PERISHABLE FOOD SUPPLY CHAIN CONSTRAINTS IN BANGLADESH*
by Rubel DAS** and Shinya HANAOKA***
1. Introduction
Efficient agriculture marketing is critically dependent on efficient transport system. Inefficient transport service coupled with poor
storage, can lead to losses as certain crops (such as milk, vegetable, fish) deteriorate quickly over time. On the other hand many
developing countries like Bangladesh suffer from monopolistic, low volume, and high cost transport and marketing system. Weaktransport and marketing system are hindering agriculture development means country development. On the other hand vegetable
are generally more costly to produce per hector than traditional crop. The value or quality of vegetable will decrease rapidly once
they are harvested and will keep decaying when being delivered. The revenue of food supplier will depend on the condition of the
products when they are received. Thus timely production and delivery of perishable foods significantly affect the supplier’s
revenue. In this paper it is tried to address present supply chain system of perishable product (especially vegetable) implication,difficulties to change the present system and suggestion for improvement of supply chain.
2. Present Supply Chain
Intermediaries make link between farmer and consumer. Number of intermediaries in the supply chain is a function of product type,accessibility of market, etc. Earlier studies on Bangladesh food supply chain claim that there are many intermediaries involvement
and they are slicking off a major portion of the consumers’ price as profit. There are five intermediaries in the major distribution
channel. Short description is as follows.
Faria: Faria are small traders who dealt in product within three or four local markets and handled a small volume of product.
They purchase product from farmer and sold that product either to the beparies or the consumer. They are usually landless labors or
small farmers having no full time work on the farm (Tasnoova1 et al, 2006). Their volume of business is small because they
possess a little capital.
Beparies: Beparies are professional traders who purchase agricultural product form the farmers or farias in the local market orin the village. They handled larger volume of product than faria. Bepary sells their product to arothdar.
Arathdar: Arathedar serve as a fixed commission agent who have fixed establishment and operate between bepari (incase of
paddy miller) and retailer and charge a fixed commission by providing storage facilities.
Retailers: Retailers are the last link in the marketing channel. They buy product from beparis through arathdar and sell themto the consumer.
Figure 1 shows the interrelationship between intermediaries of existing supply chain in Bangladesh. it is observable that abulk amount of product are transferring from grower through Bepari. Bepari distribute his product to next player through Arathdar.

Figure 1: Typical existing food supply chain in Bangladesh (Sabur2, 1990)*Keywords: perishable food, supply chain management, monopolistic**Master Student, Dept of International Development Engineering, Graduate School of Science and Engineering, Tokyo Institute of Technology
2-12-1 O-okayama, Meguro-ku, Tokyo 152-8550, Japan

Email: rubeldas@tp.ide.titech.ac.jp*** Member of JSCE, Associate Professor, Dept. of International Development Engineering, Tokyo Institute of Technology, Email: hanaoka@ide.titech.ac.jp

