Improving the Marketing System Performance of Fruits and Vegetables in Bangladesh

1. Improving the Marketing System Performance of Fruits and Vegetables in Bangladesh Professor Dr. Md. Kamrul Hassan Department of Horticulture Bangladesh Agricultural University

2. Research Team Research Team Principal Investigator Professor Dr. Md. Kamrul Hassan Department of Horticulture, BAU, Mymensingh Co-Investigator Professor Dr. Shankar Kumar Raha Department of Agribusiness & Marketing Bangladesh Agricultural University, Mymensingh Research Assistant NasrinAkhther Research Fellows Five Research Fellows

3. Research Background Rice Fruits • Fruits & vegetables requirement: 400 g day-1capita-1 • Fruits & vegetables availability: 281 g day-1capita-1 • Postharvest loss: 24-44% (34420 million BDT = 490 million US$) (Hassan 2010) APPERENT CONSUMPTION OF FRUITS AND RICE

4. Research Background UNHYGENIC MARKET CONDITIONS (KARWAN BAZAR, DHAKA)

5. Selected Commodities and Objectives 1 2 3 2% 14% 1 7% 24% 2 65% 3 Fruit area (2010) Vegetable area (2010) OBJECTIVES AND SELECTED FRUITS AND VEGETABLES

6. Approaches and Methodology • Approaches & methodologies • Secondary data • Primary survey Secondary data collection • Secondary data on acreage, production, prices of the selected commodity (potato, brinjal, okra, banana and mango) and important cereals (rice, wheat and maize) were collected. • Time Series Analysis was used to examine changes in acreage, production and prices (nominal and real) • Seasonal price variation was calculated using Moving Average Method SELECTED DISTRICTS FOR PRIMARY SURVEY

7. Primary data collection • Primary data were collected from market actors using FGD and questionnaire interview. • Data were collected by trained enumerators and Research Fellows Data collection from growers • Stratified random sampling were followed • Leading 1-2 Districts for each commodity were selected • Selected growers (N=100 per commodity) were interviewed using structured questionnaires

8. Methodology (Data Collection) Data collection from intermediaries • Respondents were Faria, Bepari, Aratdar, wholesalers, retailers • Faria & Bepari were interviewed from assemble markets (N=100) • Aratdar & wholesalers were interviewed from wholesale markets (N=100) • Retailers were interviewed from retail markets in Dhaka and also in production area (N=100) • Data collection mainly concentrated on personal information, trade volume, marketing costs, purchase & sale prices, price formation, constraints, etc.

9. Results-Potato (Primary) DATA COLLECTION & TRAINING OF ENUMERATOR

10. LOCATION OF PRIMARY SURVEY

11. Methodology-Marketing Performance Parameters investigated At growers’ level • Data were mainly collected on age, education, land, cultivated varieties, production factors, production and marketing costs, sale price, price formation, constraints, etc. At intermediary level • Marketing channels, market actor, marketing costs and margins, price determination, postharvest handling status, marketing constraints, etc. • Marketing performance was evaluated using different measures of marketing efficiency

12. Methodology-Marketing Performance a. Price spread = (Price paid by consumers – Price received by growers) b. Growers’ share = (Price received by the growers/Consumers price)*100 c. Marketing efficiency using Acharya’s formula = FP/(MC+MM) • Total Marketing Cost (MC) • Net Marketing Margin (MM) • Prices Received by the Farmers (FP) d. Return on investment, ROC (%) = (Net margin/Total investment) • Total investment = (Purchase price + marketing cost)

13. Results: Rice (Only Secondary Data) PRICE VARIATION IN BANGLADESH GLOBAL RANKING IN RICE PRODUCTION

14. Results: Rice (Only Secondary Data) CV: 2.96% CV: 1.22% Wholesale price Retail price SEASONALITY IN RICE PRICE (2000-01 to 2010-11)

15. Results: Rice (Only Secondary Data) CV=3.68% CV: 3.68% SEASONALITY SEASONALITY PRODUCTION & PRICE PRODUCTION AND PRICE RELATIONSHIP & SEASONALITY

