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Value Chain Analysis and Share of Different Actors in Rice Marketing Channel in a Selected Area of Bangladesh

MAB Siddique
PSO
Head, Agricultural Economics Division, BRRI, Gazipur

Afroza Chowshury
SO
Agricultural Economics Division, BRRI, Gazipur

Abstract/ Executive Summary:

Rice value chain encompass all economic activities including rice production, transformation, handling, transport, marketing, and distribution necessary to create, sell, and deliver to a certain destination. The present study was undertaken to map and critically analyze the value chain of rice: examining different actors and their activities;and to measure the value addition computing marketing cost and margins of value chain actors. A total of 40 sample farmers and 90 different market actors were interviewed with structured questionnaires . The grower’s information in Boro season was collected through PRA technique and traders were interviewed with individual face to face method. Simple tabular method was applied to analyze the data The result of the study revealed that miller captured the highest net margin (45%)followed by the retailers and wholesalers. On the other hand ,millers shared the highest marketing cost (52% ) among the actors of rice supply chain.Overall net margin /profit of the supply chain was more than half(58%) of the gross margin which is not justifiable.The rice market structure should be less intermediaries' involvement and each actor's roles should be valued as per their contribution in value addition.

Keywords: Value chain analysis, Diferent actors, Rice marketing channel

Location: Naogaon district

Start Date: 01-07-2013

End Date: 30-06-2014

Program Area: Socio-economic and Policy

Non-commodity: Market analysis

Objectives:

To map and critically analyze the value chain of rice: examining different actors and their activities;
To measure the value addition computing marketing cost and margins of value chain actors.

Methodology:

The location of the study was purposively selected in Naogaon district based on information on growers and traders where rice production, its processing and value addition activities is highly concentrated. A total of 40 sample farmers and 90 different market actors were interviewed with structured questionnaires. The grower’s information was collected through PRA technique and traders were interviewed with individual face to face method. Simple tabular method was applied to analyzing the data. The concurrent method was followed to calculate cost and margins of different marketing actors. In this method costs and margins are determined by comparing the prices at successive levels of marketing by-deducting ascertainable costs from the gross margin at different stages of value chain. The method could be described as follows:

Gm_i= S_pi– P_pi

Where,

Gm_i = Gross margin (Tk/unit) of _ith functionary

P_pi = Purchasing price (Tk/unit) of _ith functionary

S_pi = Selling Price (Tk/unit) of _ith functionary

Value addition or net margin at _ith level= Gross margin at _ith level – Marketing costs at _ith level

N_mi= G_mi – M_ci

Where,

N_mi= Net margin (Tk/unit) of _ith functionary

G_mi = Gross margin obtained (Tk/unit) by the _ith functionary

M_ci = Marketing costs incurred (Tk/unit) by the _ith functionary

Price Spread (PS) = Retail price (Rp) – Farm gate price (Fp)

Source of Information: Proceedings of the BRRI Annual Internal Review for 2013-14

Article Link (Online Journal):

Funding Source:

1. Government

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The value chain analysis in the study area revealed that there exists most traditional rice value chain, which is the local supply chain of paddy grown by the subsistent farmer, de-husked in local mills, and consumed by the farm household or sold to the local village markets. The rural-urban traditional rice value chain, geographically long and inter mediation by long and features sale of paddy to local traders, sell it as paddy or have it milled, sell clean rice to the wholesaler of outside. The transitional rice value chain, which is geographically long and inter mediation by medium, entails the rice farmers selling paddy directly to mills. The millers who have it milled then sell rice to the Aratdar or city wholesalers and finally to the retailers. Overall net margin /profit of the supply chain of rice was more than half (58%) of the gross margin, which is not justifiable in the context of a developing economy like Bangladesh; although, the actors of the channel performed varieties of facilitative functions. The rice market structure should be guided to transitional value chain of less intermediaries’ actor-involvement. Each of the actor’s roles should be valued as per their contribution in value addition.

Knowledge Management: Report/Proceedings