Potato Value Chain in Bangladesh final -...

1

Potato Value Chain in Bangladesh

Information and Knowledge gaps

Potato Value Chain in Bangladesh

formation and Knowledge gaps of smallholders

December 2011

Submitted to

1

6/8 Humayun Road

Telephone: 8124976, 9131424, 8156772

E-mail: [email protected]

2

3

Potato has been cultivated in Bangladesh for more than a century, and has recently occupied an 4

important place in the country’s 5

been thriving with new opportunities. The value6

huge potential of the sector and to identify bottlenecks hindering 7

analysis the study attempts to analyze the systemic issues faced within the whole process8

farming to exporting—with particular focus on knowledge and information gaps. The study 9

identifies bottlenecks the sector is facing, relationship10

actors, the flow of products and the changes in value and 11

Submitted by

6/8 Humayun Road Block: B, Mohammadpur Dhaka-1207 Bangladesh.

Telephone: 8124976, 9131424, 8156772

[email protected] . Website: www.dnet.org.bd

Abstract

Potato has been cultivated in Bangladesh for more than a century, and has recently occupied an

country’s list of major food and cash crops. Over the years, the sector has

been thriving with new opportunities. The value chain analysis was conducted considering the

huge potential of the sector and to identify bottlenecks hindering its growth.

analysis the study attempts to analyze the systemic issues faced within the whole process

particular focus on knowledge and information gaps. The study

identifies bottlenecks the sector is facing, relationships and linkages between and among the

actors, the flow of products and the changes in value and in the information and knowledge flow.

2

1207 Bangladesh.

Potato has been cultivated in Bangladesh for more than a century, and has recently occupied an

Over the years, the sector has

conducted considering the

The value chain

analysis the study attempts to analyze the systemic issues faced within the whole process—from

particular focus on knowledge and information gaps. The study

and linkages between and among the

information and knowledge flow.

It is evident from the study that potato production in Bangladesh has marked 12

over the last few years, despite the fact that, in peak seasons, growers face enormous difficulties 13

with their surplus production due to cold storages capacity constraints leading to unfavourable 14

pricing. The paper addresses some systematic information15

value chain and offers some possible solutions to farmers in the use of inputs and also to cold 16

storage operators and farmer associations to coordinate the uneven use of even the small amount 17

of such available facilities. 18

19

20

potato production in Bangladesh has marked significant growth

rs, despite the fact that, in peak seasons, growers face enormous difficulties

with their surplus production due to cold storages capacity constraints leading to unfavourable

pricing. The paper addresses some systematic information-related problems faced

value chain and offers some possible solutions to farmers in the use of inputs and also to cold

storage operators and farmer associations to coordinate the uneven use of even the small amount

3

significant growth

rs, despite the fact that, in peak seasons, growers face enormous difficulties

with their surplus production due to cold storages capacity constraints leading to unfavourable

related problems faced within the

value chain and offers some possible solutions to farmers in the use of inputs and also to cold

storage operators and farmer associations to coordinate the uneven use of even the small amount

21

22

Abstract ................................................................23

Contents................................................................24

Abbreviations ................................25

Prelude................................................................26

Methodology ................................27

Introduction ................................28

Overview ................................................................29

Potato Production ................................30

Yield and Yield Variation................................31

Potato cultivation ................................32

Potato Varieties and Grades ................................33

State Support ................................34

Mapping the Value Chain................................35

Product Flow and Value Chain Actors36

Information Flow in the Value Chain37

Price Information ................................38

Input and Know-how Information39

Financial Assistance................................40

Transaction Costs ................................41

Identified Issues in the Value Chain42

Lack of Knowledge of Farmers on Quality Inputs and Their Usage43

Lack of Knowledge of Farmers on Variety, Grading, Processing and Export Market44

Lack of Knowledge of Farmers on Post45

Lack of Information on Available Space in Cold Storage …………………………….2746

Conclusion………………………………………………………………………………47

Appendices ................................................................48

Contents

................................................................................................

................................................................................................

................................................................................................................................

................................................................................................

................................................................................................................................

................................................................................................................................

................................................................................................

................................................................................................

................................................................................................

..........................................................................................................................

................................................................................................

................................................................................................................................

................................................................................................

Product Flow and Value Chain Actors ................................................................

Information Flow in the Value Chain .............................................................................................

................................................................................................

how Information ..............................................................................................

................................................................................................

................................................................................................

Identified Issues in the Value Chain .............................................................................................

Lack of Knowledge of Farmers on Quality Inputs and Their Usage................................

Lack of Knowledge of Farmers on Variety, Grading, Processing and Export Market

Lack of Knowledge of Farmers on Post-harvest Techniques ................................


Conclusion………………………………………………………………………………

................................................................................................

4

............................................... 2

............................................... 4

...................................... 6

................................................. 7

....................................... 8

...................................... 11

........................................ 11

........................................................... 19

............................................... 21

.......................... 225

......................................... 235

................................ 235

.............................................. 245

......................................................... 245

............................. 22

........................................................ 23

.............................. 24

.................................................... 24

......................................................... 374

............................. 395

............................................ 395

Lack of Knowledge of Farmers on Variety, Grading, Processing and Export Market ................ 406

....................................................... 417


Conclusion……………………………………………………………………………… 438

...................................... 449

Appendix 1: Selection of Most Potential Export Oriented Agricultural Value Chains49

Appendix 2: List of Respondents50

51

Appendix 1: Selection of Most Potential Export Oriented Agricultural Value Chains

Appendix 2: List of Respondents ................................................................................................

5

Appendix 1: Selection of Most Potential Export Oriented Agricultural Value Chains ............... 449

................................. 515

Abbreviations 52

53

BADC Bangladesh Agricultural Development Corporation

BARI Bangladesh Agricultural Research Institutes

BBS Bangladesh Bureau of Statistics

BDT Bangladeshi Taka

CIC Community Information Center

DAE Department of Agricultural Extension

DAM Department of Agricultural Marketing

FAO Food and Agriculture Organization

FAOSTAT Food and Agriculture Organization Statistics

FGD Focus Group Discussion

ICT Information and Communication Technology

KBE Knowledge Based Economy

MMS Multimedia Messaging Service

MSEs Micro and Small Enterprises

MT Metric Tonne

NGO Non-Governmental Organization

SMEs Small and Medium Enterprises

SMS Small Message Service

TCRC Tuber Crops Research Centre

TVC Television Commercial

USD United States Dollar

VAT Value Added Tax

54

55

56

57

Bangladesh Agricultural Development Corporation

Bangladesh Agricultural Research Institutes

Bangladesh Bureau of Statistics

Bangladeshi Taka

Community Information Center

Department of Agricultural Extension

Agricultural Marketing

Food and Agriculture Organization

Food and Agriculture Organization Statistics

Focus Group Discussion

Information and Communication Technology

Knowledge Based Economy

Multimedia Messaging Service

Micro and Small Enterprises

Governmental Organization

Small and Medium Enterprises

Small Message Service

Tuber Crops Research Centre

Television Commercial

United States Dollar

Value Added Tax

6

58

59

60

61

62

63

64

65

66

67

68

69

Prelude 70

The research was envisaged to identify the bottlenecks to increased production of high quality 71

potatoes in Bangladesh that holds a huge potential to cater to the expanding market. 72

73

The specific objectives of this Knowledge Based 74

75

• Achieve an in‐depth understanding of how innovations related to Information and 76

Communication Technologies (ICTs) are used (and may be used) to improve the 77

efficiency and inclusiveness78

was on increasing the participation (inclusiveness) of small players79

small enterprises (MSEs), and small and medium enterprises (SMEs) within the value 80

chain through various forms of value addition and 81

transaction costs. 82

• Develop recommendations for improving the efficiency and inclusiveness of agricultural 83

value chains including through the application of ICTs, but not limited to them; 84

to identify the bottlenecks to increased production of high quality

potatoes in Bangladesh that holds a huge potential to cater to the expanding market.

The specific objectives of this Knowledge Based Economy (KBE) research were

depth understanding of how innovations related to Information and

Communication Technologies (ICTs) are used (and may be used) to improve the

inclusiveness of the potato value chain in Bangladesh; the specific focus

was on increasing the participation (inclusiveness) of small players, especially micro and

small enterprises (MSEs), and small and medium enterprises (SMEs) within the value

chain through various forms of value addition and reduction of various forms of

Develop recommendations for improving the efficiency and inclusiveness of agricultural

value chains including through the application of ICTs, but not limited to them;

7

to identify the bottlenecks to increased production of high quality

potatoes in Bangladesh that holds a huge potential to cater to the expanding market.

Economy (KBE) research were to:

depth understanding of how innovations related to Information and

Communication Technologies (ICTs) are used (and may be used) to improve the

h; the specific focus

especially micro and

small enterprises (MSEs), and small and medium enterprises (SMEs) within the value

reduction of various forms of

Develop recommendations for improving the efficiency and inclusiveness of agricultural

value chains including through the application of ICTs, but not limited to them;

specifically, identify and differentiat85

private sector vs. the public sector in providing such services to MSEs and SMEs.86

• Based on the in‐depth understanding87

related to measuring progress toward 88

89

In order to carry out KBE research in 90

selected through desk research. The following criteria were used to select 91

export-oriented agricultural value chains:92

Goods that 93

94

a) have potential for value addition,95

b).have high participation (or potential for participation) by small 96

MSE/ SMEs, 97

c. have high export potential98

d. have potential for increased productivity.99

100

After a rigorous desk research followed by 101

as one of the two most potential value chains and was analysed 102

describes the in-depth analysis of 103

104

Methodology 105

106

The study adopted the value chain analysis method to unfold the industry dynamics, its market 107

actors and different service provisions, constraints and108

carried out through desk research and in109

1 See Appendix 1 for selection summary

specifically, identify and differentiate between the roles that shall be played by the

private sector vs. the public sector in providing such services to MSEs and SMEs.

depth understanding mentioned above, contribute to improving indicators

related to measuring progress toward inclusive knowledge‐based economies.

In order to carry out KBE research in the Bangladesh agriculture sector, two value chains were

selected through desk research. The following criteria were used to select the two most potential

ral value chains:

have potential for value addition,

high participation (or potential for participation) by small

export potential, and

ave potential for increased productivity.

s desk research followed by a short-listing and ranking exercise1, potato came out

as one of the two most potential value chains and was analysed further afterwards. This report

depth analysis of the potato value chain.

The study adopted the value chain analysis method to unfold the industry dynamics, its market

actors and different service provisions, constraints and opportunities. The overall research was

carried out through desk research and in-depth interviews and Focus Group Discussion

See Appendix 1 for selection summary

8

e between the roles that shall be played by the

private sector vs. the public sector in providing such services to MSEs and SMEs.

mentioned above, contribute to improving indicators

based economies.

Bangladesh agriculture sector, two value chains were

two most potential

actors including

, potato came out

further afterwards. This report

The study adopted the value chain analysis method to unfold the industry dynamics, its market

opportunities. The overall research was

and Focus Group Discussions (FGDs).

The desk research involved reviewing 110

research helped develop a general understanding of the overall sector. It resulted in identifying 111

different market actors and nodal points within the value chain which112

depth interview respondents. The113

research agencies, value chain actors and industry associations. A snow114

adopted to develop the entire value chain. The process started with identifying and interviewing 115

end market factors such as exporters, then gradually moving 116

supplier level. In all, 72 interviews were conducted with different value chain actors, key 117

informants and service providers. 118

geographical locations were selected as potato producing clusters representing the diversified 119

nature of varieties and yield. The areas were Munshiganj (historically large scale potato 120

producing district), Comilla (agriculturally progressive district producing 121

scale) and Rangpur (joined recently in large scale potato production). Three FGDs were carried 122

out with potato farmers in these three different areas to capture the overall 123

Primary data was collected during 124

with interviews and FGDs throughout the study period to validate field findings with available 125

facts and figures. The overall research ap126

127

1. Mapping the core processes in the value chain,128

2. Identifying the actors, 129

3. Identifying the services that feed into the value chain,130

4. Mapping the relationships and linkages, 131

5. Mapping the flow of products including the geogra132

6. Mapping the changes in the value and form of the products,133

7. Mapping the information and knowledge flows,134

8. Mapping the number of actors and employment, and 135

9. Identifying the transaction costs and ways to reduce them. 136

137

The desk research involved reviewing the existing literature on the sector. The initial desk

eneral understanding of the overall sector. It resulted in identifying

different market actors and nodal points within the value chain which, in turn,

depth interview respondents. They included industry experts, concerned government and

research agencies, value chain actors and industry associations. A snow-balling approach was

adopted to develop the entire value chain. The process started with identifying and interviewing

tors such as exporters, then gradually moving up the value chain

72 interviews were conducted with different value chain actors, key

informants and service providers. The list of respondents is given in Appendix 2. Three different

geographical locations were selected as potato producing clusters representing the diversified

nature of varieties and yield. The areas were Munshiganj (historically large scale potato

(agriculturally progressive district producing potato on a

) and Rangpur (joined recently in large scale potato production). Three FGDs were carried

out with potato farmers in these three different areas to capture the overall production scenario.

collected during the first quarter of 2011. Desk research was continued along

with interviews and FGDs throughout the study period to validate field findings with available

facts and figures. The overall research applied the following approaches:

Mapping the core processes in the value chain,

Identifying the services that feed into the value chain,

Mapping the relationships and linkages,

Mapping the flow of products including the geographical flow,

Mapping the changes in the value and form of the products,

Mapping the information and knowledge flows,

Mapping the number of actors and employment, and

Identifying the transaction costs and ways to reduce them.

9

the sector. The initial desk

eneral understanding of the overall sector. It resulted in identifying

helped select in-

included industry experts, concerned government and

balling approach was

adopted to develop the entire value chain. The process started with identifying and interviewing

the value chain to the input

72 interviews were conducted with different value chain actors, key

in Appendix 2. Three different

geographical locations were selected as potato producing clusters representing the diversified

nature of varieties and yield. The areas were Munshiganj (historically large scale potato

potato on a moderate

) and Rangpur (joined recently in large scale potato production). Three FGDs were carried

production scenario.

first quarter of 2011. Desk research was continued along

with interviews and FGDs throughout the study period to validate field findings with available

The report begins with a brief description of the Bangladesh potato sector138

the value chain including the information and knowledge flows at different tiers. It also 139

summarizes the constraints and opportunities and possible solutions to address them. As the key 140

focus of the study is to identify the knowledge g141

research. 142

143

a brief description of the Bangladesh potato sector followed by mapping

the value chain including the information and knowledge flows at different tiers. It also

summarizes the constraints and opportunities and possible solutions to address them. As the key

focus of the study is to identify the knowledge gaps, it is reflected from the very beginning of the

10

followed by mapping

the value chain including the information and knowledge flows at different tiers. It also

summarizes the constraints and opportunities and possible solutions to address them. As the key

very beginning of the

Introduction 144

145

Overview 146

Potato has been cultivated in Bangladesh for more than a century and has recently occupied an 147

important place in its list of major food and cash 148

a vegetable in Bangladesh, while 149

After the introduction of cold storage facilities in 150

the most promising crops as it can now be consumed throughout the year. Potato consumption in 151

Bangladesh is next only to two major cereals152

consume cheap potatoes more than other vegetables (Moazzem153

per capita consumption of potato is still much lower (about 24 kg per year) than 154

countries. However, the data is based on 155

country and not on the basis of foo156

However, since the overall export volume is still very low compared to the total production, it 157

may not impact the data very significantly.158

2 Moazem G.K. and Fuzita J (2004), perspective of A village study in Comilla district, TheDevelopingEconomies,XLII

Potato has been cultivated in Bangladesh for more than a century and has recently occupied an

list of major food and cash crops. It is a subsidiary food item consumed as

while in many countries of the world it constitutes the staple food.

