Wednesday, April 24, 2024


Dhaka Tribune

Agricultural supply chain demands concerted effort from all

By overcoming all challenges of supply chain management and helping farmers reap benefits from their cultivation, we will not only empower young and future farmers but also strengthen our agriculture industry

Update : 03 Apr 2024, 09:59 AM

The agricultural sector plays a crucial role in Bangladesh beyond ensuring sustenance – it has become one of the critical sources of livelihood for millions of people. According to the Labour Force Survey 2022, 45.33% of the total employment is in the agricultural industry. However, according to the Bangladesh Bureau of Statistics (BBS), the agricultural sector's contribution to gross domestic product (GDP) is only 11.66%.

Considering the data on total employment in the agricultural sector, the total contribution to GDP was supposed to be higher. So, there is a gap in the industry that must be understood and addressed. To understand the gap, we must look at the supply chain of the agricultural industry. Most people who work in the sector are old. Younger generations are not interested in farming due to less profit and better opportunities in other sectors. Farmers are getting less profit due to multiple layers of intermediaries and opportunistic middlemen.

According to a study by the Asian Development Bank (ADB) in 2020, intermediaries get 43% of the retail price, whereas producers receive less than 40%. According to Bangladesh Agriculture University, farmers are supposed to get a minimum of 60% of the retail price, which they are definitely not receiving. According to the Department of Agricultural Market, the production cost of cauliflower is Tk11, but the same cauliflower is being sold at the city's retail market for Tk45 or Tk50. Hence, there is a price gap of 300-350%.

The supply chain of the agricultural sector from the beginning to the endpoint is out of proportion. Starting from farmers, the produce changes hands 6-8 times before they reach the final consumers, leading both end parties to make losses. On top of that, other additional costs are added to these seven levels of intermediaries, like storage and transportation. Adding up all the costs leads the commodities to have irrational prices, surpassing the buying power of most customers across the country.

Photo: Courtesy

When the issues are raised, the blame game starts throughout the supply chain like a domino effect. Consumers start blaming the retailers, who blame the wholesaler, who put the fault on transportation, and so on – ultimately, the blame reaches the farmers. Due to the blame game and the unorganized system, no proper actions are taken to bring about any changes that will help farmers reap benefits.

It has become apparent that the primary burden behind such high commodity prices falls on the intermediaries. However, it's not easy to remove them as, over millennia, they have grown and created an essential place in the existing chain structure. For example, a small farmer usually starts farming by taking loans from village moneylenders or intermediaries with capital, making them take control of the farm produce. Moreover, according to media reports, these moneylenders charge interest as high as 120% per annum. The moneylenders even charge exorbitantly high interest, such as 832%, for weekly market days.

Hence, to tackle the issue of the chaotic system of the supply chain and the blame game, the government, private sectors, and NGOs (Non-profit organizations) must take adequate initiatives. The government has taken a few crucial steps and now has been encouraging banks to provide loans to the farmers. Previously, most banks didn't offer loans to farmers as they didn't have any collateral. Now, the government is providing provisions to the banks to offer loans to farmers with interest rates as low as 4%. Additionally, according to media reports, farmers who cultivate fruits, vegetables, and paddy can receive Tk2 lakh in loans without any collateral.

Now, this has been a fantastic initiative that has the potential to tackle multiple issues from the grassroots level; however, fewer changes have taken place. One of the primary reasons behind the absence of proper results is the inadequate implementation of initiatives. Bangladesh is home to around 16.5 million farmers. Now, for instance, if a few banks are trying to help these 16.5 million farmers, how many do you think they will be able to reach? In reality, very few due to certain limitations of them directly reaching the farmers. Banks tend to use intermediaries to get to the farmers. Using intermediaries again disrupts the process, making the initiatives fail or produce less impact.

All is not lost, as numerous parties have multiple opportunities to take impactful initiatives that will create a seamless agricultural supply chain and provide more benefits to the farmers. The government and private companies can come together to ensure adequate infrastructure facilities, storage for the farmers, and transportation. The public and private sectors can work directly with certain key players in the farming sector, such as influential and institutional-level farmers. These farmers have massive lands and networks, making them influential among the grassroots and marginal-level farmers. Grassroots and marginal-level farmers tend to seriously take advice and suggestions from these influential farmers about farming and products used for cultivation. Both the public and private sectors can directly work with influential farmers and encourage them to advise other farmers on using modern technology to enhance farming and real-time communication.

Additionally, policymakers like the Department of Agricultural Marketing (DAM) and Bangladesh Investment Development Authority (BIDA) can bring all stakeholders together to get to the bottom of the problems and create fruitful policies that will actually be beneficial to all parties, primarily the farmers. Without considering the concerns of the farmers, it will be impossible to stabilize the market.

Moreover, modern technologies can also teach farmers about the market's condition. To receive fair pricing, farmers must know their crops' current prices and demands. They cannot get a good deal on their cultivation without proper knowledge. Private organizations can work directly with farmers and help them utilize modern technology to enhance learning and cultivation. At iFarmer, our experts teach local farmers how to make informed decisions regarding market demand and supply, production techniques, agricultural inputs, fertilizers, and nutrients to achieve optimum output, and improve their livelihoods. We have also created a procurement hub through which we collect crops from the farmers and ensure they receive fair prices for the produce. We provide farmers with modern technology through AgriMachinery Experience centres.

Agriculture is an important industry for the growth and sustenance of Bangladesh. By overcoming all the challenges of supply chain management and helping farmers reap benefits from their cultivation, we will not only empower young and future farmers but also strengthen our agriculture industry, which can ensure our country's sustainable and prosperous future.

Fahad Ifaz is co-founder and CEO of iFarmer

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