16. Results: Potato (Secondary Data) GLOBAL RANKING IN POTATO PRODUCTION

17. Results: Potato (Secondary Data) • Results partially support cobweb model • High production in one year causes less price in following year • Potato price did not change over the last decade in real term • Export of potato and potato products • Limitation- absence of HACCP & standards (GAP) PRODUCTION & PRICE RELATIONSHIP (POTATO)

18. Results: Potato (Secondary Data) CV: 14.13% WHOLESALE RETAIL CV: 24.75% • Results on seasonal price variation underlined vital role of potato as a source of macro nutrients because the peak prices of rice & wheat are fairly synchronized but potato is counter synchronized. So, there are scopes to popularize potato and potato products as alternatives to main staples rice and wheat. SEASONALITY IN POTATO WHOLESALE AND RETAIL PRICES

19. Results: Potato (Primary Survey) Potato marketing channel (Bogra-Dhaka) Farmer (conventional storage) Feb-May Farmer (cold store) August-Jan (net income: 8.76 Tk/kg) Farmer (early crop, net income 4.87 Tk/kg) Faria Net margin: 9.81% Bepari Net margin: 23.92% Processing unit Aratdar Net margin: 3.35% Wholesalers Net margin: 18.66% Retailers Net margin: 44.26% Consumers POTATO MARKETING CHANNEL (BOGRA-DHAKA)

20. Results: Potato (Primary Survey) Retailers receive the highest net margins. However, it is worth to mention that for perishables, retailers assume more risk and their per unit marketing as well as operating costs are higher MARKETING COSTS & MARGINS

21. Results: Potato (Primary Survey)

22. Results: Potato (Primary Survey) Month (2012) FARMERS’ PRICE OF DIFFERENT VARIETIES OF POTATO (2012)

23. Results-Potato (Primary) POSTHARVEST OPERATION: WASHING (EARLY CROP)

24. Results-Potato (Primary) POSTHARVEST OPERATION: LOADING (80 kg )

25. Results: Potato (Primary Survey) Sequential steps of storing of potatoes in commercial cold storage Pre-cooling (10-12oC 24-48 h or no pre-cooling but held under shade for 24 h and store Storing (2.2-2.8oC and 85-90% RH; Mar-Jan) Growers (Field cured potato tubers) Pre-heating (48 h at 10-12oC for 24-48 h before delivery; Aug-Jan) Normal (For table purposes (Aug-January) Private cold store Sorting shade (8 h drying under fan at normal condition before delivery; June-January) Marketing (Table potato: Aug-Jan & Seed potato: October) Traditional storage BADC Cold store SEQUENTIAL STEPS OF STORING POTATOES IN COMMERCIAL COLD STORES

26. Results: Potato (Primary Survey) Shortfalls in potato cold stores 1. Erratic supply of electricity: For table potato, temperature and RH should be 35-37oF and 85-95%. Machine should operate for 17-18 h day-1 but present electricity supply is for 10-12 h day-1. For rest of the day, generator is used at a cost of approx. 100 L diesel h-1. To avoid this cost, often generator is not run or run for shorter duration that results in degraded quality. • Physiological disorders: Ventilation or flushing with fresh air is required. This helps reduce carbon dioxide build up inside cold store and inhibit sprouting. This is practiced in the dawn or early morning. Sometimes this is not done to save labour. • Less turn over: Another important practice in cold store is change in position of potato sacks (turn over or “Palat”) every 21-28 days. Again this practice is not properly followed to save cost.

27. Results: Potato (Primary Survey) Improving cold storage facilities in Bangladesh • Improving the conditions of electric supply • Safeguarding the interests of the growers and traders • Capacity strengthening of the growers • Capacity strengthening of the staff of cold storage • Maintenance of multi-chambered cold storage Ideal conditions for table & 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 & RH conditions. • Increasing number of BADC cold storage Growers have strong demands for more BADC cold stores 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. The growers also have demand to introduce at least one chamber in each private cold stores specifically for seeds.