After the introduction of cold storage facilities in the late eighties, it has turned

the most promising crops as it can now be consumed throughout the year. Potato consumption in

Bangladesh is next only to two major cereals—rice and wheat, and low-income households

consume cheap potatoes more than other vegetables (Moazzem and Fuzita, 2004)

per capita consumption of potato is still much lower (about 24 kg per year) than

However, the data is based on the production of potato and the population of the

country and not on the basis of food intake (Hussain, 2008), and it also excludes exports.

However, since the overall export volume is still very low compared to the total production, it

may not impact the data very significantly.

Moazem G.K. and Fuzita J (2004), The potato marketing system and its changes In Bangladesh: from the omilla district, TheDevelopingEconomies,XLII-1(March2004):63

11

Potato has been cultivated in Bangladesh for more than a century and has recently occupied an

It is a subsidiary food item consumed as

in many countries of the world it constitutes the staple food.

late eighties, it has turned out to be one of

the most promising crops as it can now be consumed throughout the year. Potato consumption in

income households

and Fuzita, 2004)2. The present

per capita consumption of potato is still much lower (about 24 kg per year) than in many other

population of the

and it also excludes exports.

However, since the overall export volume is still very low compared to the total production, it

angladesh: from the 1(March2004):63−94

159

Figure1. Per head per year consumption of potato in Bangladesh (24.09 kg) compared to some 160

other countries of the world3. 161

162

The overall global production of potato has increased over the last few decades despite 163

production in developed countries experiencing a164

1991 the volume of global potato production was 268 million tonnes whereas 165

325 million tonnes in 2007. The global potato sector has been undergoing many changes since 166

the early 1990s. Before 1990s, most potatoes were grown and consumed in Europe, North 167

America and countries of the former Soviet Union. However, since then, there h168

dramatic increase in potato production and 169

output rose from less than 30 million tonnes in the early 1960s to more than 165 million tonnes 170

in 2007. FAO data shows that in 2005, for the first time171

production exceeded that of the developed world. China has now become the biggest potato 172

3 Hussain, M.M. 2008. Prospects of potato in Bangladesh.

CSD, Dhaka, Bangladesh

835.

6

415.

1

0

100

200

300

400

500

600

700

800

900

Per

hea

d/y

ear c

on

sum

pti

on

(k

g)-

Belarus

Netherlands

Per head per year consumption of potato in Bangladesh (24.09 kg) compared to some

The overall global production of potato has increased over the last few decades despite

production in developed countries experiencing a steady decline. According to FAO data, in

of global potato production was 268 million tonnes whereas production reached

325 million tonnes in 2007. The global potato sector has been undergoing many changes since

the early 1990s. Before 1990s, most potatoes were grown and consumed in Europe, North

America and countries of the former Soviet Union. However, since then, there h

dramatic increase in potato production and in demand in Asia, Africa and Latin America, where

output rose from less than 30 million tonnes in the early 1960s to more than 165 million tonnes

that in 2005, for the first time, the developing world's potato

production exceeded that of the developed world. China has now become the biggest potato

. 2008. Prospects of potato in Bangladesh. in Bangladesh Potato Campaign 2008. MOA, FAO &

835.

6

415.

1

414.

8

291.

1

286

271

267.

4

261.

2

259

219.

4

24.0

9

Belarus

Netherlands

Ukraine

Denm

ark

Latvia

Poland

Belgium

Lithunia

Russia

Kyrgyzstan

Bangladesh

Countries

12

Per head per year consumption of potato in Bangladesh (24.09 kg) compared to some

The overall global production of potato has increased over the last few decades despite

steady decline. According to FAO data, in

production reached

325 million tonnes in 2007. The global potato sector has been undergoing many changes since

the early 1990s. Before 1990s, most potatoes were grown and consumed in Europe, North

America and countries of the former Soviet Union. However, since then, there has been a

demand in Asia, Africa and Latin America, where

output rose from less than 30 million tonnes in the early 1960s to more than 165 million tonnes

, the developing world's potato

production exceeded that of the developed world. China has now become the biggest potato

Bangladesh Potato Campaign 2008. MOA, FAO &

producer, and almost a third of all potato is harvested in China and India. Currently, Bangladesh 173

is ranked 12th in the global potato p174

175

176

Figure 2. Top potato producing countries of the world in 2009 (Source: FAOSTAT)177

178

Potato consumption, especially fresh potato, is decreasing in many countries, especially in 179

developed regions. Currently, more potatoes are processed to meet 180

fast food, snack and convenience food industries. The major drivers behind this development 181

include growing urban populations, rising incomes, the diversification of diets 182

leave little time for preparing the fresh product for consumption.183

184

Potato, till today, is consumed 185

Activities towards promoting potato as a partial supplement to rice (rice is the major staple food) 186

4 FAOSTAT

producer, and almost a third of all potato is harvested in China and India. Currently, Bangladesh

in the global potato production list in terms of quantity.4

Top potato producing countries of the world in 2009 (Source: FAOSTAT)

Potato consumption, especially fresh potato, is decreasing in many countries, especially in

regions. Currently, more potatoes are processed to meet the rising demand from the

fast food, snack and convenience food industries. The major drivers behind this development

include growing urban populations, rising incomes, the diversification of diets and lifestyles that

time for preparing the fresh product for consumption.

Potato, till today, is consumed round the year in Bangladesh, mostly as a fresh vegetable.

Activities towards promoting potato as a partial supplement to rice (rice is the major staple food)

13

producer, and almost a third of all potato is harvested in China and India. Currently, Bangladesh

Top potato producing countries of the world in 2009 (Source: FAOSTAT)

Potato consumption, especially fresh potato, is decreasing in many countries, especially in

rising demand from the

fast food, snack and convenience food industries. The major drivers behind this development

and lifestyles that

in Bangladesh, mostly as a fresh vegetable.

Activities towards promoting potato as a partial supplement to rice (rice is the major staple food)

has not yet resulted in any significant success. The underlying reasons are 187

habits of Bangladeshi people and 188

remains reasonably low during the peak harvesting period and 189

in cold stores is completed. The stated situation indicates that there is little scope for 190

increase in per capita consumption of fresh potatoes in 191

country human consumption of fresh potatoes is192

rate of population increase, thereby maintaining the same per capita consumption. 193

production exceeding human consumption as fresh produce can be expected if the processing 194

and exports of potatoes increase significantly.195

196

The main export market for fresh potato is the developed world, and 197

statistics, the top ten potato importing countries 198

Russia, the USA, Germany, the UK, France and Portugal. 199

potato in the 1980s, and so far the highest amount of potato exported from Bangladesh was about 200

16,500 tonnes last fiscal year (2010201

products include the Republic of Korea, Italy, Singapore, Malaysia, 202

The opening of new markets in Russia, Vietnam and Sri Lanka facilitated the recent 203

exports. (Source: DAE). 204

205

Figure 3 and 4 illustrate the country206

the quantity of fresh potato export207

208

any significant success. The underlying reasons are the

adeshi people and the high price of potato in recent years. Generally, the price

remains reasonably low during the peak harvesting period and rises high when loading

in cold stores is completed. The stated situation indicates that there is little scope for

increase in per capita consumption of fresh potatoes in the near future. However, the total in

country human consumption of fresh potatoes is likely to increase, at least, in proportion to

thereby maintaining the same per capita consumption.

human consumption as fresh produce can be expected if the processing

exports of potatoes increase significantly.

fresh potato is the developed world, and according to

the top ten potato importing countries are Belgium, the Netherlands, Spain, Italy,

he UK, France and Portugal. Bangladesh started

1980s, and so far the highest amount of potato exported from Bangladesh was about

last fiscal year (2010-11). Major export markets of Bangladesh potato and potato

Republic of Korea, Italy, Singapore, Malaysia, the UK, India and

The opening of new markets in Russia, Vietnam and Sri Lanka facilitated the recent

Figure 3 and 4 illustrate the country-wise import and export of potatoes in 2009. Figure 5 shows

fresh potato exports from Bangladesh in 1999 - 2008.

14

the traditional food

recent years. Generally, the price

high when loading potatoes

in cold stores is completed. The stated situation indicates that there is little scope for a significant

near future. However, the total in-

in proportion to the

thereby maintaining the same per capita consumption. Increased

human consumption as fresh produce can be expected if the processing

according to 2008 FAO

he Netherlands, Spain, Italy,

Bangladesh started the export of

1980s, and so far the highest amount of potato exported from Bangladesh was about

export markets of Bangladesh potato and potato

he UK, India and the UAE.

The opening of new markets in Russia, Vietnam and Sri Lanka facilitated the recent growth in

wise import and export of potatoes in 2009. Figure 5 shows

209

Figure 3. Top potato importing countries in 2009 (Source: FAOSTAT)210

211

212

. Top potato importing countries in 2009 (Source: FAOSTAT)

15

. Top potato importing countries in 2009 (Source: FAOSTAT)

Figure 4. Top potato exporting countries in 2009 (Source: FAOSTAT)213

214

215

Figure 5. Quantity of fresh table potato exported from Bangladesh in 1999216

Figures 3 and 4 show that Belgium and 217

also are in the list of top exporting countries. 218

than that of its imports, which may explain the value addition there. However, in 219

unit value of imports into Belgium is a little higher than that of export220

observed in the case of a few other countries as well. For example, Germany’s per unit import 221

value is much higher than per unit export value. Since FAOSTAT categorizes only potatoes and 222

potato flour, it is not very clear how it considers other value added products u223

However, it is clear that a number of countries import and also export potatoes either in the same 224

form or in other value added forms. 225

provide satisfactory leads to resolve this dilemma. 226

Potato is a very popular crop for227

main reasons as found during the FGDs with farmers were its higher profitability, short growth 228

duration, the next crops requiring229

0

1000

2000

3000

4000

5000

6000

7000

8000

Quantity

(m

t)

1999 2000

. Top potato exporting countries in 2009 (Source: FAOSTAT)

Quantity of fresh table potato exported from Bangladesh in 1999-2008 (Source: DAE)

4 show that Belgium and the Netherlands are the top importing countries but they

also are in the list of top exporting countries. The unit value of the Netherlands’ export

which may explain the value addition there. However, in

Belgium is a little higher than that of exports. Similar

few other countries as well. For example, Germany’s per unit import

value is much higher than per unit export value. Since FAOSTAT categorizes only potatoes and

it is not very clear how it considers other value added products u

, it is clear that a number of countries import and also export potatoes either in the same

form or in other value added forms. An examination of these country-wise trade policies may

to resolve this dilemma.

for farmers in Bangladesh, irrespective of land holding size. The

main reasons as found during the FGDs with farmers were its higher profitability, short growth

ing less fertilizer, scope of intercropping/relay cropping

2001 2002 2003 2004 2005 2006 2007 2008

Year

16

. Top potato exporting countries in 2009 (Source: FAOSTAT)

2008 (Source: DAE)

he Netherlands are the top importing countries but they

Netherlands’ exports is higher

which may explain the value addition there. However, in the case of the

. Similar features can be

few other countries as well. For example, Germany’s per unit import

value is much higher than per unit export value. Since FAOSTAT categorizes only potatoes and

it is not very clear how it considers other value added products under potatoes.

, it is clear that a number of countries import and also export potatoes either in the same

wise trade policies may

farmers in Bangladesh, irrespective of land holding size. The

main reasons as found during the FGDs with farmers were its higher profitability, short growth

less fertilizer, scope of intercropping/relay cropping, etc.

Figures 6, 7 and 8 show the potato production and area coverage, yield and export trend230

Bangladesh. 231

232

233

235

236

237

238

239

240

241

242

243

244

245

246

247

0

2,000

4,000

6,000

8,000

2004 2005 2006 2007

Year

Potato production and area

coverage trend

Production in '000 MT

Figure 6. Potato production and area coverage trend in

Bangladesh (Source: FAOSTAT)

potato production and area coverage, yield and export trend

235

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2004 2005 2006

Expo

rt v

olum

e in

MT

Potato export trend

2007 2008 2009

Potato production and area

coverage trend

Area in '000 Ha

0

2

4

6

8

10

12

14

16

18

2004 2005 2006

Yie

ld in

MT/

Ha

Year

Yield trend

Potato production and area coverage trend in

Figure 7. Yield growth trend of potato production in

Bangladesh (Source: FAOSTAT)

17

potato production and area coverage, yield and export trends in

2007 2008 2009 2010 2011

Year

Potato export trend

2007 2008 2009

Year

Yield trend

Yield growth trend of potato production in

248

249

250

251

252

253

These Figures show that in 2004 254

production and 2.76% for yield; for export volume it was 29.12 %. Besides, the growth of 255

area under cultivation was 8.29%. However, there was an overall setback in256

industry experts, there was a potato glut in 2008 and consequently, farmers were compelled to 257

sell their produce at low prices. In the following year, many farmers did not cultivate potatoes or 258

invested less in cultivation which resulted in259

volume has steadily increased during 260

incentives to exporters on the export value, it has been working as a catalyst to increase 261

Till last fiscal year, potato export262

entitled to receive a 20% cash incentive if the 263

shipment was made between February and 264

April. In other months, the incentive was 265

halved to 10% to boost supply in the local 266

market. From the current fiscal year, potato 267

exports are entitled to a 20% cash incentive 268

throughout the year. Figure 8 shows that 269

exports have jumped to 16,500 tonnes in 270

2011. 271

272

Figure 8.

FAOSTAT and DAE)

in 2004 - 2008, the compound annual growth rate was 11.22% for

production and 2.76% for yield; for export volume it was 29.12 %. Besides, the growth of

area under cultivation was 8.29%. However, there was an overall setback in 2009. As opined by

s a potato glut in 2008 and consequently, farmers were compelled to

. In the following year, many farmers did not cultivate potatoes or

invested less in cultivation which resulted in lower yields (Figure 7). However,

volume has steadily increased during the last couple of years. As government provides cash

export value, it has been working as a catalyst to increase

potato exports were

20% cash incentive if the

shipment was made between February and

April. In other months, the incentive was

halved to 10% to boost supply in the local

current fiscal year, potato

20% cash incentive

Figure 8 shows that

exports have jumped to 16,500 tonnes in

Figure 8. Potato export trend in Bangladesh (Source:

FAOSTAT and DAE)

18

compound annual growth rate was 11.22% for

production and 2.76% for yield; for export volume it was 29.12 %. Besides, the growth of the

2009. As opined by

s a potato glut in 2008 and consequently, farmers were compelled to

. In the following year, many farmers did not cultivate potatoes or

(Figure 7). However, the export

last couple of years. As government provides cash

export value, it has been working as a catalyst to increase exports.

