Rural Market System in Bangladesh Essay Example

(compared to 92. 96% in 1968) who live in the under-developed rural areas. Bangladesh is considered as a developing economy which has recorded GDP growth above 5% during the past few years.

Microcredit has been a major driver of economic development in rural Bangladesh and 35,562,000 or three-fifths of the economically active population are employed in the agriculture sector in 2008 (compared to 27,589,000 in 1980). The steady incline in the rural-population-chart with simultaneous decline in rural-percentage gives a clear picture of urbanization. Over-population should no more be considered as the biggest obstacle to sustainable development in Bangladesh.

The migrant workers, a big majority of which are from the rural, have remitted US$8,994,997,000. in 2008 (compared to US$ 338,666,700. - in 1980). For the foreign remittance, rural-women employment in readymade garments industry and growing agricultural employment the rural economy is in transition.

By the effect of globalization, the rural scenario in Bangladesh has dramatically changed over the years. A clear cut rural-urban divide no longer exists and a traveler from town to village would find it hard to precisely say where the landscape changes from urban to rural.

In recent years, rural markets have acquired significance, as the overall growth of country’s economy has resulted into substantial increase in the purchasing power of the rural communities. The broad section of rural marketing in the economy of Bangladesh is selling of agricultural products in the urban areas and manufactured products in the rural areas. Urban Areas Outbound agricultural products Rural Marketing Cycle Inbound manufactured products Rural Areas Fig-1: The two broad sections of rural marketing.

An extensive network of rural markets

exists in Bangladesh. According to World Bank (WB) the number of rural markets in Bangladesh in 1996 was around 8,000. The introduction of high yielding variety (HYV) seeds and superior species in all sorts farming, the rural agricultural production dramatically increased. The increase of production has ultimately led to sudden growth in the number of rural markets. Data from LGED's Upazila-based GIS system gives a figure of 17,121 while a survey, commissioned by Department of Agricultural Marketing (DAM), recorded 16,476 markets3.

Rural Market Analysis comment that many small, informally organized markets at the roadsides and in villages particularly in the Char areas were not recorded. There is definitely a great increase in the number of rural market but unfortunately we have no latest data.

THE RURAL MARKETING CONCEPT

The rural market in Bangladesh is a complex chain through which the agricultural products reach the household of urban dwellers. Since the urban markets are the ultimate outlets for the agricultural products, there is justification to include the urban markets in the rural marketing chain. Based on location and market participants the rural market is a 5 (five) tier setup as illustrated below in Fig-2. The number of markets stated in the LGED survey (17,121) includes only the rural markets that are up to the Upazilla level (green boxes).

The market structure up-to the Fig-2: Components of Rural Market Chain Upazilla level is of a pyramid shape with rural Primary Market at the bottom. It again is an inverted pyramid at the urban level with the urban Retail Agro-Market more spread-out.

We have earlier classified rural marketing as an activity of selling

agricultural products in the urban areas and manufactured products in the rural areas. Similarly we may also identify the rural marketing system in two broad sections:  Agricultural products marketing Manufactured products marketing The marketing system for the agricultural products is strangely different from that of the manufactured products. Therefore we shall classify them separately in the next paragraphs.

Agricultural produce has to reach the hands of the consumers at places far or near. All the commodities cannot be produced in all the areas because of variations in agro-climatic. Agricultural commodities generally move from producers to consumers through intermediaries or middlemen. The marketing chain is highly fragmented with several intermediaries or marketing agencies. In the marketing of agricultural commodities the following agencies are involved: Farmers: Most farmers or producers, perform one or more marketing functions. They sell the surplus either in the village or in the market.

Some farmers especially the large ones, assemble the produce of small farmers, transport it to the nearby market, sell it there and make a profit. This activity helps these farmers to supplement their incomes. Frequent visits to markets and constant touch with market functionaries, bring home to them a fair knowledge of market practices. Thus they have, an access to market information, and are able to perform the functions of market middlemen. Farias (Petty Traders): They are floating traders who directly purchase small-stocks from the rural households.

After gathering a marketable quantity, they sell it either in local markets or to other traders. A great number of rural households have small surplus (small-stock) that are not enough for a marketable quantity. But these small-stocks contribute largely

in meeting the demand-supply gap and without the Farias these small stock would never reach the market. Though the Farias reap high benefit by rock-bottom purchase they play an important role by meeting the market demand with small-stocks which would otherwise gone waste. Paikers (Small Traders): They are small-scale rural intermediary traders or wholesalers.

Paikars collect products from farmers and small markets and sell those in big markets or supply to Arath (a wholesaler’s depot). Beparis (Big Traders): They are rural traders who collect products from farmers, farias, paikars in the local markets. They sort different products by variety, size, and quality and dispatch those to urban wholesale markets. They equalize the flow of goods by storing them in the peak arrival season and releasing them in the off-season; They play an important role in, mobilizing products from producing areas to markets where demand exists.

They are commission agents who have permanent establishments and manpower in markets. Through their establishment called Arath, they function in between the beparis and kuchra-bikretas and charge fees or commission from both the parties. Arathdars also offer cash-loans to producers, in return for buying the produce at a pre-fixed price, which may be well below market rate. Kuchra Bikreta (Retailers): These traders buy products from the arats and sell directly to the consumers. Some have shops or stalls but most operate either in pedestrian-oriented retail streets or as mobile vendors.

The marketing chain of agricultural products varies for different commodity groups. Following flow charts describe the marketing chain of rice, vegetables and fish: Crops: Rice, dry-chili, mustard, lentils, and such other non-perishable commodities are abundantly available in

the growing areas in the harvesting season. Financial crisis and lack of storage facility are the reasons for which the farmers sell major portion of the yield during the harvesting season when prices are low.

The fragile nature and depreciation of freshness makes the vegetable-trade risky. The risk higher cost of transportation, damages in transit, and after-sale left-over are assumed and discounted while the purchase is made by the intermediary traders. For this reason there is always a big difference in vegetableprice between the wholesale and retail market. Fish: The domestic fish market is very big in Bangladesh and about 50% of the inland fish production is consumed in fresh form due to strong consumer preference. The fish marketing system in Bangladesh is traditional and complex, but least competitive.

Fish marketing is almost entirely managed, financed and controlled by a group of powerful intermediaries who play a big role in fish marketing channel. Fig 5: The Fish Marketing Chain The major sources of fish are the haors, lakes, rivers and sea and smaller source are fisheries and domestic ponds. Fisherman are not cultivators or traders, their input in the market-chain is their efforts in catching. For fishing particularly in the sea and rivers, the aratdars or mahjan lend money for buying fishing-net and boat. The entire catch is given to the mahajan or aratdars who recovers the money after selling the fishes.

The fisheries sell their production directly to the wholesalers in the haat. The pond fish are sold to fisherman who catches them which along with local free water catch are directly sold in the rural market by the fisherman directly.