28. Results: Brinjal (Primary Survey) CV = 35.75 CV: 35.75% PRICE VARIATION SEASONALITY PRICE VARIATION AND SEASONALITY IN BRINJAL

29. Results: Brinjal (Primary Survey) Jessore (Chougacha)-Dhaka Norshingdi-Dhaka Farmer Farmer Faria Aratdar (Jessore) Faria Net margin: 10.07% Bepari Bepari Net margin: 16.77% Aratdar (Dhaka) Aratdar Net margin: 14.73% Wholesalers Wholesalers Net margin: 8.50% Retailers Retailers Net margin: 49.64% Consumers Consumers MARKETING CHANNELS OF BRINJAL

30. Results: Brinjal (Primary Survey) MARKETING COST AND MARGINS OF BRINJAL INTERMEDIARIES

31. Results: Brinjal (Primary Survey)

32. Results: Brinjal (Primary Survey)

33. Results: Okra (Primary Survey) CV = 19.90 AREA, PRODUCTION AND PRICE VARIATION OF OKRA

34. Results: Okra (Primary Survey) • Seasonal price variation in potato is lower due to sufficient cold stores • To reduce seasonal price variation for highly perishables brinjal and okra specialized storage facilities are required • Also refrigerated transport & technologies for shelf life extension are needed. CV: 35.75% SEASONALITY IN OKRA

35. Results: Okra (Primary Survey) Channel (Comilla-Dhaka) Marketing costs and margins Farmer Faria Net margin 8.97% Bepari Net margin: 12.75% Aratdar Net margin: 7.21% Wholesalers Net margin: 31.28% Retailers Net margin: 39.80% Consumers MARKETING CHANNEL & MARKETING COST AND MARGINS (OKRA)

36. Results-Mango (Secondary) GLOBAL RANKING IN MANGO PRODUCTION IN 2010 (FAOSTAT 2012)

37. Relationship between area, production and price (nominal and real price of mango in Bangladesh during 2004-05 to 2010-11 (BBS)

38. Results-Mango (Primary) HARVESTING TOOLS AND METHODS (BANGLADESH & THAILAND)

39. Results-Mango (Primary) Improved packaging (plastic crates) is used for long distance transportation of mango (from assemble market (Kansat, Shibgonj, ChapaiNowabgonj) to city wholesale market (Karwan Bazar, Dhaka). Still, some traders use bamboo basket (bamboo basket with gunny bag top)

40. Results: Mango (Primary Survey) Owners (Give their orchard lease to other trader group or produce by themselves and subsequently sell to Faria or Bepari Producers (Produces on leased property as growers and sells mangoes to Faria or Bepari) Faria (18.95%) Bepari (25.13%) Processing Aratdar (6.45%) Wholesaler (11.86) Retailer (37.61) Consumers MARKETING CHANNEL OF MANGO

41. Results: Mango (Primary Survey) MONTHLY PRICE VARIATION (2012)

42. Results: Mango (Primary Survey)

43. Results: Mango (Primary Survey) Performance of mango markets (Rajshahi and C. Nowabgonj-Dhaka City) PREVIOUS PACKAGING PRESENT PACKAGING

44. Results: Mango (Primary Survey) Acharya’s marketing efficiency of various channels in mango trade (ChapaiNowabgonj-Dhaka and Rajshahi-Dhaka)

45. Results-Banana (Secondary)

46. Results-Banana (Secondary) • Seasonal price variation is pronounced in banana. • Indicates the need to introduce winter fruit species to reduce monthly price variation. • Research is needed for developing fruit varieties for winter season Seasonality in banana prices (wholesale-Tangail) as a ratio to moving average (Sources: DAM).

47. Results-Banana (Primary Survey) Farmer (sells to Faria or Bepari); net profit: Tk. 187.09 bunch-1 of Sabri Farm Madhupur Faria (sells to Bepari); Net margin: 6.79% Bepari (sells to wholesalers via Aratdar); Net margin: 15.21% Aratdar Karwan Bazar (commission agent); Net margin: 17.52% Dhaka Wholesaler Karwan Bazar (sells to retailers or consumers); Net margin: 27.13% Retailer Karwan Bazar (sells to consumer); Net margin: 33.33% Dhaka Consumers

48. Results-Banana (Primary Survey)

49. Results-Banana (Primary Survey) Price spread and growers’ share in marketing channel of banana starting from Tangail and Kushtia to Dhaka city (Variety: Sabri; Price: May 2012)

50. Policy Implications and Recommendations