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Fertilizer Marketing Under Free Market Distribution System in Bangladesh

M. Mosharraf Uddin Molla
Bangladesh Jute Research Institute, Dhaka.

S. A. Sabur
Department of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh, Bangladesh.

S. M. Khalilur Rahman
Bangladesh Agricultural Research Council, Dhaka.

Abstract/ Executive Summary:

The study is mainly based on data collected from two thanas of Tangail and Mymensingh districts. Few large traders who collect delivery order for large amount dominate markets near the factory. Some degree of market imperfection that enables the retailers to earn abnormal profit was found at the lower level of marketing. Seasonal price variation of urea is the highest compared with other type of fertilizers. Fertilizer prices reach the peak level during growing period of Boro paddy. TSP and urea markets seem to be more integrated than other types of fertilizers. Short run price fluctuation, government intervention, adulteration, scarcity at the peak period were the main problems as stated by farmers. On the other hand, traders reported problems of lifting fertilizer, high truck fare, defective system and higher interest rate of credit as their major problems.

Keywords: Fertilizer, Marketing, Distribution system

Location: Gopalpur, Tangail and Trishal, Mymensingh

Start Date: 01-01-1991

End Date: 30-06-1995

Program Area: Socio-economic and Policy

Non-commodity: Market analysis

Objectives:

To evaluate the fertilizer marketing system.

Methodology:

The study is based on data collected from two than as of Tangail and Mymensingh districts. Two than as namely Gopalpur under Tangail district and Trishal under Mymensingh district were selected purposively. From each Thana 5 wholesalers (who lift atleast 10 tones fertilizer per installment) and 10 retailers (who lift maximum 10 tones fertilizer per installment) were interviewed. Besides 60 farmers, taking 30 from each thana were randomly selected. The farmers were divided into three categories such as small farmers (having 0.1 to 2.5 acres), medium (having 2.51 to 5.0 acres) and large (having more than 5.0 acres). (Detail methodology is described in Molla, 1996). Primary data were collected during May- June, 1996. Besides, secondary data covering the period from 1991 to 1995 were used. The cost of marketing represents the cost of performing the various marketing functions and operations made by various marketing agencies or intermediaries from the point of production to the point of consumption. Marketing cost of fertilizer for a trader was calculated by adding all expenses incurred by the trader for performing different marketing functions. The term marketing margin refers to the difference in values for equivalent physical quantities of a given commodity between different levels of market. Marketing margin at a particular stage of transaction was estimated by subtracting purchase price from sale price of a trader. The total marketing margin is the difference between the price received by the producer and price paid by the consumer. In other word, total marketing margin was calculated by summing marketing margins of all types of traders involved in the marketing channel.

Source of Information: BANGLADESH JOURNAL OF AGRICULTURE, Vol. 23 (2), pp. 81-94, (Jan- Dec) 1998, ISSN 0253-5408.

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Few large traders who artificially create scarcity dominate fertilizer market at the initial point of distribution by lifting large amount of fertilizer from the mills. The mills can arrange to sell fertilizer from different places in addition from millgate by developing stocks in different locations. The warehouses and manpower of BADC can be used for this purpose. Some degree of imperfection is found at the lower level of marketing, which enable the retailer II to earn more than normal profit, particularly during the peak season. More competition in the lower marketing level need to be developed by making arrangement so that retailer I can sell most of their product directly to the farmers. The high seasonal price variation of fertilizer, particularly for urea, can be reduced at a reasonable level if supply according to demand for fertilizer is ensured during peak demand period, especially during sowing and planting period of Boro paddy. For this purpose Ministry of Agriculture may monitor the month wise demand, price and supply of fertilizer at farm level and provide information to the government and its related ministries. District level market integration does not ensure integration of primary markets. To see farmers' level market integration, weekly or monthly price data of different primary markets may be collected and analyzed. All the selected farmers opined that problem became acute by unnecessary intervention of the market or intervention in wrong way by the government. Therefore, before taking any action, a meeting among the BCIC, traders and farmers' representative should be arranged. Finally, the selling prices of fertilizers should be determined on the basis of the real production cost and international price, considering all economic and commercial matters so that it discourage traders to illegally traffic fertilizer outside the country.

Knowledge Management: Journal