3. Function of Intermediaries
The important components of marketing functions at the intermediary level are transportation, storage, grading, financing, market
information, pricing etc. detailed description of intermediaries are described as follows.
Transport: Intermediaries make connection between consumer and producer. They provide transport to carry locally
produced agro-product to distant market. They do the all activities involved in preparation for consignment such as crating andloading. Transportation cost is high in Bangladesh. Intermediaries use different types of mode depend on the availability.
Storage: The storage function is primarily concerned with making goods available at the desired time. It creates time utility.
Storage requirement is crop specific. Potato and paddy can be stored for many days. But vegetable need immediate transport tomarket. As vegetable and fruits are perishable, they need proper post harvesting treatment before reaching market. If seller cannot
sell their product in same day, they need to storage these products for the following day.
Grading: Grading is one of the basic functions of intermediaries and it is defined as the classification of product according tosome standard on measure (Kohls3 et al, 1980). Grading is a determining factor of buying and selling price. Quality is determinedby eye estimation. For fruits and vegetable grading is done by bairal.
Packaging: Packaging is an important job of intermediaries. Wastage largely depends on packaging. Packaging materials
depends on type of crops. Fresh fruits and vegetables are generally packed in bamboo baskets, plastic crates, plastic bags, or nylon
sacks for transportation, in Bangladesh. Sometime, they are transported in an unpackaged form. Binding and packaging is mostly
done by bairal and in some case it is also done by bepari.
Financing: Financing is of crucial important for agro-product marketing like any type of product. The intermediaries face oflacking of sufficient finance. Sometimes intermediaries buy product from farmer on credit. 60% of intermediaries do operate theirbusiness by their self finance (Tasnoova1 et al, 2006).
Risk Bearing: Risk bearing facilities are essential in any marketing activities. Insurance policy system has not beendeveloped yet in Bangladesh. Matin4 et al (2008) found that many farmers sell their mango field to bairal to shift risk and bairalbear all risk of the orchard. Intermediaries bear the risk of price variation.
4. Why Need Intermediaries?
Intermediaries are essential part of food supply chain in Bangladesh. They share profit with producer. But farmer in Bangladesh
cannot avoid intermediaries for shifting their product to market. The reasons of dependency on Intermediaries are as follows.
Small Scale Farm: Small scale farming is better stewards of natural resource and contributes more to local community andeconomic development (Rosset5, 1999). The cultivation practice in Bangladesh is more or less small scale farming. The average
size of land ownership is 0.6 ha (Weinberger6, 2005) and produce small amount of production. Intermediaries’ involvement can be
attributed to the fact that average farmer’s marketable quantity is often small. It is not always economic to employ some shipping
mode to transport for such small quantity to the marketplace.
Lack of Education: It is observed that education has negative impact on agriculture income. But education effect on
nonfarm income (wage, trade etc) significantly in Bangladesh. Education is required to raise total income of farmer. Most of thevillagers in Bangladesh are illiterate and they are not getting update information. Again also farmer have fear of marketing risk.
They rely on intermediaries to send their product to market.
Lack of Information Flow: For efficient marketing system, information of current situation in market is a vital ingredient.
Agro business is not out of this group. Marketing information helps producer to make rational decision. Producer can makedecision on the basis of information on forecast of market demand and information on sales timing. This information can help not
to market glut again it enables the producer about the harvest time. Again understanding consumer need help to improve harvesting
method or produce desire type of crops. The most important information is price information which enables fair price of produced
crop. The literacy level of farmer is very poor in Bangladesh. They can’t read price in newspaper. Again most of the farmer can’t
afford television. Farmer gets information from trader or truck driver who come to buy crop which may be depend on traders
benefit (Akand7, 2006). Most intermediaries get market information through market visits, personal observations and from fellow
traders (Tasnoova1 et al, 2006). Although Directorate Agricultural marketing, Government of Bangladesh is engaged in the task ofregularly disseminating the market price of agriculture products in newspaper, weekly bulletins and on radio, no information aboutprice is available in their website. Presently FM radio, coverage is limited, broadcast daily market price.
Limited Super Market: The development of supermarkets is a recent addition in the domestic retail section of Bangladesh.
To date, there are about 30 supermarket stores operating in the country as a whole, of which 22 are located in Dhaka. Although thecoverage of supermarket chains is still very low, not even 1% of the retail sector. Since supermarkets continue to play a minor rolein Bangladesh, most vegetable produce are sold either in the local markets, or to wholesalers who then transports the produce to thecity markets, i.e., Dhaka. Consequently, production is little organized, and none of the farmers in our sample admitted participatingin contract growing arrangements. Wholesalers and small traders are the major players in vegetable trade, capturing 96% of themarket.
5. Negative Effect of Current System
High Losses and Shrinkage: Poor prepackaging and poor handling methods and marketing system causes high post harvest
loss of the commodity. Postharvest losses vary greatly across commodity types, with the location of production and with the seasonof production. Postharvest losses in food grains in Bangladesh are reported at an estimated 15%, while in fruits and vegetables they
are estimated at 20–25%. For highly perishable fruits and vegetables, these losses may go as high as 40% (Badrud-doza8, 2006).
The absence of a well-developed marketing network and rapid transportation in the country also contributes significantly to highpostharvest losses in fruits and vegetables. It is estimated that the loss of nearly 25-40% of the vegetable occurs due to roughprepackaging and improper post harvest handling, transportation, and storage practice (singh and chadha9, 1990). Postharvest
losses which average between 24 and 40% in developing countries, and between 2 and 20% in developed countries are a major
source of waste (Sirivatanapa10, 2004). Sharma11 (1987) reported that post harvest losses of vegetable in Bangladesh could be as
high as 43%. It was estimated that 1.26 million tones of Aman and Boro paddy gets wasted every year in Bangladesh(www.bangladeshnews.com.bd). A research of the Rural Development Academy (RDA) Bogra shows that the loss is 5.18 percentof the total production these two main crops.
Intermediaries’ Dominance: Tasnoova1 et al, 2006; Rahman12 et al , 2006; matin4 et al 2008 made field survey in different
region in Bangladesh on different agri-product and found that intermediaries in the market were in small number but they wereorganized. So they dominate farmer and compel them to sell product at lower price as farmer has no way to bring back the productfrom market as it involved extra cost. Rahman12 et al (2006) found their own survey that one of the main reasons for not getting
good price is the involvement of local broker (dalal).
High Transport Cost: Transport cost varies depending on road quality, utilization of the loading capacity and trip length(Sieber13, 1998).

Figure 2: Transport cost of different vehicles in developing country (Sieber13, 1998)
Figure 2 represents the typical cost per ton per km of medium distance road (50 km) for good road and short distance transport ( 5km) on poor road. According to Tasnoova1 et al, (2006) about 10%, 40% and 50% of Farias used head loads, cart, and vans tocarry their paddy. Carts and Vans are used by 40% and 60% of baparies for the transportation of paddy. About 10%, 13% and 77%of the miller used of carts, vans, and truck to carry their paddy. Farmer use head load and rickshaw van to carry the produce tomarket (Hossain14, 2004). From graph it can be seen that the cost for head load is maximum. By using proper transport service

the cost can be minimized.
Price Difference: Price increases with the increase of number of intermediaries. Price is less if there is less number ofintermediaries. Matin4 et al (2008) shows that price at outlet at distant market (Dhaka) become almost double higher than that at
farm gate. Several studies on food supply chain in Bangladesh observed that marketing margin as a percentage of consumer prices
were high. Sabur2 (1990) showed marketing margin for eggplant and tomato was as high as 74%. Perishable product marketing
depends on many intermediaries due to the absence of requisite infrastructure and cause huge delivery cost and physical wastage.
6. Conclusions
Perishable food distribution system is not sound in Bangladesh. Growers are not getting full benefit of high food price due to
deficient access to market information and undeveloped infrastructure. There are insufficient well equipped wholesale market andmany intermediaries between producer and consumer. Inferior communication and transport condition and inadequate financial
and information service also contribute to frustrated distribution of perishable food. Direct intervention of government involvementin vegetable marketing is minimal. Price is determined by open bargaining by number of buyer attending in the market. Improving
transport system and minimizing the number of intermediaries in supply chain can increase the profit margin of farmer.
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