Vegetable and Seasonal Fruits of Bangladesh

7/22/2019 Vegetable and Seasonal Fruits of Bangladesh

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Export Trends in Native Vegetable and Seasonal Fruit Markets

Fluctuating price trends in native vegetables & seasonal fruit markets

Introduction:

Bangladesh has an overwhelmingly agricultural economy . Agriculture accounts for

32%of its gross domestic product ( GDP ) , and absorbs 63% of the countrys labor force .

Sustained government investment in irrigation facilities , rural infrastructure ,

agricultural research & extension services has helped Bangladeshi farmers achieve

dramatic increase in agricultural production . Bangladesh is a land of farmers & farming

thus agriculture is the backbone of this developing nation . The rich & fertile land is ablessing which providing many types of rich vegetation .

But now food prices have become a major talking point for the media . Under mounting

pressure , the government has unveiled some short term measure to curb prices . The

problem , however , is not short term in nature . A timeline of food prices of common

food items serves as a reminder that the rapid food price inflation dates back to several

years & even more in the case of certain items like seasonal fruits , vegetables , rice ,

wheat etc ( Source : Financial Express ) . The main purpose of this research is to find out

the causes behind the inadequate profit earnings by the farmers , intermediary intervals

in every step , the proper food marketing system that is preferable & consumer reaction

towards the current situations & suggestions .
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Literature Review:

Vegetables & seasonal fruits are part & parcel to the people of Bangladesh to fulfill the

nutrition factors . The price rise is variously blamed by the different government

representatives on last years drought ( monga ) , on dysfunction in distribution . The

government has been fairly candid in admitting its helplessness in combating the price

rise . The Planning Commission Deputy Chairman has made public his belief that policy

changes to make credit dearer are not a remedy . Imports without a government

subsidy are also not possible as prices internationally are higher ( Bangladesh Bureau of

Statistics).

Diversification into vegetable crops and increasing commercialization can support the

development of the agricultural sector in several ways . Commercialization is

characterized by households moving from subsistence systems into semi-commercial &

commercial systems (with the main objective of achieving food self-sufficiency ),

thereby maximizing profits & generating surplus ( Pingali & Rosegrant 1995 ) .

It implies increased market transactions since farmers participate in the process tocapture gains from specialization ( Von Braun 1995 ) . Similarly , increasing capital

intensity in production & processing

leads to growth in the agribusiness sector . As a result , the number of agro-processing ,

distribution and farm -input provision companies increases (

Reardon & Barrett 2000 ) . Commercialization can take place on the output side-when

the farmer sells their products on the markets-or on the input side with increased use of

purchased inputs ( Von Braun 1995 ) .

The nature of the Agriculture Marketing System in Bangladesh is rather complex which

stems from the fact that there are innumerable small farmers spread all over the

country , where marketable surplus or marketed quantity of the crops they grow is very

small . Collection of these widely dispensed and small-marketed quantities is bound to


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be costly and insufficient . There are almost 13098 ( DAM study 2000 ) small , medium

and big sized markets in the country . In Bangladesh except the activities performed in

connection with Public Food Distribution System ( PFDS ) and agriculture price and

marketing policy decision of the government the trade in all agricultural products is

largely handed by the private sector . The general agricultural marketing policy of the

government is to allow free play of the market forces in determining the price and

encourage larger participation of the private section ( Md. Fazlur Rehman ) .

In practice, how can prices be stabilized so as to secure producer and trader incomes

and encourage the investment required to modernize production and markets? For

researchers, the answer depends on the type of instability. If the instability is imported

from international markets, State intervention is required. Price stabilization on a global

scale necessarily calls for international market regulation, while on a national or

regional scale, it involves controlling borders so as to compensate for the effects of

international price variations (as far as WTO regulations permit this, since they forbid

variable import taxes). If the instability is endogenous, public intervention may be

required to calm market speculation fever. This may entail regulating markets, resorting

to international markets, or using public stocks. Lastly, if the instability is natural, the

solution lies in getting to the root of the problem, by modernizing food product

production and trade structures. However, modernization inevitably takes time.

Moreover, it calls for a degree of prior price stabilization, since modernizing farms and

markets relies on investment on the part of producers and traders, who are reluctant to

invest if prices are very unstable. This prior price stabilization will thus mean using fast-

acting instruments such as public stocks or border controls .

Finally, it is important to bear in mind that for public price stabilization policies to be

effective, they need to be realistic, transparent, and credible. What needs to be done is

to define a

sufficiently wide, flexible price range to determine the thresholds for State intervention.