273

274

275

276

277

278

279

Potato Production 280

281

According to DAE, potato is grown282

the highest area of concentration is in Bogra283

and 2008-09 and contributing to 10.13% and 13.29% of the national total respectively. This is 284

followed by Rangpur (52,720 ha in 2007285

2007-08 and 37,558 ha in 2008-09), Joypurhat (38,870 ha in 2007286

Munshiganj (36,045 Ha in 2007287

2007-08 and 31,550 ha in 2008-09). 288

289

290

291

292

293

5 Field Service Wing of DAE

According to DAE, potato is grown in all the districts of Bangladesh5 (Figure 9). Among them,

the highest area of concentration is in Bogra—65,300 Hectares (ha) and 61,667 ha in 2007

contributing to 10.13% and 13.29% of the national total respectively. This is

followed by Rangpur (52,720 ha in 2007-08 and 53,700 ha in 2008-09), Dinajpur (42,430 ha in

09), Joypurhat (38,870 ha in 2007-08 and 36,075 ha in 2

Munshiganj (36,045 Ha in 2007-08 and 32,714 Ha in 2008-09), and Rajshahi (35,000 ha in

09).

Figure 9: Potato cultivation by districts in 2007

Food Programme)

19

(Figure 9). Among them,

65,300 Hectares (ha) and 61,667 ha in 2007-08

contributing to 10.13% and 13.29% of the national total respectively. This is

09), Dinajpur (42,430 ha in

08 and 36,075 ha in 2008-09),

09), and Rajshahi (35,000 ha in

Potato cultivation by districts in 2007-08 (Source: World

294

Figure 10. Area under potato 295

2008-09 (Source: Field Service Wing, DAE)296

297

The lowest area coverage is reported to be in Rajbari (96 ha in 2007298

The Dhaka region, particularly Munshiganj, which is generally known as the potato production 299

belt of Bangladesh, is gradually losing its importance in terms of area coverage in potato300

regions like Rajshahi and Rangpur are gaining momentum. 301

highest area concentrations under potato in 2007302

172,091 ha, respectively), showing a steep rise in area under potato cultivation 303

2007-08 (Figure 10). The expansion of 304

namely, Rangpur, Dinajpur, Thakurgaon and Rajshahi is mainly due to 305

a relatively lower lease value leading to lower cost306

307

308

0

20

40

60

80

100

120

140

160

180

200

2000-01

Are

a ('0

00 h

a)

Area under potato cultivation in different regions of the country in 2000

(Source: Field Service Wing, DAE)

The lowest area coverage is reported to be in Rajbari (96 ha in 2007-08 and 137 ha in 2008

e Dhaka region, particularly Munshiganj, which is generally known as the potato production

dually losing its importance in terms of area coverage in potato

regions like Rajshahi and Rangpur are gaining momentum. According to the DAE’s data, the

highest area concentrations under potato in 2007-08 were in Rangpur and Rajshahi (178,114 and

172,091 ha, respectively), showing a steep rise in area under potato cultivation from

08 (Figure 10). The expansion of the potato cultivation area in the northern districts,

Rangpur, Dinajpur, Thakurgaon and Rajshahi is mainly due to the availability of land at

relatively lower lease value leading to lower costs of production.

2001-02 2002-03 2003-04 2004-05 2007-08

Year

DhakaMymensinghComilla

Sylhet Chittagong Chittagong Hill Tract Rajshahi

RangpurJessoreBarisal

20

in different regions of the country in 2000-01 to

08 and 137 ha in 2008-09).

e Dhaka region, particularly Munshiganj, which is generally known as the potato production

dually losing its importance in terms of area coverage in potato whereas

the DAE’s data, the

08 were in Rangpur and Rajshahi (178,114 and

from 2004-05 to

potato cultivation area in the northern districts,

availability of land at

2007-08 2008-09

Yield and Yield Variation 309

310

Potato is a short duration crop in Bangladesh and its yield is relatively low 311

climatic limitations. The current national average yield of potato in Bangladesh is about 15 312

MT/ha, as compared to that of more than 40 MT/ha 313

temperate region (Figure 11). In the potato growing countries of the temperate region, potatoes 314

are grown during a long growing period 315

temperature, resulting in high accumulation of photosynthate in the tubers, ultimately leading to 316

high yields. 317

318

Figure 11. Yield of potato in Bangladesh compared to some other top potato growing countries 319

of the world in 2007. (Source: FAOSTAT)320

321

Potato yields vary widely among the potato growing areas of Bangladesh. Table 1 shows the 322

yields in different regions of the country 323

Services Wing of DAE. 324

325

45.37 44.72 44.58

0

5

10

15

20

25

30

35

40

45

50

France

6et

herla

nds

USA

Ger

man

y

Yie

ld (

mt/

ha

)

Potato is a short duration crop in Bangladesh and its yield is relatively low y mainly

climatic limitations. The current national average yield of potato in Bangladesh is about 15

MT/ha, as compared to that of more than 40 MT/ha in many potato growing countries of the

temperate region (Figure 11). In the potato growing countries of the temperate region, potatoes

are grown during a long growing period in summer with long sunny days and

resulting in high accumulation of photosynthate in the tubers, ultimately leading to

Yield of potato in Bangladesh compared to some other top potato growing countries

of the world in 2007. (Source: FAOSTAT)

widely among the potato growing areas of Bangladesh. Table 1 shows the

in different regions of the country from 2000-01 to 2008-09, as reported by the Field

44.5842.34

40.19

24.95

21.19 20.7

14.97 14.9213.14 12.89 12.66

Ger

man

yU

KIr

an

Belar

us

Polan

d

Ban

glad

esh

India

Ukr

aine

Rus

sia

Chi

na

21

y mainly owing to

climatic limitations. The current national average yield of potato in Bangladesh is about 15

in many potato growing countries of the

temperate region (Figure 11). In the potato growing countries of the temperate region, potatoes

long sunny days and a moderate cool

resulting in high accumulation of photosynthate in the tubers, ultimately leading to

Yield of potato in Bangladesh compared to some other top potato growing countries

widely among the potato growing areas of Bangladesh. Table 1 shows the

09, as reported by the Field

12.66

Chi

na

Table 1. Yield of potato in different regions of the country 326

2007-08 to 2008 -09 327

328

Region

2000-01 2001

Dhaka 23.25 22.77

Mymensingh 8.84 9.27

Comilla 16.27 12.59

Sylhet 9.17 9.34

Chittagong 13.60 11.53

Chittagong

Hill Tract 8.11 8.08

Rajshahi 7.23 7.69

Rangpur 10.38 8.77

Jessore 14.47 16.59

Barisal 11.19 10.08

6ational

(Average) 12.59 11.98

Source: Field Services Wing, DAE329

330

Interestingly, the yield of potato in Munshiganj district (fall331

than that of a few temperate countries of the world like Belarus, Poland and Iran (Table 1 and 332

Figure 11). 333

334

Potato cultivation 335

336

Yield of potato in different regions of the country from 2000-01 to 2004

Yield (MT/Ha)

2001-02 2002-03 2003-04 2004-05 2007-08

22.77 23.35 23.81 25.55 25.83

9.27 9.35 9.57 10.22 13.83

12.59 16.26 16.33 16.61 18.80

9.34 9.10 8.30 8.90 9.71

11.53 10.90 11.80 11.60 14.53

8.08 7.92 8.22 9.42 14.82

7.69 9.69 11.31 12.79 15.48

8.77 13.21 13.96 15.11 17.96

16.59 16.50 16.93 18.06 17.38

10.08 10.14 9.97 10.85 20.72

11.98 13.75 14.39 15.08 17.75

: Field Services Wing, DAE

Interestingly, the yield of potato in Munshiganj district (falling under Dhaka region) is higher

few temperate countries of the world like Belarus, Poland and Iran (Table 1 and

22

01 to 2004-05 and from

Yield (MT/Ha)

08 2008-09

25.83 25.43

13.83 13.68

18.80 17.95

9.71 9.62

14.53 14.03

14.82 12.92

15.48 12.09

17.96 14.21

17.38 14.56

20.72 18.04

17.75 14.54

under Dhaka region) is higher

few temperate countries of the world like Belarus, Poland and Iran (Table 1 and

Potato is cultivated in the winter season. The first fortnight of November is the right time for 337

plantation. However, in certain north338

harvest the crop early. Mulching339

etc. to preserve soil moisture and to prevent the growth of weeds. As the potato plants become 340

mature and the tubers are fully formed, the leaves become gradually yellowish and then 341

brownish, and finally the plants die. It is always better to harvest the crop after these signs are 342

evident in the field. Most varieties are harvested in this country during February343

Collection of the tubers is usually done manually using a spade or other d344

345

Potato Varieties and Grades 346

347

Diamante is the most widely grown potato variety in most of the potato growing districts 348

followed by Granola, Cardinal, Multa, Binella and Felsina. Other varieties grown in different 349

potato growing zones are Asterix, P350

among them, mostly the Granola variety is currently being exported because of its appearance, 351

taste and size. There are two different grades for exportable potato (Granola)352

tubers/kg and Grade B: 7-10 tubers/kg. The bigger the size of the tubers, the 353

The average C&F value per MT of potatoes in 2007 was USD 240 and in 2008, it was USD 250 354

for Singapore and USD 265 for Malaysia. It is 355

season (February-April), the wholesale price of potato in the local market is as low as USD 80 356

per MT and it rises up to USD 280 per MT during November357

358

State Support 359

360

The potato sector receives a considerable amount of state patronage 361

potato now enjoys 20% cash incentive on export value in order for Bangladeshi potato to become 362

6 In agriculture and gardening, mulch is a protective cover placed over the provide nutrients, and suppress weed growth and seed germination; Source: Wikipedia

Potato is cultivated in the winter season. The first fortnight of November is the right time for

plantation. However, in certain north-western areas, farmers even plant potato in October to

harvest the crop early. Mulching6 is frequently done over the rows with water hyacinth, straw

soil moisture and to prevent the growth of weeds. As the potato plants become

mature and the tubers are fully formed, the leaves become gradually yellowish and then

, and finally the plants die. It is always better to harvest the crop after these signs are

evident in the field. Most varieties are harvested in this country during February

Collection of the tubers is usually done manually using a spade or other devices.

Diamante is the most widely grown potato variety in most of the potato growing districts

followed by Granola, Cardinal, Multa, Binella and Felsina. Other varieties grown in different

potato growing zones are Asterix, Patronese, Provento, Ultra, Heera and Dheera. However,

Granola variety is currently being exported because of its appearance,

taste and size. There are two different grades for exportable potato (Granola)

10 tubers/kg. The bigger the size of the tubers, the

The average C&F value per MT of potatoes in 2007 was USD 240 and in 2008, it was USD 250

for Singapore and USD 265 for Malaysia. It is important to mention that, during peak harvesting

wholesale price of potato in the local market is as low as USD 80

per MT and it rises up to USD 280 per MT during November-December.

considerable amount of state patronage for export

potato now enjoys 20% cash incentive on export value in order for Bangladeshi potato to become

is a protective cover placed over the soil to retain moisture, reduce erosion, provide nutrients, and suppress weed growth and seed germination; Source: Wikipedia

23

Potato is cultivated in the winter season. The first fortnight of November is the right time for

western areas, farmers even plant potato in October to

is frequently done over the rows with water hyacinth, straw,

soil moisture and to prevent the growth of weeds. As the potato plants become

mature and the tubers are fully formed, the leaves become gradually yellowish and then

, and finally the plants die. It is always better to harvest the crop after these signs are

evident in the field. Most varieties are harvested in this country during February-March.

Diamante is the most widely grown potato variety in most of the potato growing districts

followed by Granola, Cardinal, Multa, Binella and Felsina. Other varieties grown in different

atronese, Provento, Ultra, Heera and Dheera. However,

Granola variety is currently being exported because of its appearance,

taste and size. There are two different grades for exportable potato (Granola): Grade A: 4-6

10 tubers/kg. The bigger the size of the tubers, the higher the price.

The average C&F value per MT of potatoes in 2007 was USD 240 and in 2008, it was USD 250

to mention that, during peak harvesting

wholesale price of potato in the local market is as low as USD 80

exports. The export of

potato now enjoys 20% cash incentive on export value in order for Bangladeshi potato to become

to retain moisture, reduce erosion,

competitive in the global market. However, farmers do not 363

exporters do. But exporters become more price364

more due to the cash incentive. With increased volume365

increases in the local market and farmers366

367

Mapping the Value Chain 368

369

Product Flow and Value Chain Actors370

371

From production to consumption, export and processing of potato, different actors are involved 372

in the potato sector. Among the public sector organizations, 373

(TCRC) of the Bangladesh Agricultural Research Institute (BARI) and Bangladesh Agricultural 374

Development Corporation (BADC) are involved in research, technology development, variety 375

development, seed production and promotional376

individuals and NGOs are involved in the production and marketing of potatoes. 377

diagram shows the core process involving different actors in the potato value chain. The 378

subsequent sections describe the role of different actors in the process.379

380

381

382

383

384

385

386

387

388

389

390

Inp

ut

Su

pp

lie

rs

Gro

we

rs/

Fa

rme

rs

global market. However, farmers do not receive the incentive directly but

exporters do. But exporters become more price-competitive in the global market and can export

more due to the cash incentive. With increased volumes of exports, the demand for potato

local market and farmers usually get a better price.

Product Flow and Value Chain Actors

From production to consumption, export and processing of potato, different actors are involved

in the potato sector. Among the public sector organizations, the Tuber Crops Research Centre

(TCRC) of the Bangladesh Agricultural Research Institute (BARI) and Bangladesh Agricultural

Development Corporation (BADC) are involved in research, technology development, variety

development, seed production and promotional activities in potato. Private companies,

individuals and NGOs are involved in the production and marketing of potatoes.

diagram shows the core process involving different actors in the potato value chain. The

e role of different actors in the process.

Traders/Bepari

Cold Storage Owners

Arotdars (Wholesalers)

Processors

Exporters

Retailer

24

the incentive directly but

global market and can export

demand for potato

From production to consumption, export and processing of potato, different actors are involved

he Tuber Crops Research Centre

(TCRC) of the Bangladesh Agricultural Research Institute (BARI) and Bangladesh Agricultural

Development Corporation (BADC) are involved in research, technology development, variety

n potato. Private companies,

individuals and NGOs are involved in the production and marketing of potatoes. The following

diagram shows the core process involving different actors in the potato value chain. The

391

392

393

394

395

396

397

Figure 12. 398

399

Input Suppliers 400

401

Four major inputs are required in potato cultivation. These are seed402

fertilizers and irrigation. Among them, seed is the most important and vital input. Considering 403

potato production in about 400,000 ha of land in 2007404

annual requirement of seed potato in Bangladesh is about 600,000 MT. But, the supply of high 405

quality seed potatoes in the country is only about 6% of the total requirement406

locally produced seed potato is 1%, private sector’s locally produced seed potato is 2% and 407

private sector’s imported seed potato is 3% (Figure 10). The 408

seed potatoes, which were harvested in preceding season from table potato crop of the potato 409

growers and preserved in cold storage410

7 Standard rate recommended by DAE

Figure 12. Core Process and Value Chain Actors

Four major inputs are required in potato cultivation. These are seed, crop protection materials,

fertilizers and irrigation. Among them, seed is the most important and vital input. Considering

production in about 400,000 ha of land in 2007-08 and a seed rate of 1.5 MT/Ha

annual requirement of seed potato in Bangladesh is about 600,000 MT. But, the supply of high

quality seed potatoes in the country is only about 6% of the total requirement; of which, BADC’s

locally produced seed potato is 1%, private sector’s locally produced seed potato is 2% and

private sector’s imported seed potato is 3% (Figure 10). The balance 94% is farmers’ retained

seed potatoes, which were harvested in preceding season from table potato crop of the potato

growers and preserved in cold storage.

