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Evaluation of Fertilizer Supply and Marketing System Under Private Market Mechanism

M. Aminul Islam Akanda
Departrn nt of Agricultural Economics, Bangabandhu Sheikh Mujibur Rahman Agricultural University (BSMRAU), Salna, Gazipur, Bangladesh

Joynal Abedin
Departrn nt of Agricultural Economics, Bangabandhu Sheikh Mujibur Rahman Agricultural University (BSMRAU), Salna, Gazipur, Bangladesh

B.A.A. Mustafi
Bangladesh Rice Research Institute, Gazipur, Bangladesh

Abstract/ Executive Summary:

The present study was undertaken to identify the supply characteristics and the delivery system of fertilizers, and to evaluate the marketing efficiency of fertilizer traders. The study was based on secondary data collected from different reports and primary data collected from the fertilizer traders in Gazipur district. The data relating to fertilizer marketing were collected from purposively selected 30 traders of different catagories. The exponential growth model was used to determine the annual growth rate of Urea, TSP & MP and also for total fertilizer. The supply of fertilizer grew significantly during the period of 1981-82 to 1998-99, but the growth for TSP declined. The growth of SSP for recent few years was significant and alarming (42.59%). The total growth of fertilizer was found significant whereas, total cropped area were not.The marketing channel was derived based on the data collected from fertilizer traders. The intermediaries of the marketing channel were : factories/importers, wholesaler-1, wholesaler-11, retailer-I and retailer-H. Shepherd marketing efficiency and allocative efficiency were used to determine the marketing efficiency. According to the Shepherd marketing efficiency, the retailers are comparatively more efficient than the wholesalers, but in terms of allocative efficiency the wholesalers. were more efficient in earning profit and it was least for retailer-1

Keywords: Evaluation, Fertilizer, Marketing, Mechanism.

Location: Gazipur District.

Start Date: 00-00-1981

End Date: 00-00-1999

Program Area: Socio-economic and Policy

Non-commodity: Market analysis

Objectives:

i) To identify the supply characteristics of fertilizer including sources of supply and its rate of growth.

ii) To identify the delivery mechanism and evaluate the efficiency of fertilizer marketing system.

Methodology:

Two types of data were used in this study. For macro level analysis relating to fertilizer supply, time series data (1981-82 to 1998-99) were collected mostly from published reports. The data were taken from Bangladesh Bureau of Statistics (BBS), Statistical Year Book, Agricultural Cencus Report, reports of Agrobased Industries and Technology Development Project (project implemented by IFDC), and Bangladesh Chemical Industries Corporation. For collecting data on fertilizer marketing, a total of thirty sample traders were chosen purposively from market and rural areas of Gazipur Sadar, Sreepur and Kaliakoir Thanas under Gazipur District. Based on their business volume, the fertilizer traders were categorized into four groups: Wholesaler-I (usually dealers of BCIC), Wholesaler-11 (usually dealers in partnership who lift 10-15 M.tons of fertilizer per lifting), Retailer-I(usually fertilizer traders for the whole year lifting greater than 5 ton fertilizers per lifting), and Retailer-ll (very small-scale fertilizer saler). The sample traders, i.e., 7 Wholesaler-I, 6 Wholesaler-11, 8 Retailer-1 and 9 Retailer-11 were interviewed with a questionnaire designed for this study. The collected data was carefully examined and edited in order to remove ambiguities and inconsistencies. The data were then analyzed in accordance with the objectives of the study. In order to arrive at a meaningful conclusion, tabular technique was followed. Some statistical methods were also used for analysis of data.Two approaches have been used to measure the efficiency of fertilizer marketing. The marketing cost and price of fertilizers were determined by using the weighted average methods taking all the fertilizers (Urea, TSP. MP) into account. Marketing costs included cost of transportation, loading and unloading, shop and storage rent, personnel costs and wages, electricity and telephone bills, cost of capital and miscellaneous costs (marketing tolls, tips, subscription etc.). Interest on operating capital was computed at the rate of 15 percent per annum for a period of 4 months. It was divided by 2 to arrive at an average. Another approach used by Bain (1968) to measure the return on equity in the market was examined through Allocative Efficiency.

Source of Information: Bangladesh Journal of Agriculture, Vol: 24 (1), PP: 81-95, 1999, ISSN: 0253-5408

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Bangladesh chemical Industries Corporation were engaged solely in production of Urea in full and TSP & SSP partly. The Ministry of Agriculture allocated the supply of Urea for each district, based on the projected demand by District Fertilizer Monitoring Committee. Therefore, projection of demand for fertilizers should be done carefully and accurately particularly during the peak period. The growth in supply of Urea and MP were moderately significant over the study years. But TSP had a negative significant growth whereas SSP had an alarming positive growth in supply. Comparing the higher profitability and demand, the importers procured more SSP than TSP; but the farmers were cheated by supplying SSP as TSP in the market. Measure should be taken to make farmers aware of this. The marketing efficiency was higher for small-scale traders. This was the highest for retailer-II and the lowest for wholesaler-H. In terms of estimated accounting profit on owners' equity and excess profit rate on sale and owners' equity, the efficiency of wholesalers was higher compared to retailers. Profit rate was higher for wholesalers as they had direct linkage with the producing and importing units and they procured fertilizer at a reasonable price. Steps should be taken to get direct relationship for each category of traders to the producing and importing units. For earning more profit, the traders try to increase the price of fertilizer. Proper monitoring of fertilizer market should be continued to endue that the fertilizer prices do not go abnormally up the to artificial supply shortage vested during the peak season.

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