Prices of essential food items in the country are increasing by up to 116% due to long and inefficient supply chains stretching from producers to consumers.
As a result, food inflation is intensifying, creating additional financial pressure on low and fixed-income people, according to the Centre for Policy Dialogue (CPD).
These findings were presented on Thursday at an event organized at the BRAC Centre in the capital titled "Food Value Chain: Bangladesh's Market System, Profit, and Middlemen," where the research report was published and discussed.
Minister for Commerce Khondokar Abdul Muktadir attended as the chief guest.
Chaired by CPD executive director Fahmida Khatun, the research paper was presented by the organization's senior research associate Fakhruddin Al Kabir.
The study revealed that green chili had the highest price gap between producers and retail markets, with prices increasing by 116%.
Additionally, price hikes of nearly 100% were observed in medium-quality rice, 87% in onions, 78% in red lentils, 72% in eggplants, and up to 50% in potatoes.
On the other hand, the price gap was significantly lower for products with relatively shorter supply chains. Price increases observed were 25% for eggs, 22% for broiler chicken, 13% for beef, and 10% for Rui fish.
The study analyzed the supply system of 10 domestically produced essential food items based on a survey conducted among 820 traders across 10 markets in the Dhaka division.
The report noted that products passing through longer marketing chains incur larger price gaps. Therefore, simplifying and optimizing the food supply system is crucial.
According to the report, for six out of the ten products—onions, potatoes, green chilies, eggplants, eggs, and Rui fish—retailers primarily rely on urban commission agents (arotdars).
This amplifies the influence of a limited number of traders in the market, reduces competition, and creates price volatility.
In the case of medium-quality rice, farmers receive only 50.8% of the final retail price.
Conversely, auto rice mill owners earn the highest profits while exercising significant control over rice stocks, supply, and price determination.
Presenting the research, Fakhruddin Al Kabir stated that production costs alone are not responsible for food inflation in the country. Supply shortages, dominance of a limited number of entities in the market, the role of middlemen, hoarding, and market manipulation are equally to blame.
He informed that nearly 30% of the country's population still suffers from food insecurity. Prolonged high inflation has eroded real wages and purchasing power. Consequently, many families are reducing food consumption, depleting savings, or being forced to take loans.
The study further highlighted that food accounts for 59% of Bangladesh's Consumer Price Index (CPI) basket.
More than 60% of households in the country spend at least half of their total income on purchasing food.
While the poorest 5% of households spend nearly 59.8% of their total consumption expenditure on food, the richest 5% spend 28.9%. Thus, the primary burden of rising food prices falls on low-income individuals.
Fahmida Khatun noted that inflation has remained at a high level in the country for several years, posing one of the biggest economic challenges. Food inflation impacts the poor population most severely because a large portion of their income goes toward food expenses.
She added that production costs, marketing inefficiencies, supply chain bottlenecks, natural disasters, supply shortages, hoarding, and weak market competition all play roles in setting food prices. Therefore, it would be incorrect to attribute price hikes to a single cause.
The report identified supply shortages, collusion among dishonest traders, unfair hoarding, lack of adequate cold storage and cold-chain facilities, weaknesses in post-harvest preservation, rising transportation costs, and high production expenses as the primary causes of food inflation.
However, the study explicitly stated that blaming middlemen alone or viewing the presence of a few firms in the market as definitive proof of a syndicate should be avoided.
To address the situation, the CPD recommended cutting unnecessary steps in the food supply chain, increasing competition in wholesale markets, ensuring transparency in price setting, expanding cold storage and cold-chain infrastructure, establishing direct market connections between farmers and consumers, reducing production costs, and taking strict legal action against proven hoarding and syndicates.