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Marketing and Value Chain Analysis of Dry Chilli: a Study in Selected Areas of Bangladesh

Md. Kamrul Hasan
Senior Scientific Officer
Spices Research Centre, Bogra.

Md. Kalim Uddin
Chief Scientific Officer
Spices Research Centre, Bogra.

Abstract/ Executive Summary:

The study was undertaken to determine marketing system, marketing cost, margin, efficiencies and to examine the value chain aiming to determine the value addition of dry chilli in different steps of marketing channel. Primary data were used for this study. Primary data were collected from Bogra, Serajganj and Comilla districts depending upon the concentration of production and commercially marketing of chilli; and consuming area Dhaka, Rajshahi and Chittagong. Data were analyzed using marketing margin, profit, efficiency ratio, and value addition. Five major marketing channels were identified for domestic produced dry chilli marketing. Channel-3 (Farmerg→ Traderg→ Commission agent→ Retailerg → Consumer) was the most important supply chain through which 24% domestic produced chilli reaches to consumers. Per quintal marketing cost of chilli was estimated from Tk 101.88 to 3921.15 and marketing margin Tk 777.00 to 12564, respectively for different intermediaries. Marketing margin and profit were the highest in retailer for non processed chilli and those were the highest with processed chilli in processing industry than those of other intermediaries. Out of five marketing channel, Channel-2 was more efficient than those of other channels. Eight actors like; farmer, local trader, trader, commission agent, wholesaler, processing industry, distributor, retailer and consumer were identified who were involved in the chilli value chain systems. The study revealed that farmer added the highest amount of value Tk 1790.00 per quintal in non processed chilli followed by retailers (Tk 1339.00), Trader (Tk 1244.00), wholesalers (Tk 1035.00) and local trader (Tk 777.00), respectively. In the case of processed chilli, processing industry added the highest amount of value and it was Tk.12564 per quintal. Thirteen marketing problem were identified, among them price fluctuation, higher transport cost and lack of loan facilities were the major and common problem for most kinds of intermediaries involved in chilli marketing in Bangladesh. It is therefore, recommended that loan facilities should be provided to the intermediaries and price fluctuation should be kept in reasonable limit by the government intervention. Natural gas and frequent supply of electricity should be ensured to chilli processing industries for continuous production of processed chill.i Technologies should be developed for identification and removal of alpha toxin and heavy metal for enhancing export.

Keywords: Marketing, Value chain, Dry chilli

Location: Bogra, Sirajgong and Comilla districts Bangladesh

Start Date: 00-00-2016

End Date: 00-00-2017

Program Area: Postharvest and Agro-processing

Commodity: Chilli

Objectives:

i. To examine the existing marketing system of dry chilli. ii. To determine the marketing cost, margin and profit of intermediaries on different domestic markets. iii. To estimate the marketing efficiency of different marketing channel. iv. To examine the value chain aiming to determine the value addition of dry chilli in different steps of marketing channel.

Methodology:

Data were collected from primary sources. Primary data were collected by survey method where in various market intermediaries were interviewed for eliciting information at various stages of chilli marketing. Apart from these, formal interview with input supplier, chilli producers, concerned traders and buyers were conducted to have detailed information from the stakeholders involved in supply and value chain system of chilli marketing. The study areas were purposively selected from Bogra, Sirajgong and Comilla districts depending upon the concentration of production and commercial marketing of chilli. In these study areas, three types of market such as primary, secondary and consumer market were selected. However, to examine the value chain of chilli aiming to determine the value addition in different steps of marketing channel; in addition, city markets of Dhaka, Rajshahi and Chittagong were selected to examine the price variation of chilli in secondary and consumer market and compared with chilli market in production areas of Bangladesh. A total of 120 farmers from three areas taking 40 from each area were selected purposively. Ten input suppliers, 36 local traders (faria), 45 traders (bepari), 15 commission agents (aratdar), 30 wholesalers (paiker), 6 processing industry, 6 distributor and 30 retailers were selected from the above selected areas including major consuming area of Dhaka, Rajshahi and Chittagong. Two sets of pre-tasted interview schedule, one for farmers and other for intermediaries were used for the collection of data/information using survey method. Primary data were collected by face-to-face interview during 2016-17 cropping season. The collected data and information were reduced to tabular form which included classification of tables into meaningful results by using arithmetic mean, percentage and ratio. For chilli marketing, intermediaries involved in marketing channel were identified and marketing costs, margins, and profits of intermediaries were determined by using tables and flow diagrams. Value chain and value addition to chilli were shown by using flow channel and table. Except this the following analytical techniques were used for the study.

Source of Information: Annual Research Report, 2017, Agricultural Economics Division, BARI, Gazipur

Article Link (Online Journal):

Funding Source:

1.

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The results of the study depicted that five major marketing channels were identified for domestic produced chilli marketing. Channel-3 was the most important supply chain through which 24% domestic produced non processed chilli reached to the consumers. On the other hand, Channel 5 was the most popular supply chain for processed chilli marketing. Marketing costs per quintal of chilli were estimated at ranged from Tk 101.88 to 3921.15 and marketing margin Tk 777.00 to 12499 for different intermediaries. Marketing margin and profit were the highest in processing industries than those of other intermediaries. Out of five marketing channel, Channel-2 was more efficient than those of other channels. Nine actors like; farmer, local trader, trader, commission agent, wholesaler, processing industry, distributor, retailer and consumer were identified who were involved in chilli value chain. The study revealed that processing industry added highest amount of value Tk 12564 per quintal of chilli followed by retailer (Tk 6100.00), farmer (Tk.1790.00), trader (Tk 1244.00), wholesalers (Tk 1035.00) and local trader (Tk 777.00), respectively. In the chilli value chain system, processing industry faced some core constraints which enhanced their production cost and reduced export. These were lack of processing facilities; like natural gas, frequent supply of electricity and lack of identifying and removal technology of alpha toxin and heavy metal of chilli. Thirteen marketing problem were identified, among them price fluctuation, high transport cost and lack of loan facilities were the major and common problem for most kinds of intermediaries involved in chilli marketing in Bangladesh.

Knowledge Management: Report/Proceedings