25

, crop protection materials,

fertilizers and irrigation. Among them, seed is the most important and vital input. Considering

08 and a seed rate of 1.5 MT/Ha7, the

annual requirement of seed potato in Bangladesh is about 600,000 MT. But, the supply of high

; of which, BADC’s

locally produced seed potato is 1%, private sector’s locally produced seed potato is 2% and

94% is farmers’ retained

seed potatoes, which were harvested in preceding season from table potato crop of the potato

411

Figure 13. Supply of quality seed potato (6%) in Bangladesh from different sources, compared 412

to farmers' seed (94%) in 2008413

414

In general, the application of the 415

perception that a higher seed rate would result in higher yield416

germination of seed can be offset this way. 417

418

There is no special type of fertilizer 419

crops is also used in potato production. 420

organic fertilizers. Apart from organic manure, 421

shops that are available in all village markets. But adulteration of fertilizer is commonplace and 422

farmers suffer from increased production cost423

fertilizer is generally lower than the recommended dose of 10 MT/ha424

organic manure like cow dung, farm manure and compost is the main reason for 425

of organic fertilizer. 426

427

Crop protection materials include fungicides, insecticides and bactericides. Application of such 428

materials is very common among 429

8 Recommended by DAE

BADC

Supply of quality seed potato (6%) in Bangladesh from different sources, compared

o farmers' seed (94%) in 2008-09. (Source: Hussain, 2008)

the seed rate is higher than recommended. Farmers have a common

higher seed rate would result in higher yields and also loss through failed

ion of seed can be offset this way.

special type of fertilizer as such for potato only. Fertilizer used in other agricultural

also used in potato production. Common fertilizers are urea, MOP, TSP, NPK and

organic fertilizers. Apart from organic manure, the rest of the fertilizer is sold in input retail

shops that are available in all village markets. But adulteration of fertilizer is commonplace and

fer from increased production costs due to over application of them. Use of organic

fertilizer is generally lower than the recommended dose of 10 MT/ha8. The limited availability of

organic manure like cow dung, farm manure and compost is the main reason for

Crop protection materials include fungicides, insecticides and bactericides. Application of such

among potato farmers for curing and also protect

1%3%

94%

2%

BADC Private sector Imported Farmers' seed

26

Supply of quality seed potato (6%) in Bangladesh from different sources, compared

seed rate is higher than recommended. Farmers have a common

and also loss through failed

used in other agricultural

Common fertilizers are urea, MOP, TSP, NPK and

rest of the fertilizer is sold in input retail

shops that are available in all village markets. But adulteration of fertilizer is commonplace and

due to over application of them. Use of organic

imited availability of

organic manure like cow dung, farm manure and compost is the main reason for the lower dose

Crop protection materials include fungicides, insecticides and bactericides. Application of such

protecting their crops.

There are many companies and 430

there are as many as 103 brands of registered fungicides in the country recommended against the 431

late blight disease of potato9. Farmers use different types of crop protection materials 432

(fungicides, bactericides, insecticides) at least 4433

Not all the products are of good quality and farmers very often complain about them. These crop 434

protection materials are marketed by private companies and sold through 435

all village markets. 436

437

Irrigation is another essential input for potato cultivation. On average, farmers apply irrigation 438

three times in a cultivation period. Well439

on their land. Small farmers usually buy water from other neighbo440

irrigation facilities. 441

442

Potato Growers 443

444

Potato growers or farmers usually play a unitary role445

through traders and cold storage owners. However, a small portion of growers play 446

of producer and trader. Most growers are447

households in Bangladesh, about 80% are small farmers (land holding less than 0.2 ha) and some 448

of these farmers are landless 10(BBS, 2007). 449

growers as such. Potato is considered 450

vegetable growers in 2008 was 1,260,000. 451

452

Traders (Bepari) 453

454

9 List of Registered Agricultural & Public Health Pesticides in Bangladesh. PlaKhamarbari, Dhaka. 2008. 67 p 10 BBS 2007

many companies and many brands of such crop protection materials. For example,

there are as many as 103 brands of registered fungicides in the country recommended against the

. Farmers use different types of crop protection materials

s, bactericides, insecticides) at least 4-5 times during the whole cultivation process.

Not all the products are of good quality and farmers very often complain about them. These crop

protection materials are marketed by private companies and sold through dealers and retailers in

Irrigation is another essential input for potato cultivation. On average, farmers apply irrigation

three times in a cultivation period. Well-off farmers have their own irrigation pump

Small farmers usually buy water from other neighbouring farmers who have

usually play a unitary role—producing potato and selling them

through traders and cold storage owners. However, a small portion of growers play

. Most growers are, however, smallholders. Of the 12 million farm

about 80% are small farmers (land holding less than 0.2 ha) and some

(BBS, 2007). No specific data is available of the number of potato

growers as such. Potato is considered a vegetable and according to BBS, the number of

in 2008 was 1,260,000.

List of Registered Agricultural & Public Health Pesticides in Bangladesh. Plant Protection Wing, DAE,

27

many brands of such crop protection materials. For example,

there are as many as 103 brands of registered fungicides in the country recommended against the

. Farmers use different types of crop protection materials

5 times during the whole cultivation process.

Not all the products are of good quality and farmers very often complain about them. These crop

dealers and retailers in

Irrigation is another essential input for potato cultivation. On average, farmers apply irrigation

off farmers have their own irrigation pumps and engines

ring farmers who have

producing potato and selling them

through traders and cold storage owners. However, a small portion of growers play the dual role

smallholders. Of the 12 million farm

about 80% are small farmers (land holding less than 0.2 ha) and some

number of potato

and according to BBS, the number of

nt Protection Wing, DAE,

Traders, locally called Bepari, are non455

number of traders varies from 10456

large volume of potato and some 457

traders are potato growers as well. The458

storage owners, arotdars and also retailers. 459

460

Arotdars 461

462

Arotdar, a Bangla term, is a commission agent who has a fixed establishment in the market 463

place. The number of arotdars 464

arotdars deal in other agricultural commodities as well. Like traders465

potato. They conduct their business in aggregation markets and sometimes in the premises of the 466

cold storage. They let sellers bring their merchandise in467

to buy. Thus they offer a physical platform for buyers and sellers to negotiate. They have a few 468

hired laborers or part-time or full469

weighing, sorting, grading, cleaning470

transaction takes place. Sometimes, they also become buyers of the goods brought to their 471

premises. They are licensed traders with warehouses. In general, 472

in a large geographic area between the points of production and consumption. 473

474

Cold Storage Owners 475

476

Cold storage owners are entrepreneurs who own one or more cold storage facilities generally for 477

storing potatoes. Cold storage saves 478

table potatoes in the market. Farmers’ seed potatoes are also preserved in cold storage. Most cold 479

store owners are also involved in potato trading. They buy and store potatoes during the potato 480

harvesting season, and sell the stored potatoes mostly to the traders at a later stage.481

482

are non-licensed business people in the production areas. The

number of traders varies from 10-15 in each rural aggregation market. They handle

some amounts of other agricultural commodities. Some of th

are potato growers as well. They purchase potato from the growers and sell it to cold

and also retailers.

, a Bangla term, is a commission agent who has a fixed establishment in the market

also varies from 15-25 in rural aggregation markets. Usually,

other agricultural commodities as well. Like traders, some arotdars

potato. They conduct their business in aggregation markets and sometimes in the premises of the

bring their merchandise into their premises where buyers also visit

to buy. Thus they offer a physical platform for buyers and sellers to negotiate. They have a few

time or full-time salaried persons to perform various functions such as

ing, cleaning, etc. Arotdars charge a commission from the buyers if

transaction takes place. Sometimes, they also become buyers of the goods brought to their

premises. They are licensed traders with warehouses. In general, arotdars distribute commodi

in a large geographic area between the points of production and consumption.

Cold storage owners are entrepreneurs who own one or more cold storage facilities generally for

saves potatoes from spoilage and ensures a year round supply of

table potatoes in the market. Farmers’ seed potatoes are also preserved in cold storage. Most cold

owners are also involved in potato trading. They buy and store potatoes during the potato

harvesting season, and sell the stored potatoes mostly to the traders at a later stage.

28

licensed business people in the production areas. The

15 in each rural aggregation market. They handle a relatively

other agricultural commodities. Some of these

purchase potato from the growers and sell it to cold

, a Bangla term, is a commission agent who has a fixed establishment in the market

25 in rural aggregation markets. Usually,

rotdars also produce

potato. They conduct their business in aggregation markets and sometimes in the premises of the

their premises where buyers also visit

to buy. Thus they offer a physical platform for buyers and sellers to negotiate. They have a few

time salaried persons to perform various functions such as

charge a commission from the buyers if a

transaction takes place. Sometimes, they also become buyers of the goods brought to their

distribute commodities

Cold storage owners are entrepreneurs who own one or more cold storage facilities generally for

year round supply of

table potatoes in the market. Farmers’ seed potatoes are also preserved in cold storage. Most cold

owners are also involved in potato trading. They buy and store potatoes during the potato

harvesting season, and sell the stored potatoes mostly to the traders at a later stage.

The number of cold storage plants 483

number increased to 340 due to 484

Considering the total cold storage485

nearly 25-30% of the total potatoes produced in the country can be preserved in the cold 486

storage. But still, in some areas of the country and in some poor production years, a certain 487

portion of the cold storage space remains unutilized (Figure 14). 488

another reason for this underutilization. 489

490

Table 2. Utilization of space in some cold storage

2009 (Figures in parenthesis are the number of cold storage

491

1.Munshiganj (45)

2. Chandpur (6)

3. Comilla (7)

4. Bogra (6)

5. Joypurhat (4)

6. Rangpur (8)

7. Lalmonirhat (2)

8. Nilphamari (4)

9. Dinajpur (4)

10. Thakurgaon (2)

11. Rajshahi (8)

12. Kushtia (1)

13. Jessore (3)

14. Khulna (1)

plants in Bangladesh was only 77 in 1975, and in 30 years the

number increased to 340 due to the increase in potato production in the country.

Considering the total cold storage plants and production of potato in the country, at present,

30% of the total potatoes produced in the country can be preserved in the cold

. But still, in some areas of the country and in some poor production years, a certain

on of the cold storage space remains unutilized (Figure 14). Poor flow of information is

another reason for this underutilization.

Utilization of space in some cold storage plants in different areas of Bangladesh in

2009 (Figures in parenthesis are the number of cold storage plants.)

Area Utilization of cold storage space

(%)

1.Munshiganj (45) 89

2. Chandpur (6) 80

3. Comilla (7) 88

4. Bogra (6) 84

5. Joypurhat (4) 47

Rangpur (8) 100

7. Lalmonirhat (2) 79

8. Nilphamari (4) 78

9. Dinajpur (4) 74

10. Thakurgaon (2) 100

11. Rajshahi (8) 99

12. Kushtia (1) 47

13. Jessore (3) 71

14. Khulna (1) 81

29

nd in 30 years the

increase in potato production in the country.

and production of potato in the country, at present,

30% of the total potatoes produced in the country can be preserved in the cold

. But still, in some areas of the country and in some poor production years, a certain

oor flow of information is

different areas of Bangladesh in

15. Chittagong (3)

Bangladesh (105)

Source: 492

493

Figure 14. Number of cold storage494

to 2009 (Source: Bangladesh Cold Storage Association, Dhaka).495

496

Most of the cold storage space is normally utilized by potato traders, although in some areas, 497

potato growers are the major clients of cold stores such as in the northern part of Bangladesh. In 498

most of these areas (e.g., Rajshahi, Bogra, Rangpur), cold sto499

production of potatoes providing credit support and each of the growers 500

production takes lease of a large area of land for potato cultivation. 501

502

The cold storage facilities are not uniformly distributed 503

the clients for the storage of potatoes (traders and growers) is therefore not similar in all areas. 504

As a result, the cold storage charge per bag of potatoes is also not the same in all areas, e.g., the 505

charge is USD 3 per bag in Rangpur and USD 2 per bag in Bogra. Cold stored potatoes start 506

coming out from May and continue till the next harvest. Usually, most of the cold stor507

(77) (110)

0

500

1000

1500

2000

2500

Amount (000 mt)

1975

1980

15. Chittagong (3) 27

Bangladesh (105) 90

Source: Bangladesh Cold Storage Association

Number of cold storage plants and quantity of potato stored in Bangladesh

: Bangladesh Cold Storage Association, Dhaka).

Most of the cold storage space is normally utilized by potato traders, although in some areas,

potato growers are the major clients of cold stores such as in the northern part of Bangladesh. In

most of these areas (e.g., Rajshahi, Bogra, Rangpur), cold storage owners organize

production of potatoes providing credit support and each of the growers in

lease of a large area of land for potato cultivation.

The cold storage facilities are not uniformly distributed throughout the country. The pressure of

the clients for the storage of potatoes (traders and growers) is therefore not similar in all areas.

As a result, the cold storage charge per bag of potatoes is also not the same in all areas, e.g., the

3 per bag in Rangpur and USD 2 per bag in Bogra. Cold stored potatoes start

coming out from May and continue till the next harvest. Usually, most of the cold stor

(110)

(168)(170)

(260)

(270)

(320)(330)

(334) (340)

1980

1985

1990

1997

1998

2005

2007

2008

2009

Year

Total Capacity

Potato Stored

30

and quantity of potato stored in Bangladesh from 1975

: Bangladesh Cold Storage Association, Dhaka).

Most of the cold storage space is normally utilized by potato traders, although in some areas,

potato growers are the major clients of cold stores such as in the northern part of Bangladesh. In

rage owners organize the

in such organized

throughout the country. The pressure of

the clients for the storage of potatoes (traders and growers) is therefore not similar in all areas.

