Food prices are rising not because of hoarding or syndicates, but due to higher production costs, weather-related disruptions and deep-rooted weaknesses in agricultural value chains, a new Bangladesh Bank study has found.
The research also points to inadequate storage facilities and poorly timed policy interventions as key contributors, noting that farmers bear most of the losses while inflation remains stubbornly high despite adequate harvests.
The study was carried out by the central bank’s Chief Economist’s Unit and the Governor’s Office, based on field surveys conducted across 61 upazilas in 18 districts during June and July 2025.
It further finds that food inflation tends to remain sticky, persisting even during periods of sufficient agricultural output.
Addressing these upstream constraints is critical to stabilising food prices and safeguarding the long-term viability of farmers, the study argues.
Md Salim Al Mamun, director of the Chief Economist’s Unit at Bangladesh Bank, told TIMES of Bangladesh that the research was designed as an independent assessment to determine whether structural weaknesses exist in the supply chains of five staple food items: rice, onion, potato, broiler chicken and eggs.
The study, he said, found intense competition among middlemen and warehouse operators, leaving little room for them to manipulate prices.
“In reality, it is farmers who benefit or suffer the most,” Mamun said. “Intermediaries add only limited value before products reach the market. That is why the study recommends a coordinated approach to reducing production costs.”
Rice: High production costs trouble farmers
In rice, the country’s staple, the study finds that higher prices stem from increased costs and seasonal disruption rather than artificial scarcity.
Retail prices of coarse rice reached Tk61 per kg during the survey period, up from Tk55 a year earlier. The increase reflects a 35% rise in production costs, driven mainly by higher labour wages and heavier use of fertiliser and pesticides.
Yields also declined due to adverse monsoon conditions and the diversion of land to other crops.
The research shows that most boro rice is either consumed by producing and non-producing households, procured by the government or lost to weather damage, leaving only a limited share available for sale.
Temporary supply tightening occurred during Eid holidays, when mill closures and a 10-day bank shutdown delayed trading and forced farmers to hold paddy.
The study characterises this as liquidity-driven stocking rather than deliberate hoarding, noting that mills supplying mandatory government procurement incurred losses of Tk1 per kg.
Potatoes: Surplus and losses undermine hoarding claims
According to the central bank study, potatoes provide the clearest counterpoint to the hoarding narrative. Farmers expanded acreage and output this season, pushing supply well above storage capacity.
Production costs rose to Tk19 per kg from Tk14 last year, yet farmers earned only Tk12–13 per kg when selling directly, locking in losses during peak harvest.
More than half of production was placed in cold storage, but high storage charges further reduced returns. Prices remained below cost even after storage, indicating oversupply rather than withholding.
Middlemen and stockists earned narrow margins, and many also stored potatoes in anticipation of future price recovery, a response to market signals rather than price manipulation, the study finds.
Onions: Efficient price discovery, high farmer risk
In onions, the research finds a largely competitive and self-regulating market. Average production costs were Tk33 per kg and selling prices during the survey averaged Tk43, but early-season prices of Tk22–28 per kg caused losses for many farmers.
Post-harvest spoilage and weight loss further reduced effective returns.
Retail prices of Tk55-60 per kg mainly reflected transport, handling and spoilage costs.
About 90% of farmers sold based on immediate cash needs rather than price expectations, and the study reports no evidence of coordinated stockpiling driving prices.
Instead, price movements closely followed supply and demand conditions across the season.
Broiler chicken: Feed costs hurt production
The broiler sector illustrates how losses accrue at the farm level without downstream price distortion. Average production costs stood at Tk132 per kg against selling prices of Tk 120, resulting in losses of Tk12 per kg during the survey period.
Feed accounted for 75% of total costs making farmers highly exposed to input price volatility.
After Eid-ul-Adha the demand fell sharply as red meat consumption rose, leading to oversupply and lower farm-gate prices.
Eggs: Structural imbalance hits small producers
Egg producers faced a similar pattern. Average production costs were Tk8.93 per egg while selling prices averaged Tk8.12 resulting in losses of Tk0.81 per egg during the survey period.
Feed made up more than 84% of costs, amplifying the impact of price swings. Small-scale farmers were the most vulnerable, while larger and integrated producers remained profitable.
Seasonal demand drops again played a central role, with producers bearing losses and intermediaries adjusting margins. The study finds no evidence that coordinated stocking influenced prices in this segment.
