A report on pricing of Sunflower in Bangladesh

Course: Pricing theory and practices (412)

Submitted by:

Group: Harmony

4th year, 2nd semester

Department of Marketing

University of Rajshahi.

Submitted to:

Dr. Md. S. M. Kabir

Professor

Department of Marketing

University of Rajshahi.

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Group member information

Serial Roll Name

1. 08207504 Sadia Nazrin

2. 08217432 Tania Sultana

3. 08247445 Nahar Islam

4. 08047495 Md. Abdullah-Al-Mamun

5. 08097506 Md. Al Ryhan Pathan

6. Sazia Afrin

Table of contents

Topic Page No.

1. Abstract 04

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2. Introduction/problem definition 043. Objective 054. Program design 05

Information needs 05 Data collection from secondary sources 05 Data collection from primary sources 05 Fieldwork 05

5. Data analysis6. Results/findings 067. Limitations 078. Conclusion and recommendations

Conclusion Recommendations regarding market promotion Recommendation regarding pricing

9. Appendix

Abstract

The production of sunflower is very much new to the farmers of Bangladesh. They are mostly unaware about the proper cultivation process and marketing of their product. As a result, they are not getting fair value for their produce. Pricing imbalance is present in the market of Sunflower mostly due to farmers’ ignorance and the extra profit making habit of the second and third stage

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marketers. Through this study, we have tried to discover the market pricing of Sunflower, reasons behind pricing imbalances and have also tried to provide some recommendations to achieve price harmony among the farmers/producers, sellers, buyers, competitors, and customers of sunflower market.

Introduction

The cultivation of Sunflower started in Bangladesh in 1975 when this was cultivated only as a garden plant. It gained popularity as edible oil mid ‘90s when it was used as a substitute of soyabin. But due to market unavailability and pricing problem famers became discouraged to cultivate sunflower.

Background of Sunflower cultivation

Sunflower (Helianthus annus L.) is relatively proved a good oil seed crop in Bangladesh. It is a potential source of high quality edible oil, ranges second next to soybean as an oil crop in the world (FAO). Due to the increasing edible use of this oil crop, its production has been enhanced rapidly all over the world. Sunflower's seed contains 48 % - 52 % of good quality edible oil and 40 % - 50 % of protein in meals. The oil cake from sunflower is also useful for cow and fish feeding. At present, sunflower is grown in many district of Bangladesh without proper care. The average production of sunflower per unit area in our country is comparatively poor. The total cultivation area of this particular oil crop is limited. The progress in sunflower production is slow due to the lack of proper production technologies and management practices.

But the growing size of the sunflower market, both for oilseed and birdseed uses, is creating new opportunity to add sunflowers to crop rotations in our country. Sunflowers can be planted from April through July, including as a double crop after wheat.

By adding sunflower to an existing crop rotation, pest problems such as corn borer or soybean cyst nematode can be reduced.  Sunflower is shorter season than most crops, so can be planted later or harvested earlier, helping spread out work load.  Sunflowers are efficient at extracting water from the soil profile, especially in sandy loam soils, and can often tolerate drier conditions better than other crops.

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Objective

The main objective of our work is to understand the nature of pricing of Sunflower in Bangladeshi markets, search for any pricing imbalances existing in the markets, and offer recommendations for price harmony if there are any imbalances.

Program design

Information needs

For the work purpose, we have searched information from the primary as well as the secondary sources. Information regarding the Sunflower cultivation process was required to properly understand how the farmers price their products. The cultivation process lead us to various costs associated with production, such as – costs of seed, fertilizer, insecticides etc. these information were collected from both the primary and the secondary sources.

For obtaining the market price related information, we needed to know the farmer’s price, price in the secondary market, and the final price charged from the customers of the final product.

Data collection from secondary sources

To collect the secondary data we went to BARI (Bangladesh Agricultural Research Institute), Faculty of Agriculture (RU), Journal, Internet.

Data collection from primary sources

For collecting the primary data we went to farmers who are engaged in sunflower production, fertilizer dealers, and seed dealers. More than one respondent’s information was taken to avoid any errors.

Fieldwork

After collecting the secondary data we went to field for collecting primary data. We have visited and talked over phone with some farmers in Jessore, Naogaon, and Jhenaidah. We went to Katakhali and Horian to get information regarding seeds and fertilizer. We also went to BRRI, BWRI in Rajshahi.

Data analysis

The data collected both from primary and secondary sources have been brought to an uniform format for understanding of general people. Acre has been chosen as identification unit for land

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measurement, production items are shown in kilogram and all the amount are shown in tk. We have applied statistical operation (arithmetic mean) to unify similar type of data.

Results/findings

From the fieldwork, we have found that various costs are associated with the production of Sunflower. To name some – cost of seeds, fertilizers or manure, irrigation cost, labor cost etc. These costs are very much important to understand how farmers set the price of their produce. A list of different costs incurred by the Sunflower farmers is given in the following.

Table 1Item (per acre) Cost (in taka)Seed 1030Fertilizer 5224Insecticide 920Irrigation 4050Labor 4320Total 15,544

Sunflower is sold to the secondary market by the producers or farmers who get the minimal price for their production. The secondary marketers purchase the sunflower seeds from the farmers and produce Sunflower oil themselves. Sometimes they sell seeds or oil to the wholesalers, but in most cases the marketing process of Sunflower seeds continues up to the secondary market. We have collected the market prices for last three years and we’ve used trend analysis to come up with the pricing for the present and upcoming years. A brief presentation of the findings is given below.