As a result, the cold storage charge per bag of potatoes is also not the same in all areas, e.g., the

3 per bag in Rangpur and USD 2 per bag in Bogra. Cold stored potatoes start

coming out from May and continue till the next harvest. Usually, most of the cold stores become

empty by December-January since after May, there are only cold stored potatoes an508

harvests. However, the cold storage509

510

Another approach of the cold storage owners 511

potatoes of the growers or traders to the cold stor512

of say, USD 0.15 per bag as commission. The potato traders and growers in some areas513

loans from cold storage owners for the storage of their potatoes where stored potatoes work as 514

collateral. The study found that cold storage owners take loans from banks at around14% interest 515

and disburse them to the potato traders and growers at a relatively higher rate of interest (say 516

18%). 517

518

The supply of non-cold stored potatoes remains high during and immediately519

period of harvest (February-May). Normally, cold stor520

and continue releasing up to November or December, depending on 521

of the potatoes released in October and Novembe522

523

Processors 524

525

The present state of potato processing in Bangladesh is not 526

considered as transitional. A few years back, four potato flake527

country. But none of them are 528

Constant increases of potato prices in the wholesale market 529

plants for indefinite periods. As per the capacity, each factory could utilize about 50,000 MT of 530

fresh potatoes as raw material every year. Figure 15 shows that the potato wholesale price has 531

doubled within five years since 2005. 532

the intervals in the horizontal axis are not uniform. But it clearly shows that the price increase 533

has been significantly high in recent years. 534

535

January since after May, there are only cold stored potatoes an

age charge is levied once for the whole season.

Another approach of the cold storage owners in some areas is to appoint agents, who bring

potatoes of the growers or traders to the cold stores for preservation, and in return get an amount

USD 0.15 per bag as commission. The potato traders and growers in some areas

loans from cold storage owners for the storage of their potatoes where stored potatoes work as

nd that cold storage owners take loans from banks at around14% interest

to the potato traders and growers at a relatively higher rate of interest (say

cold stored potatoes remains high during and immediately

May). Normally, cold stores start releasing potatoes in June or July,

and continue releasing up to November or December, depending on the market situation. A part

of the potatoes released in October and November is used as seed.

of potato processing in Bangladesh is not very encouraging, but

considered as transitional. A few years back, four potato flake industries were established in the

are in operation now, mostly due to lack of operational capital.

of potato prices in the wholesale market forced them to shut down their

plants for indefinite periods. As per the capacity, each factory could utilize about 50,000 MT of

fresh potatoes as raw material every year. Figure 15 shows that the potato wholesale price has

since 2005. It shows the wholesale price increase since 1955 though

the intervals in the horizontal axis are not uniform. But it clearly shows that the price increase

has been significantly high in recent years.

31

January since after May, there are only cold stored potatoes and no fresh

some areas is to appoint agents, who bring the

preservation, and in return get an amount

USD 0.15 per bag as commission. The potato traders and growers in some areas receive

loans from cold storage owners for the storage of their potatoes where stored potatoes work as

nd that cold storage owners take loans from banks at around14% interest

to the potato traders and growers at a relatively higher rate of interest (say

cold stored potatoes remains high during and immediately after the peak

es start releasing potatoes in June or July,

market situation. A part

encouraging, but it can be

industries were established in the

now, mostly due to lack of operational capital.

forced them to shut down their

plants for indefinite periods. As per the capacity, each factory could utilize about 50,000 MT of

fresh potatoes as raw material every year. Figure 15 shows that the potato wholesale price has

the wholesale price increase since 1955 though

the intervals in the horizontal axis are not uniform. But it clearly shows that the price increase

536

Figure 15. Average wholesale price of potato in Bangladesh (2009 price is up to June) 537

(Source: DAM) 538

539

A number of processing companies are now making frozen French fries, chips and other snacks 540

using potato as a raw material. Some of these processing companies are Bombay Sweets & Co. 541

Ltd., Ejab Foods Ltd., Ispahani Ltd., Zoha Chips Factory and Crisp Factory of Bhai Bhai Group. 542

As regards the use of potato by different processing companies, the543

domestic market for French fries of around 80544

the global market for flakes and starch, growing at a rate of 10% yearly, is over USD 20 billion 545

(The Financial Express, 7 May 2008). A546

Bangladesh, including the widely547

cases, potato processors are handicapped by a 548

549

The range of quality snacks, frozen food products and ethnic snacks produced by different food 550

companies consists of more than 25 items including potato, corn, cereal551

pulses. Some of these food companies 552

0

200

400

600

800

1000

1200

1400

1600

1800

Tk/1

00 k

g

1955

1960

age wholesale price of potato in Bangladesh (2009 price is up to June)

A number of processing companies are now making frozen French fries, chips and other snacks

using potato as a raw material. Some of these processing companies are Bombay Sweets & Co.

Ltd., Ejab Foods Ltd., Ispahani Ltd., Zoha Chips Factory and Crisp Factory of Bhai Bhai Group.

use of potato by different processing companies, there exists a significant

domestic market for French fries of around 80-100 thousand MT per year. Moreover, the size of

flakes and starch, growing at a rate of 10% yearly, is over USD 20 billion

(The Financial Express, 7 May 2008). As reported, most of the existing potato varieties of

Bangladesh, including the widely-grown varieties, are not suitable for industrial use. In most

handicapped by a lack of processing-type varieties.

range of quality snacks, frozen food products and ethnic snacks produced by different food

companies consists of more than 25 items including potato, corn, cereal-based products, nuts and

pulses. Some of these food companies in Bangladesh (such as Bombay Sweets & Co. Ltd., Ejab

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2006

2007

2008

2009

Year

32

age wholesale price of potato in Bangladesh (2009 price is up to June)

A number of processing companies are now making frozen French fries, chips and other snacks

using potato as a raw material. Some of these processing companies are Bombay Sweets & Co.

Ltd., Ejab Foods Ltd., Ispahani Ltd., Zoha Chips Factory and Crisp Factory of Bhai Bhai Group.

re exists a significant

100 thousand MT per year. Moreover, the size of

flakes and starch, growing at a rate of 10% yearly, is over USD 20 billion

s reported, most of the existing potato varieties of

grown varieties, are not suitable for industrial use. In most

range of quality snacks, frozen food products and ethnic snacks produced by different food

based products, nuts and

Bangladesh (such as Bombay Sweets & Co. Ltd., Ejab

2009

Foods Ltd.) have sister organizations for the production of raw materials. They mainly cultivate 553

agricultural products either under 554

system. They provide potato seed to their contract farmers to ensure quality output, monitor and 555

supervise the production and also undertake training program556

productivity. Their demand is much more than what they are current557

arrangements. They meet the rest of the demand by procuring from 558

traders or cold stores. 559

560

561

Exporters 562

563

Currently, there are only a few, around 8564

processed potatoes, mostly to Singapore, Malaysia and 565

Vietnam and Sri Lanka. Some of these companies are Agriconcern, Surovi Agro Industries Ltd. 566

(a sister organization of Supreme Seed Co. Ltd.), Alpha 567

Agro Resources Incorporation, 568

expanding their own contract farming system in order to ensure quality and grade demanded by 569

buyers. 570

571

Retailers 572

573

Retailers are the marketing actors between 574

traders/arotdars and consumers of potato. They 575

generally buy potatoes from arotdars576

sometimes from cold store owners and sell directly 577

to consumers. Retailers dealing 578

general, also sell different types of vegetables and spices579

consumer market. 580

Foods Ltd.) have sister organizations for the production of raw materials. They mainly cultivate

under their own management and/or under the contract growing

em. They provide potato seed to their contract farmers to ensure quality output, monitor and

supervise the production and also undertake training programmes for the farmers to enhance

productivity. Their demand is much more than what they are currently producing

rest of the demand by procuring from the open market, either from

Currently, there are only a few, around 8-10 established private companies that

processed potatoes, mostly to Singapore, Malaysia and the UAE and very recently to Russia,

Vietnam and Sri Lanka. Some of these companies are Agriconcern, Surovi Agro Industries Ltd.

(a sister organization of Supreme Seed Co. Ltd.), Alpha Agro, Eusum Agro Ltd

etc. All of these exporters have started and are gradually

expanding their own contract farming system in order to ensure quality and grade demanded by

the marketing actors between

and consumers of potato. They

arotdars, traders and

owners and sell directly

etailers dealing in potatoes, in

general, also sell different types of vegetables and spices and they exist in every agriculture

33

Foods Ltd.) have sister organizations for the production of raw materials. They mainly cultivate

contract growing

em. They provide potato seed to their contract farmers to ensure quality output, monitor and

s for the farmers to enhance

ly producing under contract

open market, either from

that export fresh or

he UAE and very recently to Russia,

Vietnam and Sri Lanka. Some of these companies are Agriconcern, Surovi Agro Industries Ltd.

., BRAC, Global

etc. All of these exporters have started and are gradually

expanding their own contract farming system in order to ensure quality and grade demanded by

n every agriculture

581

582

583

584

Information Flow in the Value Chain585

586

The field investigation shows that the 587

the growth of the sector. After a 588

other actors, were asked a wide range of questions regarding the flow of information relating to 589

planting, growing, harvesting, post590

inquiry was into how and from whom they source their information and how easily available and 591

accessible the information is. The dynamics of this uncovered information flow consisting of 592

financial assistance, inputs, price and technical know593

594

595

Information Flow in the Value Chain

The field investigation shows that the erratic information flow in the value chain

a review of the general information on the sector, farmers, among

other actors, were asked a wide range of questions regarding the flow of information relating to

planting, growing, harvesting, post-harvest processes, marketing and different services. The core

how and from whom they source their information and how easily available and

accessible the information is. The dynamics of this uncovered information flow consisting of

financial assistance, inputs, price and technical know-how is mapped in the following diagram.

Picture 1. Retailer selling table potato

34

he value chain is hampering

the general information on the sector, farmers, among

other actors, were asked a wide range of questions regarding the flow of information relating to

harvest processes, marketing and different services. The core

how and from whom they source their information and how easily available and

accessible the information is. The dynamics of this uncovered information flow consisting of

e following diagram.

Picture 1. Retailer selling table potato

596

597

Figure 13. 598

599

Price Information 600

601

Farmers receive price information from a variety of sources. They mostly get their price related 602

information from their immediate buyers such as traders and cold 603

processed potato exporters provide price information to their contract growers. Bigger growers 604

tend to explore more sources for 605

seem to take place at the local market place; however, big growers negotiate over the phone but 606

the deal is not completed until the buyer physically verifies the potatoes for weight, size, 607

uniformity, and injury status. Most farmers now see the advantage of knowing 608

Figure 13. Information flow in the value chain

Farmers receive price information from a variety of sources. They mostly get their price related

information from their immediate buyers such as traders and cold store owners. Fresh or

processed potato exporters provide price information to their contract growers. Bigger growers

for precise price information. Price negotiations by

local market place; however, big growers negotiate over the phone but

until the buyer physically verifies the potatoes for weight, size,

uniformity, and injury status. Most farmers now see the advantage of knowing the

35

Farmers receive price information from a variety of sources. They mostly get their price related

owners. Fresh or

processed potato exporters provide price information to their contract growers. Bigger growers

precise price information. Price negotiations by small growers

local market place; however, big growers negotiate over the phone but

until the buyer physically verifies the potatoes for weight, size,

the potato market

price in the Karwan bazaar and the Chalk bazaar, the major retail and wholesale markets in the 609

capital city, to enhance their bargaining power. Besides, wider expansion of telecommunication 610

networks in the country and the growing use of mobile phones ha611

check price information and price levels at different key market places throughout the country. 612

613

However, mobile operator Banglalink has introduced an Interactive Voice Response (IVR)614

service called ‘Banglalink Krishi615

of agro-goods or browse through by listening to other advertisements recorded by other callers to 616

get the necessary information. C617

finalize the deal. Information ab618

making the process easier.11 The Grameen Phone has been facilitating 619

last few years. Anyone with Internet connectivity 620

price of different products. Those who w621

a Grameen Phone subscription number.622

623

Input and Know-how Information624

625

Farmers obtain information regarding seeds from input retailers and also from extension officers. 626

From the same sources, they also receive 627

fertilizer and their use. Farmers also share information among themselves on different inputs and 628

technical issues. Besides, print media and broadcasting media also provide information 629

occasionally. The growers under contract arrangements receive input630

information from the contracting companies/exporters. Cold stor631

post-harvest- related information to farmers such as sorting, grading632

Grameenphone, the leading mobile operator, has established more than 500 Community 633

Information Centres (CIC) with 634

11 www.banglalinkgsm.com 12 www.cellbazaar.com

price in the Karwan bazaar and the Chalk bazaar, the major retail and wholesale markets in the

capital city, to enhance their bargaining power. Besides, wider expansion of telecommunication

networks in the country and the growing use of mobile phones have enabled the farmers to cross

check price information and price levels at different key market places throughout the country.

However, mobile operator Banglalink has introduced an Interactive Voice Response (IVR)

service called ‘Banglalink Krishibazaar’. It allows customers to record their own advertisements

goods or browse through by listening to other advertisements recorded by other callers to

Callers can also call up the trader instantly by pressing "8" and

bout the products is available by category, price

The Grameen Phone has been facilitating online market

with Internet connectivity can visit the website12 and check the market

Those who want to upload their merchandize on the

a Grameen Phone subscription number.

how Information

information regarding seeds from input retailers and also from extension officers.

From the same sources, they also receive information regarding crop protection material

e. Farmers also share information among themselves on different inputs and

technical issues. Besides, print media and broadcasting media also provide information

he growers under contract arrangements receive input-related and technical

information from the contracting companies/exporters. Cold store owners provide particularly

related information to farmers such as sorting, grading,

Grameenphone, the leading mobile operator, has established more than 500 Community

(CIC) with Internet connectivity in the semi-urban and rural areas of

36

price in the Karwan bazaar and the Chalk bazaar, the major retail and wholesale markets in the

capital city, to enhance their bargaining power. Besides, wider expansion of telecommunication

ve enabled the farmers to cross-

check price information and price levels at different key market places throughout the country.

