0.002 0.158 Total 1.394 100 Badda Kacha Bazar Transportation 0.210 23.73 Rent of shop 0.140 15.82 Loading & unloading 0.250 28.25 Electricity bill 0.110 12.43 Cleaner 0.020 2.26 Security guard 0.020 2.26 Damage/wastage 0.050 5.65 Packaging (polybags) 0.075 8.47 Depreciation (basket) 0.008 0.88 Depreciation (weighing machine) 0.002 0.25 Total 0.89 100

169

Annex 21: Global ranking in okra production in 2010 (FAOSTAT 2012)

170

Annex 22: Marketing costs of okra producer and intermediaries Marketing cost of okra producer of Comilla Items of cost Cost (Tk. Kg-1) % of total cost Transportation 0.5501 71.528 Packaging 0.2180 28.348 Depreciation (spade) 0.0006 0.078 Depreciation (sprayer) 0.0004 0.046 Total 0.7690 100

Marketing cost of Faria, Chandina, Comilla Items of cost Cost (Tk. Kg-1) % of total cost Loading & unloading 0.25 83.33 Depreciation (gunny sacks) 0.05 16.66 Total 0.30 100

Marketing cost of Bepari, Nimshar Bazar, Comilla Items of cost Cost (Tk. Kg-1) % of total cost Transportation 0.890 70.505 Loading & unloading 0.179 14.141 Local commission 0.050 3.961 Truck broker commission 0.023 1.822 String/packaging 0.024 1.933 Damage/wastage 0.055 4.319 Depreciation (gunny sacks) 0.042 3.319 Total 1.262 100

Marketing cost of Aratdar (Karwan Bazar) Items of cost Cost (Tk. Kg-1) % of total cost Karwan Bazar, Dhaka Rent 0.630 53.543 Unloading 0.410 34.845 Electric bill 0.060 5.099 Staff salary 0.064 5.448 Security guard 0.008 0.680 Cleaner 0.005 0.385 Total 1.177 100 Jatrabari Bazar Rent 0.52 47.706 Unloading 0.45 41.284 Electric bill 0.06 5.505 Staff salary 0.06 5.505 Total 1.09 100

171

Marketing cost of wholesalers of Dhaka city Items of cost Cost (Tk. Kg-1) % of total cost Karwan Bazar Transportation 0.80 49.689 Loading & unloading 0.25 15.528 Rent of Arat 0.35 21.739 Aratdar commission 0.10 6.2112 Damage/wastage 0.08 4.969 Depreciation (gunny sacks) 0.03 1.863 Total 1.61 100 Jatrabari Bazar Transportation 0.680 52.636 Loading/unloading 0.450 34.833 Aratder commission 0.100 7.741 Damage/Wastage 0.056 4.296 Depreciation (gunny sacks) 0.006 0.494 Total 1.290 100

Marketing cost of retailers of Dhaka city Items of cot Cost (Tk. Kg-1) % of total cost Karwan Bazar, Dhaka Rent of shop 0.47 44.76 Loading & unloading 0.18 17.14 Electricity bill (incl. generator) 0.13 12.38 Cleaner 0.06 5.71 Damage/wastage 0.05 4.76 Guard 0.08 7.62 Packaging (polybags) 0.05 4.76 Depreciation (bamboo basket) 0.01 0.95 Depreciation (weighing machine) 0.02 1.91 Total 1.05 100 Mohakhali Kacha Bazar Transportation 0.41 30.39 Rent of shop 0.38 28.13 Loading & unloading 0.25 18.53 Electricity bill 0.11 8.15 Generator 0.02 1.23 Cleaner 0.02 1.48 Damage/wastage 0.02 2.00 Guard 0.02 1.48 Packaging (polybags) 0.05 3.71 Depreciation (bamboo basket) 0.05 3.71 Depreciation (weighing machine) 0.02 1.48 Total 1.35 100 Gulshan D.C.C. Market Transportation 0.45 26.64

172

Rent of shop 0.39 23.09 Loading & unloading 0.33 19.54 Electricity bill 0.20 11.84 Staff salary/wages 0.07 4.14 Generator 0.02 1.18 Cleaner 0.02 1.18 Damage/wastage 0.07 4.09 Guard 0.02 1.18 Packaging (polybags) 0.05 2.96 Depreciation (aluminum plate) 0.02 1.18 Depreciation (weighing machine) 0.05 2.96 Total 1.69 100 Mohakhali Bou Bazar Transportation 0.406 29.48 Rent of shop 0.370 26.86 Loading & unloading 0.320 23.23 Electricity bill 0.084 6.08 Cleaner 0.060 4.36 Damage/wastage 0.075 5.45 Packaging (polybags) 0.053 3.81 Depreciation (basket) 0.008 0.57 Depreciation (weighing machine) 0.002 0.16 Total 1.3773 100 Badda Kacha Bazar Transportation 0.270 22.98 Rent of shop 0.340 28.94 Loading & unloading 0.250 21.28 Electricity bill 0.150 12.77 Cleaner 0.010 0.85 Security guard 0.020 1.70 Damage/wastage 0.050 4.26 Packaging (polybags) 0.075 6.38 Depreciation (basket) 0.007 0.58 Depreciation (weighing machine) 0.003 0.27 Total 1.175 100

173

Annex 23: Global ranking in mango production in 2010 (FAOSTAT 2012)

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174

Annex 24: Mango harvest (picking pole) and field packing in Shibgonj, Chapai Nowabgonj, Bangladesh (A, B) and in Thailand (C, D).

A

B

C

D

175

Annex 25: Growers generally use bamboo baskets to carry mangoes from the orchards to the assemble market (Kansat, Chapai Nowabgonj)

176

Annex 26: Growers/lease takers sell mangoes to traders (Banashar Bazar, Rajshahi). They generally use bamboo baskets as packaging materials and van (pedal and diesel driven) as transport vehicle

177

Annex 27: Global ranking in banana production in 2010 (FAOSTAT 2012)

178

Annex 28: Estimation of marketing costs of banana intermediaries Marketing cost of Faria in banana marketing (Madhupur, Tangail) Items of cost Cost

Cost (Tk. Bunch-1) % of total cost Transportation 10.00 75.00 Loading 1.00 7.00 Unloading 2.00 14.00 Market toll 0.50 4.00 Total 13.5 100

Marketing costs and margins of Bepari (Madhupr, Tangail). Items of cost Costs

Cost (Tk. Bunch-1) % of total cost Transportation 15.00 63.00 Loading 2.00 9.00 Unloading 3.00 13.00 Toll 1.00 4.00 Market toll 0.50 2.00 Damage/wastage 1.25 5.00 Cleaner 1.00 4.00 Total 23.75 100

Marketing costs of wholesalers (Karwan Bazar, Dhaka) Cost items Cost

Cost (Tk. Bunch-1) % of total cost Transportation 20.00 76.00 Loading and unloading 2.00 7.00 Commission for Aratder 2.00 7.00 Damage/wastage 1.25 5.00 Cleaner 1.00 3.00 Personal expenses 0.50 2.00 Total 26.75 100

Marketing cost of retailers (Dhaka) Cost Items Cost

Cost (Tk. Bunch-1) % of total cost Transportation 20.00 33.85 Rent 25.00 42.32 Loading and unloading 2.00 3.38 Electricity bill 3.00 5.08 Cleaner 6.00 10.16 Damage/wastage 1.25 2.12 Generator 1.33 2.25 Personal expenses 0.50 0.85 Total 59.08 100