Table 2

Market 2009 2010 2011 2012 2013Farmer market 25400 27956 30500 33052 35598.67Secondary market 39850 41680 43125 44826.67 46357.22Tertiary market 47120 45813 48750 48857.67 50851.56

*price shown in the table is for production from per acre of land.

A graphical presentation of the market prices of Sunflower is illustrated in the following.

Figure 1

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2009 2010 2011 2012 20130

10000

20000

30000

40000

50000

60000

Market price of Sunflower

Farmer priceSecondary market priceWholesale market price

By studying the various pricing levels of Sunflower market, we have found that pricing imbalance exists in the market to some extent. Farmers who produce the product do not always get the proper price for their produce. To compete with the edible oil substitutes, the price of Sunflower oil has to be within the same price range. This sometimes forces producers and secondary marketers to sell at an inappropriate price.

In the recommendation section we have provided some suggestions which may be helpful to the farmers as well as secondary sellers to adjust their cost and pricing and remove the pricing imbalances.

Limitations

While conducting the project work, we have faced several problems.

The government research institutes were unable to provide us sufficient information regarding the cultivation of Sunflower.

We had few difficulties to get proper pricing information because most of the farmers produce Sunflower for fulfilling their own consumption need of edible oil.

Customers are not habituated with Sunflower oil, so farmers are not willing to produce the product. The farmers, who have produced the product once or twice, are switching over other profitable crops. As a result, getting concrete information about the Sunflower production and pricing is becoming hard.

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Conclusion and recommendations

Conclusion

After working on this project we found that there are significant differences between our theoretical knowledge about pricing with the reality. Through this project we have understood the hindrances in fair pricing of sunflower. That’s why the farmers of Bangladesh are switching from sunflower production to other crops. Though the switching rate is comparatively low at

present, but if the market price condition continues switching rate will go up in near future.

Recommendations regarding market promotion

To promote the market of Sunflowers, government initiative is very much essential. Government can take initiative in the following areas

o Easy agricultural loan facilities

o Provide proper information to the farmers relating to Sunflower cultivation

o Provide information about use and benefit of Sunflower oil and seed to consumers

o Training farmers

o Make Sunflower seeds available to farmers

o Establish research centers

o Establish processing plant to make Sunflower oil

Non-government institutions should also come forward to promote Sunflower cultivation. Heavy advertising can be undertaken to make consumers aware of the product benefits.

Recommendations regarding pricing

To encourage production Sunflower and reduce the cost burden of farmers, government should give subsidy in this sector of agriculture.

Farmers who cultivate Sunflower use the seed KIRONI DS1 for production which is the local seed and comparatively low in price from the other two (Hybrid and BARI seed). But the production rate from the Hybrid and BARI seeds are higher than KIRONI DS1 (2-2.5 m.tons per hector compared to 1.6-1.8 m.tons). If they use the other two varieties they will get more production and it would affect the Sunflower pricing positively.

Farmers should keep their Sunflower production rate high, because rate of production affects price as well as profit. In this regard, farmers should be more cautious about the proper monitoring of their production. Parrot is the main threat for the sunflower; it eats sunflower seeds when in the field. Moreover, children also pluck flowers when they pass by. If the farmers guard their field, they can reduce damages due to these reasons.

Farmers get low price because sometimes they are bound to sell their product before proper harvesting to give their labor wages, pay the loan installments etc. If we can

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ensure the financial security for the farmers up to the harvesting period, they won’t have to sell seeds early and get right price after proper harvesting.

Farmers should line their credits when entering into Sunflower cultivation. It enables them to avoid the worry of repaying the high loan installments and they can pay back their borrowings after selling their product.

Farmers should make use of the byproducts to redirect some part of their production costs. For example – they can use the plant as a house building material like straw, use it as food for domestic animals, use it as organic manure for the field etc. if they can sell it in the market (though in very little price) the production cost will reduce and their profit from selling the main product (seed) will be relatively high.

Either farmers or secondary marketers who go for the Sunflower oil processing they can sell the hull of Sunflower seeds in the market as animal feed. There is a good market for this product and the production cost can be reduced by selling this. It allows them to charge proper price for Sunflower oil and thus remove pricing imbalances.

The Sunflower seed can also be marketed as bird feed. It has a growing market not only in our country but also in abroad. Farmers as well as other marketers can also consider this option.

Appendix

List of fertilizers

Name of fertilizer Amount (per acre) Price (per kg) Total price (in tk)Euria 60-66 20 1200-1320T. S. P. 50-66 22 1100-1452M. P. 40-50 15 600-750Zipsum 40-56 6 240-336Zinc sulphate 2.5-3.5 80 200-280Boric acid 3.5-4 160 560-640Magnesium sulphate 26-33 30 780-990Rovral 50 wp (insecticide)

400 gm 920

Acknowledgements

We are thankful to the following people for helping us with our work

Md. Zahidul IslamScientific officerBangladesh Agricultural Research Institute (Wheat)Mobile: 01712259616

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Md. Harun-ur-RashidScientific officerBangladesh Agricultural Research InstituteGazipur, DhakaMobile: 01716517314

Md. AminAsha Biz Vandar?Horian bazaarMotihar, Rajshahi.

Gour Pada Biswas SAAO (Sub Assistance Agriculture Officer)RajbariMobile: 01715373037

References

We used information from the following websites.

www.bari.gov.bd www.brac.net www.sunflower-bd.com

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