However, mobile operator Banglalink has introduced an Interactive Voice Response (IVR)-based

own advertisements

goods or browse through by listening to other advertisements recorded by other callers to

trader instantly by pressing "8" and

price, location, etc.

online marketing over the

check the market

n the site need to have

information regarding seeds from input retailers and also from extension officers.

information regarding crop protection material and

e. Farmers also share information among themselves on different inputs and

technical issues. Besides, print media and broadcasting media also provide information

related and technical

owners provide particularly

, etc. Besides,

Grameenphone, the leading mobile operator, has established more than 500 Community

urban and rural areas of

Bangladesh. By visiting the CICs, farmers can 635

www.ruralinfobd.com, which is rich in agriculture636

Banglalink offers the ‘Krishi Jigyasha 7676’ service which provides 637

any queries related to agriculture, vegetable an638

To avail themselves of this service, 639

advice on the problem. 640

641

Financial Assistance 642

643

Financial assistance flows in four forms:644

• Some traders offer loans to their known growers with whom they have a 645

relationship, 646

• Input suppliers sell on credit to their known farmers,647

• Loans are given by commercial banks and NGOs (microfinance),648

• Loans are given by cold stor649

650

Transaction Costs 651

652

In order to simplify the discussion653

related disciplines, a transaction cost is a cost incurred in making an economic exchange 654

(restated: the cost of participating in a market)655

transaction costs as many variables are present. 656

and knowledge (Figure 13). Sometimes, 657

particular issue before making a 658

farmer and also according to the type of information. For example, a farmer can receive input 659

related information from other farmers, input retailers, government extension office660

13 Source: Wikipedia

Bangladesh. By visiting the CICs, farmers can access a web portal named

which is rich in agriculture-related information. On the other hand,

igyasha 7676’ service which provides suggestions and answers to

any queries related to agriculture, vegetable and fruit farming, poultry, livestock, fisheries

this service, Banglalink subscribers need to dial 7676, talk and get expert

Financial assistance flows in four forms:

Some traders offer loans to their known growers with whom they have a

Input suppliers sell on credit to their known farmers,

commercial banks and NGOs (microfinance),

old store owners.

discussion, it is important to define transaction costs. In economics and

related disciplines, a transaction cost is a cost incurred in making an economic exchange

(restated: the cost of participating in a market).13 Apparently, it is very difficult to estimate the

many variables are present. Farmers use various sources to get information

. Sometimes, they use a number of sources to get information on a

decision. Hence, the transaction cost also varies from farmer to

farmer and also according to the type of information. For example, a farmer can receive input

ted information from other farmers, input retailers, government extension office

37

a web portal named

related information. On the other hand,

suggestions and answers to

d fruit farming, poultry, livestock, fisheries, etc.

to dial 7676, talk and get expert

Some traders offer loans to their known growers with whom they have a continuous

, it is important to define transaction costs. In economics and

related disciplines, a transaction cost is a cost incurred in making an economic exchange

it is very difficult to estimate the

various sources to get information

a number of sources to get information on a

decision. Hence, the transaction cost also varies from farmer to

farmer and also according to the type of information. For example, a farmer can receive input

ted information from other farmers, input retailers, government extension offices, private

companies doing contract farming, exporters661

source to make purchase decisions and in other cases, 662

buys an input from an input retailer, then the transaction cost would only be his/her transport 663

cost to the shop in the market, may be around BDT 10 (it may also vary, if the farmer makes any 664

other purchases when he/she goes to the market). On the other hand, 665

be higher if a farmer needs to get information from a government extension officer. In many 666

cases, the transport cost to the office would be around BDT 50667

communication has reduced transport cost668

and can access the extension officer, he/she can talk over 669

transaction cost to less than BDT 10. However, it does not reflect the total transaction costs as it 670

shows only the transportation costs or phone call costs671

effort costs. In a nutshell, transaction costs for farmers672

and the effort and time to find the solution provider, in particular673

transport all of which varies from transaction to transaction. However, all these transaction costs 674

have decreased significantly now considering transportation cost 675

phones. Once a person knows the source of his/her information, he/she can make phone calls 676

and can talk for a few minutes for less 677

rural areas. However, as mentioned in the previous sections, there are 678

a few mobile operators in Bangladesh where transaction costs for making different decisions or 679

deals are very straight forward. For instance, in ‘Banglalink Krishibazaar’, a farmer can record 680

his/her product details with a service charge of BDT681

farmer is able to record his complete product profile in two minutes and 682

products from the seller’s place, then the transaction cost of selling his goods would be only 683

BDT 2. In Banglalink ‘Krishi Jigyasha’, when a farmer speaks to 684

his/her queries, he/she has to pay B685

other operators’ subscribers. However, this discussion only narrowly tried to identify transaction 686

14 BDT=Bangladeshi Taka, 1 USD≈74 BDT (www.xe.com)

companies doing contract farming, exporters, etc. In certain cases, farmers may use a single

source to make purchase decisions and in other cases, they may use several sources. If a farmer

an input retailer, then the transaction cost would only be his/her transport

cost to the shop in the market, may be around BDT 10 (it may also vary, if the farmer makes any

other purchases when he/she goes to the market). On the other hand, the transactio

be higher if a farmer needs to get information from a government extension officer. In many

cases, the transport cost to the office would be around BDT 50-100. However, mobile

transport costs significantly. If the farmer has the mobile number

the extension officer, he/she can talk over the phone which would bring down the

to less than BDT 10. However, it does not reflect the total transaction costs as it

shows only the transportation costs or phone call costs, and not other variables such as time and

effort costs. In a nutshell, transaction costs for farmers mostly include the cost of information

the effort and time to find the solution provider, in particular, the associated cost of

transport all of which varies from transaction to transaction. However, all these transaction costs

significantly now considering transportation cost to be the cost

phones. Once a person knows the source of his/her information, he/she can make phone calls

and can talk for a few minutes for less than BDT 10. Mobile phones are also available now in

rural areas. However, as mentioned in the previous sections, there are a few specific services by

a few mobile operators in Bangladesh where transaction costs for making different decisions or

very straight forward. For instance, in ‘Banglalink Krishibazaar’, a farmer can record

his/her product details with a service charge of BDT14 1 per minute (excluding VAT). If the

farmer is able to record his complete product profile in two minutes and later someone buys his

seller’s place, then the transaction cost of selling his goods would be only

BDT 2. In Banglalink ‘Krishi Jigyasha’, when a farmer speaks to an expert and get

his/her queries, he/she has to pay BDT 2 per minute for a Banglalink subscriber and BDT 5 for

other operators’ subscribers. However, this discussion only narrowly tried to identify transaction

74 BDT (www.xe.com)

38

may use a single

use several sources. If a farmer

an input retailer, then the transaction cost would only be his/her transport

cost to the shop in the market, may be around BDT 10 (it may also vary, if the farmer makes any

transaction cost would

be higher if a farmer needs to get information from a government extension officer. In many

100. However, mobile

. If the farmer has the mobile number

phone which would bring down the

to less than BDT 10. However, it does not reflect the total transaction costs as it

other variables such as time and

cost of information

the associated cost of

transport all of which varies from transaction to transaction. However, all these transaction costs

ost of using mobile

phones. Once a person knows the source of his/her information, he/she can make phone calls

than BDT 10. Mobile phones are also available now in

few specific services by

a few mobile operators in Bangladesh where transaction costs for making different decisions or

very straight forward. For instance, in ‘Banglalink Krishibazaar’, a farmer can record

1 per minute (excluding VAT). If the

someone buys his

seller’s place, then the transaction cost of selling his goods would be only

expert and gets answers to

DT 2 per minute for a Banglalink subscriber and BDT 5 for

other operators’ subscribers. However, this discussion only narrowly tried to identify transaction

costs and cannot be concluded as the basis 687

required to measure the associated transaction costs of any economic exchange.688

689

Identified Issues in the Value Chain690

691

692

693

The overall field investigation identified a series of constraints besetting the value chain and 694

hindering its growth. Not all the identified constraints are discussed in the report as the focus of 695

the study is to identify the information and the knowledge 696

small holder farmers. Therefore, only the constraints pertaining to small holder farmers have 697

been analyzed in this section. 698

699

Lack of Knowledge of Farmers on Quality Inputs and Their Us700

701

As mentioned earlier, the price of potato has almost doubled during the period 2005702

some significant negative consequences. 703

competitive in the global market; 704

few years cannot be increased; because of increased prices, all four potato flakes industries are 705

non-operational when they could 706

facilities creates a glut of potato after harvest and consequently the price comes down to 707

low level with farmers making low profit708

Hence, continuous increases in potato price709

710

However, a primary cause of increased price711

identifying quality inputs and their application. It is true that the input cost has increased during 712

this period but the use of excess inputs in all categories (seeds, crop protection and fertilizer713

costs and cannot be concluded as the basis for estimating such costs. A thorough research is

quired to measure the associated transaction costs of any economic exchange.

Identified Issues in the Value Chain

he overall field investigation identified a series of constraints besetting the value chain and

hindering its growth. Not all the identified constraints are discussed in the report as the focus of

the study is to identify the information and the knowledge gaps in the value chain related to

small holder farmers. Therefore, only the constraints pertaining to small holder farmers have

Lack of Knowledge of Farmers on Quality Inputs and Their Use

As mentioned earlier, the price of potato has almost doubled during the period 2005

some significant negative consequences. Bangladeshi potato has become expensive or less

; its export volume even after a huge production

because of increased prices, all four potato flakes industries are

when they could have produced huge amounts; and, inadequate

glut of potato after harvest and consequently the price comes down to

low profits or even losses in a good or bumper production year.

increases in potato prices have made the potato industry vulnerable.

However, a primary cause of increased prices seems to be the lack of knowledge of farmers o

identifying quality inputs and their application. It is true that the input cost has increased during

e of excess inputs in all categories (seeds, crop protection and fertilizer

39

such costs. A thorough research is

he overall field investigation identified a series of constraints besetting the value chain and

hindering its growth. Not all the identified constraints are discussed in the report as the focus of

gaps in the value chain related to

small holder farmers. Therefore, only the constraints pertaining to small holder farmers have

As mentioned earlier, the price of potato has almost doubled during the period 2005-09 with

expensive or less

huge production rise during last

because of increased prices, all four potato flakes industries are

inadequate cold storage

glut of potato after harvest and consequently the price comes down to a very

in a good or bumper production year.

have made the potato industry vulnerable.

seems to be the lack of knowledge of farmers of

identifying quality inputs and their application. It is true that the input cost has increased during

e of excess inputs in all categories (seeds, crop protection and fertilizer)

increase production costs several 714

required. They use the same crop protection material715

product and how to apply it. Because of 716

quality products which do not work well and then they buy 717

in the case of fertilizer as adulterated fertilizer is very common in rural markets and farmers buy 718

them as they cannot recognize the difference. As a result, they have to apply more fertilizer to 719

achieve the desired yield. 720

Hence, this is clearly an extension failure. 721

can hardly reach all the farmers. Exporting and/or processing companies have started contract 722

farming whereby they provide inputs and also technical know723

to cater to the large number of farmers. In this 724

likely to minimize the limitation725

seems to be a very appropriate solution in this regard. 726

communication can also add value. Along with improving the extension services, it makes sense 727

to make farmers aware of how to 728

crop protection and fertilizer companies can arrange promotional campaigns within their 729

marketing plans which would also promote their own brands. This can be done through 730

arranging road shows, poster-billboards, TVCs and demonstrations besides mobile phones. 731

732

Lack of Knowledge of Farmers on Variety, Grading, Processing and Export Market733

734

Potato should be large, uniform in size, attractive in appearance and free from injuries for export 735

and processing industries. Granola is the most appropriate variety for 736

limited cold storage space, it is unlikely that the price will remain fair after the harvest. Hence, 737

farmers should plan their varieties in such a way so that they could find alternative markets 738

than the traditional consumer ones. In Rangpur regions, the farmers mostly grow 739

variety. The introduction of contract farming by a number of exporters and/or processing 740

companies in this region has enabled the farmers to know about the demand for 741

several fold. Farmers use poor quality seed and in excess

crop protection material repeatedly as they do not know the right

. Because of this lack of knowledge, they very often

not work well and then they buy a different product. It is not different

case of fertilizer as adulterated fertilizer is very common in rural markets and farmers buy

as they cannot recognize the difference. As a result, they have to apply more fertilizer to

is clearly an extension failure. The limited number of government extension workers

can hardly reach all the farmers. Exporting and/or processing companies have started contract

they provide inputs and also technical know-how. But their outreach is

to the large number of farmers. In this situation, the use of mobile phones could very

to minimize the limitations of physical distance. Banglalink’s ‘Krishi

seems to be a very appropriate solution in this regard. The use of SMS or MMS in

communication can also add value. Along with improving the extension services, it makes sense

how to identify better quality inputs and also their us

crop protection and fertilizer companies can arrange promotional campaigns within their

marketing plans which would also promote their own brands. This can be done through

billboards, TVCs and demonstrations besides mobile phones.


Potato should be large, uniform in size, attractive in appearance and free from injuries for export

d processing industries. Granola is the most appropriate variety for the purpose

, it is unlikely that the price will remain fair after the harvest. Hence,

farmers should plan their varieties in such a way so that they could find alternative markets

than the traditional consumer ones. In Rangpur regions, the farmers mostly grow

ntroduction of contract farming by a number of exporters and/or processing

companies in this region has enabled the farmers to know about the demand for

40

and in excess of what is

repeatedly as they do not know the right

very often buy inferior

a different product. It is not different

case of fertilizer as adulterated fertilizer is very common in rural markets and farmers buy

as they cannot recognize the difference. As a result, they have to apply more fertilizer to

imited number of government extension workers

can hardly reach all the farmers. Exporting and/or processing companies have started contract

utreach is too low

, the use of mobile phones could very

rishi jigyasha 7676’

e of SMS or MMS in

communication can also add value. Along with improving the extension services, it makes sense

better quality inputs and also their use. Quality seed,

crop protection and fertilizer companies can arrange promotional campaigns within their

marketing plans which would also promote their own brands. This can be done through

billboards, TVCs and demonstrations besides mobile phones.


Potato should be large, uniform in size, attractive in appearance and free from injuries for export

the purpose. Because of the

, it is unlikely that the price will remain fair after the harvest. Hence,

farmers should plan their varieties in such a way so that they could find alternative markets other

than the traditional consumer ones. In Rangpur regions, the farmers mostly grow the granola

ntroduction of contract farming by a number of exporters and/or processing

companies in this region has enabled the farmers to know about the demand for the granola

variety. On the other hand, Munshiganj, being a very old and one of the leading potato growing 742

regions, is still growing other varieties but not 743

744

There is another aspect of grading 745

popular varieties, can also yield 746

price after harvest remains low because of 747

bigger ones of uniform size for export748

the farmers of the requirements of exporters limits their scope to increase income. 749

750

Exporters, in this context, can promote the varieties they require and 751

the need to grade their harvest. Contract farming has shown positive results as 752

steadily increased in the last few years. Hence, 753

exporters and/or processing companies can educate the farmers on varieties and grading. 754

‘Banglalink krishibazaar’ can also provide 755

product quality, grade and price. 756

757

Lack of Knowledge of Farmers758

Techniques 759

760

Since potato is harvested manually with a little spade, 761

few potatoes can always get damaged762

harvest may also be affected by 763

curing and grading are essential before preserving them 764

in cold storage. Farmers’ lack of knowledge o765

matters results in wastage and rotting 766

process. As cold storage owners and also 767

goes bad. This ultimately affects 768

769

variety. On the other hand, Munshiganj, being a very old and one of the leading potato growing

regions, is still growing other varieties but not granola.

of grading potatoes after harvest. Diament and Cardinal,

popular varieties, can also yield rather bigger size potatoes if graded after harvest. Since the

price after harvest remains low because of a glut, farmers can grade their potatoes, separate the

uniform size for export and thus can earn a better margin. Lack of knowledge of

the requirements of exporters limits their scope to increase income.

Exporters, in this context, can promote the varieties they require and make the farmers

. Contract farming has shown positive results as

last few years. Hence, by expanding the contract farming system

exporters and/or processing companies can educate the farmers on varieties and grading.

‘Banglalink krishibazaar’ can also provide a platform for buyers and sellers to get to know about

product quality, grade and price.

Lack of Knowledge of Farmers on Post-harvest

Since potato is harvested manually with a little spade, a

can always get damaged. Some of the

affected by disease. Hence sorting,

and grading are essential before preserving them

in cold storage. Farmers’ lack of knowledge of these

results in wastage and rotting in the preservation

old storage owners and also farmers stated, approximately 5% preserved potatoes

. This ultimately affects their net return on production.