These intervention prices will have to be announced publicly, be credible, and be


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respected, otherwise public intervention could well increase uncertainty among market

operators rather than reducing it ( CIRAD ) .

Volatility is a directionless measure of the extent of the variability of a price or quantity.

It follows that volatility measures derive from the second moment of the distribution of

the price or quantity in question, or transformations thereof. Economists generally

focus on the standard deviation of logarithmic prices since this is a unit-free measure.

For low levels of volatility, the log standard deviation is approximately equal to the

coefficient of variation.

Economic series typically exhibit trends. Measurement of volatility therefore requires

the series to be de-trended since otherwise trend movements will be included in the

volatility measures. Because trends are rarely linear and deterministic ( Kim et al 2006 ;

Kerald & Wohar 2006 ), detrending requires a trend model that implies a judgmental

trade-off between attribution of variability to the trend itself and to variation about the

trend. The volatility measure can therefore depend on the choice of the trend model in

an undesirable manner. In looking at price volatility, economists often circumvent these

issues by measuring volatility as the standard deviation of price returns, i.e. the

standard deviation of changes in logarithmic prices. We adopt this standard

measurement convention.

Academic and policy analyses have tended to focus on price levels rather than

volatilities. An exception is who showed that agricultural price volatility was low in the

1960s but was higher in the 1970s and the first half of the 1980s ( Gilbert 2006 )

Volatility fell back in the second half of the 1980s and the 1990s but remained well

above its 1960s level. credible, and be respected, otherwise public intervention could

well increase uncertainty among market operators rather than reducing it ( CIRAD ) .


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Fresh Fruits and Vegetables

Bangladeshi businessmen despite slow growth in exports of fresh vegetables

and fruits are optimistic of the potentials of these sectors. According to the

recent media reports, they believe they would be able to export more fresh

produces provided they get one modern processing centre for testing,

sorting and packaging facilities and efficient and hassle-free airport services.

They are for a modern processing centre to help them export m or e f resh p rod uc es

b y m eet i n g req u i rem en ts o f b u y ers , es p ec i a l l y i n th e Eu rop ean

markets. The Bangladesh Vegetable and Allied Fruits Exporters Association have sought

technical and financial supports besides allocation of land from the

government for the centre. The fresh vegetable and fruit exporters have now

been facing stiff competition from their counterparts from Pakistan, India and

Kenya in Middle-east markets including United Arab Emirates, Qatar, and Kuwait,

Pakistani and Indian exporters.

According to local exporters, Bangladeshis in many European cities look for fresh

Bangladeshi vegetables and fruits. Earlier Britain was the major destination for local

fresh vegetables and fruits. For the past few years Bangladesh has been exporting such
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consignments to Italy and France. According to the Export Promotion Bureaus latest

data, fresh produces worth $10 million was exported in two months July and August

of the current fiscal year, nearly 7 per cent less than the export of the corresponding

period of last year.


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Conceptual Model:

The proposed research is about consumer perception towards the rising price of

vegetables & seasonal fruits . It will also focus on farmers position & distribution

channel & their effects on the marketing of vegetables & fruits . Again achieving food

self-sufficiency thereby maximizing profits to only to the distributors & giving negative

signals towards the consumers ( Pingali & Rosegrant 1995 ) , ( Haque 2000 ) . To find out

the consumer perception there can be selected variables or factors . These independent

variables are : intermediaries intervention , in-season stock tendency of businessmen ,

farmers unawareness of price news , distribution/transportation cost , processing cost ,

storage cost , weather condition , disease. The effects of these variables will beevaluated in this study.


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Research Methodology:

A survey was conducted for one month using a semi- structured questionnaire through

interviews among a cross section of people .Information were also collected from some

published reports , papers and some official documents & also reviews on the existing

information in different aspects of price increasing in the purchasing & attitudes of

consumers on it . Nature of the study is descriptive . The information required are both

primary and secondary . The required primary data were collected from different places

of Dhaka city . And the secondary data were collected from institutions like BADC , BRRI ,

Department of food and nutrition , genetic engineering and biochemistry of Dhaka

University etc .

