Vegetable prices multiply several times on the way to Dhaka — who pockets the profit?
Why do vegetable prices rise in Dhaka's markets? How much does the price of a vegetable rise from its place of production to the capital's wholesale market, and why does that same price multiply several times by the time it reaches a neighbourhood retail shop? Searching for answers to these questions reveals a long market system built around farmers, middlemen, traders, commission agents, wholesalers and retailers.
Winter vegetables begin arriving in the markets every year in November and December. As supply rises at this time, vegetable prices usually fall, and this year has been no exception. In the last few days, prices in the capital's vegetable markets have eased somewhat. But that relief is not lasting; every couple of days the price of one vegetable or another rises again. A visit to Karwan Bazar, the capital's main wholesale and retail fresh market, as well as Shyambazar in Old Dhaka, Gabtoli fresh market, New Market fresh market, Mohammadpur Town Hall and Krishi Market, found that the prices of several vegetables have fallen recently. But shoppers remain unhappy about the gap between wholesale and retail prices.
The complaint is that by the time a vegetable sold at wholesale reaches a neighbourhood retail shop, its price rises by 70 to 80 taka per kilogram, and sometimes by 100 taka. For example, potatoes retail at 18 taka a kilogram at Karwan Bazar, but in some neighbourhood shops they sell for 30 to 40 taka, and even 50 taka. Several shoppers at Karwan Bazar made this complaint on Sunday afternoon (8 November). One shopper, Mohiuddin, said Karwan Bazar is his workplace and his home is in Bosila, where potatoes now sell at 40 taka. That is why he shops regularly at Karwan Bazar.
To investigate, Channel i Online spoke to several commission agents at Karwan Bazar, fresh-produce traders, farmers and an agriculture department official. Their accounts show that the price rise is not caused by middlemen or retailers' profits alone; the entire supply chain from production to consumer carries many kinds of costs, constraints and inconsistencies.
Zakir Hossain, proprietor of the wholesale arat Barishal Banijyalay at Karwan Bazar, was asked why the gap between wholesale and retail prices is so large. In his view, many traders at the retail stage earn relatively higher profits, but the cost and risk of bringing produce from its place of production to the capital's markets must also be considered. Hossain said that no matter where in Bangladesh the produce comes from, transport costs average about five taka per kilogram. The cost is almost the same whether the produce comes from Manikganj or from Hemayetpur. According to him, potatoes that sell for six taka a kilogram in Rajshahi, or cauliflower at five taka apiece, rise sharply in price by the time they reach Dhaka.
One reason is spoilage during transport. If a truck carries four to five thousand pieces of produce, at least 500 pieces may spoil. The cost of that loss has to be recovered from the price of the good produce. Giving the example of potatoes, he said a sack of potatoes costs 950 taka at Karwan Bazar, which works out to about 14 taka 60 paisa per kilogram. Transport and other costs are added to that. Retailers then take the produce to areas such as Mohakhali and Moghbazar, where potatoes sell for 40 to 50 taka a kilogram, and sometimes 60 taka, despite the transport cost. In his view, this extra increase cannot be justified in any way.
Kusum Mia, a commission agent at Karwan Bazar and a member of the Malik Bohumukhi Samabay Samiti, raised the risk of perishable goods. He said wholesale sales of vegetables take place after midnight and before dawn every day. The produce goes to various district towns, and retailers from nearby areas also buy it. Kusum Mia said fresh produce cannot be stored for long. If it cannot be sold in time, it spoils, and traders are sometimes forced to sell at very low prices. At that time, papaya was selling at 15 taka a kilogram and cauliflower at 15 to 20 taka apiece at Karwan Bazar. But when produce spoils, traders bear the loss. Once, 310 sacks of potatoes spoiled and had to be dumped, paying van fare to carry them to a garbage dump.
Even so, whether the risk of spoilage and transport costs fully explain the large wholesale-retail gap remains an open question. Jahir, a trader at Karwan Bazar's Hachina Market, said the large gap also depends on the area. Where there are many markets and shops, competition forces traders to sell at relatively lower profits. But in areas such as Gulshan, Banani or Dhanmondi, there are comparatively fewer markets, and in some places shops are limited, so traders there get the chance to earn somewhat higher profits. That is another reason the price of the same vegetable can differ greatly from area to area.
Moniruzzaman Monir, a farmer from Godagari upazila in Rajshahi, said a farm product passes through several intermediate stages before reaching the consumer, and each stage adds new costs and profits, so the price rises considerably by the time it reaches the capital's markets. Asked about the role of middlemen and syndicates, he said produce from the farmer first goes to the arat, where the commission agent takes a commission. Then it passes through the wholesaler, the transporter and the retailer before reaching the consumer, with some cost added at every stage.
He gave an example: to bring potatoes from Rajshahi to Dhaka, the produce must first be taken out of the place of production or the cold storage. Then transport costs, arat commission, wholesale market costs and the cost of supplying to different areas are added, and finally the retailer must also keep a business profit. Some want a profit of 10 taka per kilogram, others 20 taka. The final price for the consumer is set by adding all of these together.
But in Monir's view, the problem is not limited to the excessive profits of a few traders. Profit-centred thinking has spread through every level of society, and that is what has created this crisis in the market system. In his words, the same problem is discussed repeatedly, but effective steps to solve it are rarely seen. He said that in discussions about lowering farm prices, farmers' interests are often ignored, yet if farmers do not get a fair price, the production system itself will suffer. So alongside lower prices for consumers, it is also essential to ensure a fair price for what farmers produce. In his view, the state and society must move away from profit-centred thinking and adopt a welfare-oriented outlook.
Abdul Halim, a farmer from North Fatikchhari in Chattogram, mainly grows seasonal vegetables. This winter season he is growing cucumber and coriander, and when their season ends he will start growing bitter gourd around January. In Halim's view, the first step to ensuring a fair price for farm produce is to build an effective system for setting market prices that takes production costs into account. Speaking to Channel i Online, he said that in his six to seven years in farming, he has observed that one of the biggest problems in agriculture is the absence of an effective government system for setting and controlling the market price of farm produce. He said the government takes steps to set or control prices for edible oil, lentils and other daily essentials, but the vegetable market is largely arat-dependent. With no effective government price-control system here, the pricing of farm produce depends largely on middlemen and traders.
In his words, after buying from farmers, farias and traders add their own profits, commission agents take commissions, wholesalers keep profits, and then retailers add their profits too. In this way, produce changes hands several times on its way from the producer to the consumer, and at each stage 10 to 20 taka or more per kilogram can be added. Yet after all these stages, farmers still do not get a fair price for what they produce.
Halim believes the government needs to pay special attention to the storage and processing of farm produce to overcome this situation, especially building storage facilities at the farmer level. He said vegetables, being perishable, cannot be stored for long. Within a day or two of harvest, much of the produce risks spoiling, so producers are often forced to sell quickly even when the market price is five to ten taka lower, because if the produce spoils, the entire production cost turns into a loss. Middlemen take advantage of this weakness.
In his view, if farmers had storage facilities, they could decide when to sell based on market conditions instead of being forced to sell immediately when prices are low. That would increase their bargaining power in the market and give farmers a better chance of getting a good price for their produce.