41

variety. On the other hand, Munshiganj, being a very old and one of the leading potato growing

potatoes after harvest. Diament and Cardinal, two other most

bigger size potatoes if graded after harvest. Since the

glut, farmers can grade their potatoes, separate the

and thus can earn a better margin. Lack of knowledge of

the requirements of exporters limits their scope to increase income.

e farmers aware of

. Contract farming has shown positive results as exports have

expanding the contract farming system,

exporters and/or processing companies can educate the farmers on varieties and grading.

platform for buyers and sellers to get to know about

approximately 5% preserved potatoes

770

771

772

potato 773

774

Cold storage companies can educate farmers on these issues. Before 775

educate potential customers through an information campaign. In this way, their customers 776

(farmers) will suffer little or no loss and the cold storage operators can create a better image 777

win-win service. 778

779

In addition, CICs of Grameenphone780

information to the farmers. 781

782

783

Lack of Information on Available Space in Cold 784

Storages 785

786

As mentioned earlier, only around 25787

production can be stored in around 340 cold storage 788

plants all over Bangladesh. The c789

is only a meagre portion of the790

result is an obvious glut during and immediately after 791

the harvest when the price sometimes792

in this situation, around 10% of 793

remains unfilled in some areas 794

farmers stand in long queues for few days 795

asymmetry prevails here. 796

797

Picture 2. Women harvesting

Cold storage companies can educate farmers on these issues. Before harvesting, they can

potential customers through an information campaign. In this way, their customers

little or no loss and the cold storage operators can create a better image

In addition, CICs of Grameenphone or ‘Krishi jigyasha’ of Banglalink can also provide such

Lack of Information on Available Space in Cold

As mentioned earlier, only around 25-30% of total

production can be stored in around 340 cold storage

The current export volume

portion of the total volume. The

obvious glut during and immediately after

sometimes falls even below the production cost. Unfortunately, even

in this situation, around 10% of cold storage space

while in other areas,

for few days for access to cold storage. A clear information

Picture 3. Queue in front of a cold storage

42

Picture 2. Women harvesting

harvesting, they can

potential customers through an information campaign. In this way, their customers

little or no loss and the cold storage operators can create a better image of a

rishi jigyasha’ of Banglalink can also provide such

below the production cost. Unfortunately, even

access to cold storage. A clear information

cold storage plant

In this situation, informing farmers on 798

farmer can take his/her potatoes to th799

Transportation cost is a decisive factor 800

important that the farmers get information regarding the unfilled 801

convenient distance. Cold store owners can provide such information to the farmers through a 802

variety of means such as announcement803

in rural areas) in production clusters, market places804

An ICT based solution could be 805

mobile phone numbers. Farmers can register themselves 806

After harvests, an unfilled cold store can send SMSs to the registered farmers informing 807

the space available to store potatoes.808

809

810

Conclusion 811

812

Potato consumption has increased globally and marks a shift from the developed world to the 813

developing. Bangladesh has also showed significant growth in terms of production, yield and 814

consumption in the last decade. However, 815

competitive in the global market and th816

only made Bangladeshi potato less competitive in 817

farmers from reaping sufficient profit or even 818

grading and standard post-harvest practices also lead to economic loss for the farmers. 819

Appropriate post-harvest techniques can reduce 820

period. There are only limited preservation facilities available in Bangladesh for potatoes821

still a significant part remains unused. These 822

and also the weak flow of information to823

their proper application can certainly reduce the 824

the entire value chain positively as the exporters will also be in a better situation regarding price 825

farmers on unfilled space in the cold stores can

farmer can take his/her potatoes to the particular cold store where space is available

Transportation cost is a decisive factor in the distance the farmer can travel. Hence, it is

important that the farmers get information regarding the unfilled cold storage

e owners can provide such information to the farmers through a

variety of means such as announcements through a public address system (a very popular means

) in production clusters, market places, etc, banners, “word of mouth”

An ICT based solution could be to register farmers in the surrounding areas on

mobile phone numbers. Farmers can register themselves with the cold stores prior to harvesting.

After harvests, an unfilled cold store can send SMSs to the registered farmers informing

to store potatoes.

Potato consumption has increased globally and marks a shift from the developed world to the

. Bangladesh has also showed significant growth in terms of production, yield and

consumption in the last decade. However, the sector is still struggling to become price

competitive in the global market and thus export the surplus. Increased production cost

only made Bangladeshi potato less competitive in the global market but also prevented

sufficient profit or even cover their investment costs. Lack of sorting,

harvest practices also lead to economic loss for the farmers.

harvest techniques can reduce wastage and rotting during

period. There are only limited preservation facilities available in Bangladesh for potatoes

still a significant part remains unused. These are all rooted in the poor knowledge of the farmers

e weak flow of information to them. Increased knowledge of agriculture inputs and

their proper application can certainly reduce the farmers’ cost of production. This would affect

the entire value chain positively as the exporters will also be in a better situation regarding price

43

can help. Then, the

where space is available.

the farmer can travel. Hence, it is

space within a

e owners can provide such information to the farmers through a

(a very popular means

banners, “word of mouth”, and so on.

on their respective

the cold stores prior to harvesting.

After harvests, an unfilled cold store can send SMSs to the registered farmers informing them of

Potato consumption has increased globally and marks a shift from the developed world to the

. Bangladesh has also showed significant growth in terms of production, yield and

struggling to become price

export the surplus. Increased production costs have not

prevented small

. Lack of sorting,

harvest practices also lead to economic loss for the farmers.

wastage and rotting during the preservation

period. There are only limited preservation facilities available in Bangladesh for potatoes but

rooted in the poor knowledge of the farmers

agriculture inputs and

. This would affect

the entire value chain positively as the exporters will also be in a better situation regarding price

competitiveness. With knowledge and information regarding post826

can also increase their profit by reducing wast827

which cold storage has provision828

money in a period of glut. The study analyzed all these aspects from 829

knowledge gaps perspective and tried to identify the root causes. Addressing the issues can 830

certainly improve the information and knowledge flow scenario and can ultimately lead to831

vibrant and competitive potato sector in Bangladesh.832

833

834

Appendices 835

836

Appendix 1. Selection of most p837

838

Introduction 839

840

In recent years, Bangladesh’s economy has earned 841

and with high potential. During the last couple of decades, the economy has experienced quite a 842

rapid expansion with a spectacular surge in the Ready Made Garments (RMG) sector. 843

Bangladesh exported more than $18 billion worth of goods and services in 2009 where the844

contribution of the RMG sector alone was almost 75%. Although its foreign trade still remains 845

very concentrated in only a few sectors, there are clear signs of progress in many areas. 846

Agricultural commodities are climbing up 847

export items. Although RMG export848

remains quite low – approximately 30% 849

commodities is almost 100%. The850

potential value chains: 851

. Goods that 852

a) have potential for value addition,853

knowledge and information regarding post-harvest techniques,

fit by reducing waste. If the information is available to a farmer on

which cold storage has provisions for preserving potato, he/she can save him/her from losing

. The study analyzed all these aspects from the

knowledge gaps perspective and tried to identify the root causes. Addressing the issues can

certainly improve the information and knowledge flow scenario and can ultimately lead to

vibrant and competitive potato sector in Bangladesh.

Selection of most promising export oriented agricultural value chains

In recent years, Bangladesh’s economy has earned recognition from many spectators as vibrant

. During the last couple of decades, the economy has experienced quite a

rapid expansion with a spectacular surge in the Ready Made Garments (RMG) sector.

exported more than $18 billion worth of goods and services in 2009 where the

RMG sector alone was almost 75%. Although its foreign trade still remains

very concentrated in only a few sectors, there are clear signs of progress in many areas.

Agricultural commodities are climbing up the ladder and trying to diversify the product list of

export items. Although RMG exports take a lion’s share of export earnings, its value addition

approximately 30% – while the value addition of exported agricultural

The following four major criteria were used to select the two most

have potential for value addition,

44

harvest techniques, farmers

e. If the information is available to a farmer on

, he/she can save him/her from losing

the information and

knowledge gaps perspective and tried to identify the root causes. Addressing the issues can

certainly improve the information and knowledge flow scenario and can ultimately lead to a

export oriented agricultural value chains

recognition from many spectators as vibrant

. During the last couple of decades, the economy has experienced quite a

rapid expansion with a spectacular surge in the Ready Made Garments (RMG) sector.

exported more than $18 billion worth of goods and services in 2009 where the

RMG sector alone was almost 75%. Although its foreign trade still remains

very concentrated in only a few sectors, there are clear signs of progress in many areas.

the ladder and trying to diversify the product list of

export earnings, its value addition

while the value addition of exported agricultural

used to select the two most

b. have high participation (or potential for participation) by small actors 854

SMEs, 855

c. have high export potential,856

d. have potential for increased productivity.857

858

Identifying an initial list of value chain commodities859

860

The list was largely derived from the Food and Agriculture Organization Statistics (FAOSTAT). 861

There are several categories including quantity of export, the value of the export earnings of 862

individual commodity, and unit value 863

However, the commodity Shrimp and Prawn is added separately for the sake of grouping o864

leading agro-commodities and for further assessment. Table 1 shows a total of 20 value chains 865

that have been considered in this exercise.866

867

868

Table 1. List of main exported agro869

Rank Comm Quantity

1 Shrimp** 43435***

2 Jute **

3 Tobacco, unmanufactured**

4 Vegetables fresh nes**

5 Tea**

6 Cotton Waste

7 Rice Milled

8 Nuts, nes

9 Arecanuts

10 Potatoes Flour

11 Pastry

high participation (or potential for participation) by small actors

ave high export potential,

ave potential for increased productivity.

lue chain commodities

from the Food and Agriculture Organization Statistics (FAOSTAT).

several categories including quantity of export, the value of the export earnings of

individual commodity, and unit value that are considered by FAOSTAT for the ranking.

However, the commodity Shrimp and Prawn is added separately for the sake of grouping o

commodities and for further assessment. Table 1 shows a total of 20 value chains

have been considered in this exercise.

Table 1. List of main exported agro-commodities (2008 estimate)*

Quantity Flag Value Flag Unit value

43435*** 447785

369372 R 162195 R

9490 R 30438 R

7574 R 15915 R

8259 R 14403 R

26746 R 9753 R

5445 R 4537 R

6707 R 3918 R

6290 F 3377 F

1971 F 2925 F

1943 R 2834 R

45

high participation (or potential for participation) by small actors including MSEs/

from the Food and Agriculture Organization Statistics (FAOSTAT).

several categories including quantity of export, the value of the export earnings of

considered by FAOSTAT for the ranking.

However, the commodity Shrimp and Prawn is added separately for the sake of grouping of the

commodities and for further assessment. Table 1 shows a total of 20 value chains

commodities (2008 estimate)*

Unit value

8004

350

2518

1866

1304

365

833

584

537

1484

1459

12 Rice Husked

13 Veg.in Tem. Preservatives

14 Vegetable Frozen

15 Food Prep,Flour,Malt

16 Flax Fibre Raw

17 Breakfast Cereals

18 Potatoes

19 Cotton Carded,Combed

20 Fruit Juice Nes

Source: FAOSTAT, 2008; and ITC 2008870

F : FAO estimate

R : Estimated data using trading partners database

* FAOSTAT data differs from that of ITC (which has been used in latter part of this report in 871

different situational analysis) due to adopting different methods of data collection. 872

** ITC 873

*** BBS Yearbook of Agricultural Statistics of Bangladesh 2009874

875

As the table suggests, shrimp stood as the top commodity in terms of export earnings in 2008 876

with $447.7 million followed by 877

with $23.8 million earnings, was 878

waste stood in close proximity in the earning list with $14 million, $10.7 million and $9.7 879

million respectively. Besides, there are other commodities such as potatoes with 880

contribution have also been listed some of which, although seemingly insignificant, have 881

export potential in terms of other indicators which we will explore in the latter part of the report. 882

883

Selecting 4 – 6 value chains for further 884

885

3352 R 2523 R

1104 F 2493 F

1159 R 2272 R

1121 F 1981 F

5461 F 1791 F

2061 R 1741 R

6194 R 1553 R

135 F 1275 R

3078 R 1256 R

: FAOSTAT, 2008; and ITC 2008

Estimated data using trading partners database

* FAOSTAT data differs from that of ITC (which has been used in latter part of this report in

different situational analysis) due to adopting different methods of data collection.

*** BBS Yearbook of Agricultural Statistics of Bangladesh 2009

hrimp stood as the top commodity in terms of export earnings in 2008

with $447.7 million followed by jute which earned $129.4 million in the same period. Tobacco,

was positioned third from the top while vegetables,

close proximity in the earning list with $14 million, $10.7 million and $9.7

million respectively. Besides, there are other commodities such as potatoes with

contribution have also been listed some of which, although seemingly insignificant, have

in terms of other indicators which we will explore in the latter part of the report.

6 value chains for further assessment

46

753

2258

1960

1767

328

845

224

9444

408

* FAOSTAT data differs from that of ITC (which has been used in latter part of this report in

different situational analysis) due to adopting different methods of data collection.

hrimp stood as the top commodity in terms of export earnings in 2008

ute which earned $129.4 million in the same period. Tobacco,

egetables, tea, and cotton

close proximity in the earning list with $14 million, $10.7 million and $9.7

million respectively. Besides, there are other commodities such as potatoes with a moderate

contribution have also been listed some of which, although seemingly insignificant, have huge

in terms of other indicators which we will explore in the latter part of the report.

Based on Table 1, each value chain has been assessed comparatively against the two most 886

important following criteria – participation of actors in the value chain and export potential887

those commodities. Through a short888

fewer value chains to assess against 889

890

Table 2. Leading value chains in terms of participation and export earnings 891

Rank Commodity

1 Shrimp

2 Jute

3 Tobacco

4 Vegetables (including Potato)

5 Tea

6 Potato

Sources: 892

* BBS Yearbook of Agricultural Statistics of Bangladesh 2009893

**Source: ITC 2008 894

*** included in vegetable895

896

Figure 1 shows the results of the short897

898

Figure 1. Results of the short899

Rice

High

Medium

Low

Pa

rtic

ipa

tio

n o

f a

cto

rs

Based on Table 1, each value chain has been assessed comparatively against the two most

participation of actors in the value chain and export potential

those commodities. Through a short-listing matrix exercise, the initial list is narrowed down to

against all the criteria.

Table 2. Leading value chains in terms of participation and export earnings

Commodity Export earnings

Value in 2008 (1000

$)**

Participation of

persons (000)*

447785 32

162195 154

30438 115

(including Potato) 15915 1260

14403 431

4537 4537***

* BBS Yearbook of Agricultural Statistics of Bangladesh 2009

vegetables and can be considered the same number

Figure 1 shows the results of the short-listing exercise.