The main objective of the research is to identify the ways for improving the situation

regarding price rise in the local market. So data is collected from some primary sources

by preparing a questionnaire which is open ended in nature. Primary data sources are

the independent producers of vegetable products, the exporting firm. Secondary data

have played an important role because maximum information is reviewed from these

sources as primary data was hard to find out. Secondary data has been reviewed and

collected from different articles, published journals, and websites in order to meet up

the gap of information available. Here some data has been collected also from relevant

topics as well as substitute products because the data is not available about vegetable

goods in some matters. The nature of the research is exploratory in nature as the article

tried to emphasize on the problem which can further be studied for making decisions

about price rise condition. In case of selecting the elements for sampling, judgmental

method of non-probability sampling has been used because of the fewer vegetable

product producers are available in Dhaka. Informal questionnaire which is given in the

appendix has been used as an instrument, in many cases the questionnaire was

conducted in sequence but without directly asking the respondents. The sample size is

very small only 30. In some cases, instead of face to face interview telephone survey

method has been conducted to collect data. In case of analyzing the data no statistical

method such as ANOVA, ANCOVA, REGRESSION, CONJOINT has been used because the


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natures of the questions are open ended as well as secondary data are qualitative in

nature. Instead of using any statistical techniques data are simply analyzed in light of

different models developed by different theorists. Personal in-home interview &

personal interview were selected as survey method . Survey instrument was proposed

as questionnaire which followed the 5 point likert scale standard.


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Analysis & Findings:

The findings are based on responses of small sample size . The nature of the Agriculture

Marketing System in Bangladesh is rather complex which stems from the fact that there

are innumerable small farmers spread all over the country , where marketable surplus

or marketed quantity of the crops they grow is very small .

The number of middlemen are present in vegetables and fruit markets . The rise of

middlemen specializing in such activities as storage , transportation , processing , and

retailing .These cost more .This is one of the reasons of fluctuating vegetables and fruit

prices . Some businessmen stock the vegetables and fruits during the season and

market them in off-season at higher prices . This is another reason for price fluctuation

in vegetables and fruit market .

Farmers are unaware of price news . Some middlemen and also some businessmen take

this unethical advantage . they buy vegetables and fruits at lower prices from farmers

and sell them in Dhaka city at higher prices . This is a common practice in our total food

market . Almost no processing is involved for the daily price list on vegetables andseasonal fruits, Processing of growers price data does not follow any definite time

schedule .

The reasons behind price fluctuation lie in the inelastic supply and demand curves for

agriculture and the unpredictable changes in food supplies as a result of weather

condition , disease and other factors . because of the inelastic curves , shifts in either

demand or supply will result in proportionately larger price changes . In turn , instability

of farm incomes is directly related to unstable farm prices . Farmers are punished in

market place when they succeed in producing good yields and high output . The

rightward supply shift lowers farm prices and , to add insult to injury , this movement

along an inelastic demand curve reduces gross farm income .

Now the most influencing factors affecting vegetables & fruit prices will be discussed


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Intermediaries intervention: Middlemen buy products from farmers at lower prices and

sell them in Dhaka at higher prices . This is common practice in our country . In-season

stock tendency of businessmen: Some businessmen stock products during the season

and sell them in off-season at higher prices . Farmers unawareness of price news:

Farmers are unaware of market price of their products due to lack of proper

information system & control power.

Distribution/transportation cost: Transportation cost is higher which is sometimes

added to the price of the product. Toll on the way to Dhaka creating more pressure on

price.

Storage cost: Storage condition, either frozen or not costs much in Bangladesh.

Processing cost:Processing cost is also higher.

Weather condition: Unfavorable weather condition may hamper production and thus

price .

Disease: Because of various diseases price of vegetables & fruits may fluctuate .

Figure: Factors causing price rise.


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Conclusion & Recommendation:

In Bangladesh, agriculture has been the backbone of economy and chief source of

income for the people. Bangladesh have accelerated and changed her exports

substantially from time to time. Bangladesh needs to develop its export strategies to

increase the value added of its products. The development of a successful export

market requires the development of a performing internal economy. Efforts should be

undertaken to reduce internal barriers to development due to weak governance, weak

legal system and difficult labor relations

Food prices have become a major talking point for the media. Under mounting pressure,

the Government has unveiled some short term measures to curb prices. The problem,

however, is not short term in nature. A timeline of food prices of common food items

serves as a reminder that the rapid food price inflation dates back to several years &

even more in the case of certain items like seasonal fruits, vegetables, rice, wheat etc.

This research found the causes behind the inadequate profit earnings by the farmers,

intermediary intervals in every step, the proper food marketing system that is

preferable & consumer reaction towards the current situations & suggestions.

Limitations :

The proposed research was conducted only in Dhaka city. Again there were random &

non-random sampling error because of small sample size. There may be response error

for their inability to recall and unwillingness to participate.

Scope of Future Research :

This research can be used for future research if sampling error will be reduced . Under

this research sample size is small. The existing random sampling error can be reduced

only by increasing sample size. Response error can be can reduced by encouraging

respondents so that they will be willing to answer.

Vegetable and Seasonal Fruits of Bangladesh

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