Price increases from farm-gate to retail
- Green chilli: 116%
- Rice: 100%
- Lentil: 87%
- Onion: 80%
- Potato: 78%
- Brinjal: 72%
- Egg: 25%
- Beef: 22%
- Rui fish: 13%
- Chicken: 10%
Bangladesh’s food prices are being pushed up by high logistics costs, rising production expenses and bottlenecks at key wholesale points, with urban aratdars emerging as a dominant link in several major food supply chains, according to a new study by the Centre for Policy Dialogue (CPD).
The study, titled “The Food Price Chain: Markets, Margins and Intermediaries in Bangladesh”, found that urban aratdars — wholesale intermediaries connecting suppliers and retailers — are the primary procurement source for six of the 10 essential commodities examined: onion, potato, green chilli, brinjal, eggs and Rui fish.
Heavy dependence on a limited number of wholesale channels could increase market concentration, weaken bargaining power and make prices more volatile, CPD said, while cautioning that the findings do not establish that intermediaries are responsible for higher prices or that concentration alone proves collusion.
“Intermediaries are not inherently the problem; the policy challenge is to ensure that each stage adds value efficiently, transparently and competitively,” the think tank said.
The findings were presented at a CPD dialogue on Thursday where Commerce Minister Khandakar Abdul Muktadir identified high logistics costs, rising input prices and weaknesses in market systems as major factors behind persistent food inflation.
Reducing logistics costs, controlling production expenses and improving agricultural productivity are necessary to bring down food prices, he said, adding that traceability across the food supply chain would help identify stages where abnormal costs or price increases occur.
Longer chains widen farm-to-retail gaps
CPD traced the supply chains of 10 domestically produced commodities — rice, lentil, onion, potato, green chilli, brinjal, egg, beef, fish and chicken — from retail markets back to farmers.
The research covered 500 retailers across 10 markets in Dhaka Division and collected information from 820 market agents, including farmers, beparis, paikers, aratdars, millers, wholesalers and retailers.
The study found that commodities moving through longer supply chains generally recorded larger increases between farm-gate and retail prices.
Green chilli recorded the highest increase, with retail prices 116 per cent above farm-gate prices. Rice followed with a 100 per cent increase, lentil 87 per cent, onion 80 per cent and potato 78 per cent.
By comparison, retail prices increased 10 per cent from farm-gate levels for chicken, 13 per cent for Rui fish, 22 per cent for beef and 25 per cent for eggs.
CPD said reducing unnecessary layers in supply chains, while retaining intermediaries that provide collection, transport, storage and distribution services, could improve market efficiency.
Rising costs squeeze farmers
Higher consumer prices do not always translate into better returns for farmers, the study found.
Although respondents most frequently identified farmers as beneficiaries of higher prices, profitability varied significantly after accounting for production and marketing costs.
Chicken and beef farmers recorded negative net marketing margins, mainly due to high feed costs and other production expenses.
In the chicken supply chain, farmers sold below their average cost, while wholesalers and retailers recorded positive margins.
Crop producers mainly cited fertiliser and labour costs as major pressures, while poultry and livestock farmers highlighted feed, veterinary services and medicine expenses.
Poor households bear food inflation burden
Food inflation is placing a heavier burden on lower-income households because food accounts for a larger share of their budgets, CPD said.
Food represents 59 per cent of Bangladesh’s consumer price index basket, while more than 60 per cent of households spend at least half of their income on food, according to CPD citing Bangladesh Bureau of Statistics and United Nations World Food Programme data.
The bottom 5 per cent of households spend 59.8 per cent of their consumption expenditure on food, compared with 28.9 per cent for the top 5 per cent.
Logistics costs add pressure
Bangladesh’s high logistics costs are adding to food price pressures, the commerce minister said.
While global logistics costs are around 10 per cent of gross domestic product, Bangladesh’s cost is about 16 per cent, he said.
Lowering logistics expenses, improving market information and helping farmers make better production decisions are needed to reduce repeated losses, he added.
The minister cited potato farmers who continued cultivation despite failing to receive fair prices over several years, saying better market signals and production planning support were needed.
The government is moving towards introducing traceability across the agricultural supply chain to identify unusual costs and price increases, he said.
CPD calls for transparent markets
CPD recommended stronger monitoring of wholesale markets where retailers depend heavily on a small number of suppliers.
The think tank called for action against proven cases of hoarding, collusion, artificial shortages and non-transparent commissions, while avoiding unnecessary intervention in normal market operations.
It suggested expanding farmer cooperatives, collection centres and digital platforms to connect producers with more buyers.
Regular publication of farm-gate, wholesale and retail prices, along with market arrivals and stock information, would improve transparency, CPD said.
For individual commodities, the study recommended monitoring rice pricing at miller and aratdar levels, diversifying potato procurement channels, strengthening onion market surveillance and reducing unnecessary intermediary layers in green chilli trading.
CPD concluded that controlling food inflation requires lower logistics costs, stronger market governance, better storage and transport infrastructure and higher agricultural productivity.