Figure 1. Results of the short-listing exercise

Vegetables

Potato

Tea

Shrimp

Jute

Tobacco

47

Based on Table 1, each value chain has been assessed comparatively against the two most

participation of actors in the value chain and export potential of

e, the initial list is narrowed down to a

Table 2. Leading value chains in terms of participation and export earnings

Participation of

persons (000)*

Cereals

Cotton Waste

Fruit Juice Nes

Sesame seed

900

Low 901

902

903

Using the matrix, six value chains have been indentified and selected for additional assessment. 904

These include shrimp, jute, tobacco, 905

categories that either have a large 906

high export potential as indicated 907

either have limited export earning908

909

Finalized value chains selection910

911

For selecting the final value chains, we have discussed a couple of important factors affecting the 912

selection. Firstly, we have looked into the domestic production of those six commodities and 913

compared their productivity with 914

3). Besides, four years’ export data of the commodities ha915

annual growth rate (Table 4). Table 5 illustrates the analysis end916

exercises. 917

918

919

Mango

Fruit Juice Nes

Pastry

Nuts, nes

Arecanuts

Medium High

Using the matrix, six value chains have been indentified and selected for additional assessment.

obacco, vegetables, tea and potato. These products fall into the

a large participation of actors (including SMEs and MSMEs) or hav

as indicated in the recent export data (Table 1). The remaining value chains

either have limited export earning potential or low participation of actors.

value chains selection

For selecting the final value chains, we have discussed a couple of important factors affecting the

we have looked into the domestic production of those six commodities and

compared their productivity with that of two leading world producers – India and China (Table

four years’ export data of the commodities has been given with their comp

annual growth rate (Table 4). Table 5 illustrates the analysis ending with a value chain ranking

Table 3. Productivity

Export potentials

48

Using the matrix, six value chains have been indentified and selected for additional assessment.

otato. These products fall into the

participation of actors (including SMEs and MSMEs) or have

emaining value chains

For selecting the final value chains, we have discussed a couple of important factors affecting the

we have looked into the domestic production of those six commodities and

India and China (Table

been given with their compound

with a value chain ranking

Rank Commodity Domestic Production

1 Shrimp (kg) 117.31

2 Jute

3 Tobacco

4 Vegetables

5 Tea

6 Potato

Source: FAOSTAT 2008 920

* FAO fisheries statistics 921

**Aquaculture Authority News 2002, Ministry of Agriculture, Government of India922

923

Table 3 shows that in almost all the commodities 924

and China. However, in the case of potato 925

India, which certainly shows the potential to improve. 926

vegetables [we?] are lagging far behind 927

China but close to India. In jute and shrimp Bangladesh is behind but not too much.928

929

Table 4. Five year exports of top commodities in value (USD thousands) 930

and their Compound Annual Growth Rate (CAGR) over 931

Rank HS Commodity

1 0306 Shrimp

2 5303 Jute

3

2401

Tobacco,

unmanufactured;

tobacco refused

4 0709 Vegetables fresh or

chilled

Domestic Production Productivity (hg/ha)

Bangladesh China

117.31 Million Lbs 565* 700

848715 MT 20184 26666

40265 MT 13741 21381

1100000 MT 70512 170618

53400 MT 10171 9527

6648000 MT 165373 147574

**Aquaculture Authority News 2002, Ministry of Agriculture, Government of India

Table 3 shows that in almost all the commodities [we..Bangladesh is?] are lagging behind

case of potato [we? are more productive than China but less than

which certainly shows the potential to improve. The same is evident in the

are lagging far behind both the countries. In tobacco Bangladesh is far behind

China but close to India. In jute and shrimp Bangladesh is behind but not too much.

Table 4. Five year exports of top commodities in value (USD thousands)

and their Compound Annual Growth Rate (CAGR) over a four- year

Commodity CAGR 2008 2007 2006

8% 447785 612632 482589

10% 162195 196794 141390

unmanufactured;

tobacco refused

23% 30438 20893 14346

Vegetables fresh or -34.6% 15915 50948 37834

49

Productivity (hg/ha)

China India

700 660**

26666 22790

21381 14054

170618 130082

9527 16986

147574 193080

**Aquaculture Authority News 2002, Ministry of Agriculture, Government of India

ing behind India

are more productive than China but less than

the case of tea. In

obacco Bangladesh is far behind

China but close to India. In jute and shrimp Bangladesh is behind but not too much.

Table 4. Five year exports of top commodities in value (USD thousands)

ear period

2006 2005

482589 354883

141390 121911

14346 16320

37834 56925

5 0902 Tea

6 0701 Potatoes

Source: ITC trade competitiveness map932

933

Table 4 shows that Bangladesh has positive growth in shrimp, jute and tobacco but negative in 934

the other best three. 935

936

Before we come to a conclusion, it is 937

political and environmental issue these days as its production is creating environmental hazards 938

and also large shrimp growers driving away 939

hand, from an ethical point of view, tobacco is not an industry to patronize. Hence, we would not 940

consider shrimp and tobacco in the final ranking grid.941

942

Based on the overall analysis, the four value chains943

ranked on a scale of 1 to 10 indicating the strongest correspondence between a value chain and 944

an individual criterion. The results of this ranking exercise are as follows (Table 945

946

Table 5. Value Chain ranking exercise947

Scale 1 – 10 (10 is high) 948

949

Indicators Vegetable

Value addition 5

Participation 8

Export 4

Productivity 6

23

-8.9% 14403 13864 9046

-4.8% 1553 1136 2042

ITC trade competitiveness map

Table 4 shows that Bangladesh has positive growth in shrimp, jute and tobacco but negative in

Before we come to a conclusion, it is important to mention that shrimp has become

political and environmental issue these days as its production is creating environmental hazards

driving away small farmers from their own land

ethical point of view, tobacco is not an industry to patronize. Hence, we would not

consider shrimp and tobacco in the final ranking grid.

analysis, the four value chains, i.e., vegetables, tea, jute and potato were

ranked on a scale of 1 to 10 indicating the strongest correspondence between a value chain and

an individual criterion. The results of this ranking exercise are as follows (Table

Table 5. Value Chain ranking exercise

Tea Jute Potato

6 8 7

6 6 8

5 6 4

5 7 6

22 27 25

50

9046 19087

2042 1803

Table 4 shows that Bangladesh has positive growth in shrimp, jute and tobacco but negative in

to mention that shrimp has become a much more

political and environmental issue these days as its production is creating environmental hazards

land. On the other

ethical point of view, tobacco is not an industry to patronize. Hence, we would not

vegetables, tea, jute and potato were

ranked on a scale of 1 to 10 indicating the strongest correspondence between a value chain and

an individual criterion. The results of this ranking exercise are as follows (Table 5):

Potato

The ranking exercise clearly demonstrates that jute and potato are ahead 950

while all four criteria are considered. 951

study are jute and potato. 952

953

954

Appendix 2: List of respondents955

Sl

no

Type of Actor

1 Input supplier

2

3

4

5

6

7

8

9

10

11

12

The ranking exercise clearly demonstrates that jute and potato are ahead of other competitors

while all four criteria are considered. Hence the finally selected value chains for in

of respondents

6ame Address

Jasim Gazi

Katakhali, Munshiganj

Mosharraf Member


Kamrul Hasan

Chor Kewa, Munshirganj

Babu

Munshirhat, Munshirganj

Javed Bepari

Chor Kewa, Munshiganj

Shawkat Hossain

Katakhali, Munshirganj

Harun Gazi


Md. Nasir Uddin

Sourav Enterprise Daudkandi Bazar, Daudkandi, Comilla Mobile: 01712197160

Md. Ikbal Hossain

M/s Rony Traders Daudkandi Bazar, Daudkandi,Comilla Mobile: 01926756935

Md lokman Hossain

Daudkandi Bazar, Daudkandi, Comilla Mobile: 01676416233

Md Abul Kalam

Abdu Miah Store Daudkandi Bazar, Daudkandi, Comilla Mobile: 01676416233

Md Abdus Sattar

Madhaia, Chandina, ComillaMobile: 01718546211

51

other competitors

Hence the finally selected value chains for in-depth



Chor Kewa, Munshirganj

Munshirhat, Munshirganj

Katakhali, Munshirganj


Daudkandi Bazar, Daudkandi,

Mobile: 01712197160


Mobile: 01926756935


Mobile: 01676416233


Mobile: 01676416233

Madhaia, Chandina, Comilla Mobile: 01718546211

13 Farmer

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

Krishna Chandra Hawlader

Chor Hadrabad, Munshiganj Pourashava, Munshiganj Mobile: 01815462627

Md. Khokon Matbar

Chor Kewa, Guetkandi, Munshiganj

Khoka Molla

Munshiganj Pourashava, Munshiganj Mobile: 01811503822

Abdul Hafiz

Tengar chor, Munshiganj

Amin Uddin

Chor Hadrabad, Munshiganj Pourashava, Munshiganj

Abdul Khaleq


Ramiz Miah


Fazal Shekh


Najrul Islam

Muktarpur, Munshiganj

Md Ahsan Habib


Abdur Rafiq


Md Jamal Hossain


Kabir Hosen


Abu Saleh


Wali Miah

Joy Debpur, Chandina, Comilla01817598303

Dr. Nurul Islam

Joy Debpur, Chandina, Comilla01917664246

Md Ibrahim

Joy Debpur, Chandina, Comilla

Hasan


Kalu miah


Mohammad Ali


52

Chor Hadrabad, Munshiganj Pourashava, Munshiganj Mobile: 01815462627


Munshiganj Pourashava, Munshiganj Mobile: 01811503822

Tengar chor, Munshiganj














Chandina, Comilla



33

34

35

36

37

38

39

40

41

42

43

44

45

46 Intermediaries

47

48

49

50

51 Cold storage owner

52

Siraj Miah


Hosen Miah


Abu Taher


Shohid Miah


Khorshed Alam


Abdur Razzak

Nircintopur, Chandina, Comilla

Zoynal


Md. Wali Ullah


Monir Hosen


Tazul Islam


Topon Das

Batabaria, Chandina, Comilla

Md Liton


Bulu Das


Khoka Mullah

Chor Kewa, MunshiganjMobile: 01811503822

Abdur Rahman


Abdul Jabbar


Abdus Sobhan


Shohel


Abdul Latif Sarker

River View Cold StorageGen. Assistant Muktarpur, Munshiganj

Mr. Shib Sankar

Shaha, Manager

53














Chor Kewa, Munshiganj Mobile: 01811503822





River View Cold Storage


53

54

55 Dhaka market wholesaler

56

57

58 Processor

59

60 Association

61 Exporter

62

Shobhan Ice & Coldstore Ltd., Tongibari, Munshigonj

Md Mafiz Uddin

Executive Director Chandina Farmland and Cold Storage Ltd Chandina, Comilla

Mostafa Azad Chowdhury

Director, Kishan Himagar Limited, Motahar Group, Choto Monthona, Rangpur, Mobile: 01712 099561

Abdul Haq

Haq Banijyalay

Shyam Bazaar, Lalkuthi, Dhaka

Abu Hanif

Mohanagor Arat


Nazir hossain

Munshinganj Arat


Masudul Kabir

Secretary Bombay Sweets & Co. LtdRed Crescent Concord Tower (10Floor) 17 Mohakhali C/A, Dhaka 1212Mobile: 01730010228

Sirajul Islam

Potato Flakes (BD) Ltdhouse# 384, Road # 28new DOHS, Mohakhali, Dhaka 1206Tel: 8821751 Mobile: 01720542837

Mozammel Haque Chowdhury

Secretary, Bangladesh Cold Storage Association, BCSA Bhaban, 38 Purana Paltan, Dhaka 1000. Mobile: 01712 025996

Anwarul Haque

Managing Director Blue Moon International, 4/7 Iqbal Road Mohammadpur DhakaMobile: 01552448748

Estiaque Ahmed Dhaka -1213 Mobile: 01817291717

Managing Director Ejab Group, asal Centre (9th Floor034, Dakal Ataturk Avenue, Banani,

54

Shobhan Ice & Coldstore Ltd., Tongibari, Munshigonj

Chandina Farmland and Cold

Director, Kishan Himagar Limited, Motahar Group, Choto Monthona, Rangpur, Mobile: 01712 099561


Lalkuthi, Dhaka


Bombay Sweets & Co. Ltd Red Crescent Concord Tower (10th

17 Mohakhali C/A, Dhaka 1212 Mobile: 01730010228

Potato Flakes (BD) Ltd house# 384, Road # 28 new DOHS, Mohakhali, Dhaka 1206 Tel: 8821751 Mobile: 01720542837

Secretary, Bangladesh Cold Storage Association, BCSA Bhaban, 38 Purana Paltan, Dhaka 1000. Mobile:

Blue Moon International, 4/7 Iqbal

Mohammadpur Dhaka-1217 Mobile: 01552448748

Ejab Group, asal Centre (9th Floor0 Ataturk Avenue, Banani,

63

64

65 Others

66

67

68

69

70

71

72

956

957

Mr. Mozammel Hoque Choudhury,

Secretary Bangladesh Cold Storage Association, BCSA Bhaban38, Purana Paltan, Dhaka

Engr. Md. Abdur

Razzaque Miah, Mech. &Refrigeration Engineer, Bangladesh Cold Storage Association,BCSA Bhaban, 38 Purana Paltan, Dhaka 1000

Dr. Meer Musharraf Hossain

Senior Consultant, Action for Enterprise, House 3 A 4, NAM Villa, Road 6, Gulshan 1, Mobile: 01714 4093481

Dr. Anisur Rahman Supply Chain Knowledge Management Expert, Hortex Foundation, Dhaka. Mobile: 01720 010936

Md. Fozlul Haque

Director (Field Services Wing)Dept. of Agricultural Extension, Khamarbari, Farm gate, Dhaka1215, mobile: 01720 634666

Abdul Awal Director, Rural Services, Katalyst, House 20, Road 6, Baridhara, Dhaka. Mobile: 01714 069255

Tamanna Sultana Group Manager, Rural Services, Katalyst, House 20, Road 6, Baridhara, Dhaka. Mobile: 01730 338542

Md. Abu Taher Khan Upazilla Agriculture Officer, Upazilla Krishi Office, Chandina, Comilla, Mobile: 01817 511400

Aman Ashraf Faiz Head of Communication Channels, Grameen Phone, Boshundhara, Baridhara, Dhaka. Mobile: 01711505800

Debashis Roy Head of CSR, Grameen Phone, Boshundhara, Baridhara, Dhaka. Mobile: 01711500261

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Bangladesh Cold Storage Association, BCSA Bhaban 38, Purana Paltan, Dhaka

Razzaque Miah, Mech. & Refrigeration Engineer, Bangladesh Cold Storage Association,BCSA Bhaban, 38 Purana Paltan, Dhaka

Senior Consultant, Action for Enterprise, House 3 A 4, NAM Villa, Road 6, Gulshan 1, Mobile:

Supply Chain Knowledge Management Expert, Hortex Foundation, Dhaka. Mobile: 01720

Director (Field Services Wing) Dept. of Agricultural Extension, Khamarbari, Farm gate, Dhaka-1215, mobile: 01720 634666

Director, Rural Services, Katalyst, House 20, Road 6, Baridhara, Dhaka. Mobile: 01714 069255

Group Manager, Rural Services, Katalyst, House 20, Road 6, Baridhara, Dhaka. Mobile: 01730

Agriculture Officer, Upazilla Krishi Office, Chandina, Comilla, Mobile: 01817 511400

Head of Communication Channels, Grameen Phone, Boshundhara, Baridhara, Dhaka. Mobile:

Head of CSR, Grameen Phone, Boshundhara, Baridhara, Dhaka. Mobile: 01711500261

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