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Profitability of Flower Production and Marketing System of Bangladesh

NUSRAT HASAN MOU
MS Student
Dept. of Agri. Economics, Bangladesh Agricultural University (BAU), Mymensingh, Bangladesh.

Abstract/ Executive Summary:

This study examines the production and profitability of some selected flowers in comparison with their competing crops. The study also attempts to identify the value chains and channels of flower marketing in Bangladesh. Stratified random sampling method was used to collect Primary data collected from the 32 farmers of Guptergaon under Phulpur Upazila in Mymensingh district and from the 21 flower traders, retailers and wholesalers of different flower trading zones in Dhaka city. The study reveals that gross margins of flower and vegetables per hectare were Tk.1,359,824.20 and Tk.46,362.14, respectively. The average marketing margin of three intermediaries i.e., BRAC, wholesaler-cum-retailer and retailer in Dhaka city, were Tk. 187.56, Tk. 638.39 and Tk.689.72 per 100 flowers, respectively. Lack of mother stock and their high price, price of fertilizer and insecticides, lack of scientific knowledge & training, damage by pest & disease, lack of extension work came out as major financial and technical problems of the flower farmers while inadequate & underdeveloped transportation & communication system, low market price, lack of market information, unstructured market are among major market related problems. On the other hand marketing intermediaries specified price instability, lack of adequate market information, lacking storage facilities, unsold flower, inadequate shop-space, demand fluctuation, strikes as their problems and constraints. Pertinent recommendations for facilitating flower production and developing an improved marketing system in Bangladesh include - a concentrated effort by the government and non-govt. agencies to provide appropriate trainings to farmers and traders, to provide appropriate production assistance and storage facility & to build countrywide permanent trading infrastructure, deployment of an Market Information System (MIS) and deployment of Entrepreneur-friendly SME and credit policies and packages for ensuring a balanced growth of the floriculture industry.

Keywords: Flower production in Bangladesh, Flower marketing in Bangladesh, Floriculture in Bangladesh, Flower trading.

Location: Guptergaon under Phulpur Upazila in Mymensingh district

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Production

Objectives:

This study has been undertaken to determine the nature and characteristics and the impact of contract flower farming in flower production in Bangladesh which may help the stakeholders to have valuable insight of floriculture industry of Bangladesh and its development thereby. In doing so, this study attempts to estimate productivity and profitability of flower production versus its competing crops; to determine the value chain of flower market and to identify opportunities and constraints in production and marketing of flowers.

Methodology:

Data collection Guptergaon under Phulpur Upazila in Mymensingh district was selected for the study because this area is the pioneer in the cultivation export quality flowers under contract farming through a pilot project of BRAC. Traders from Shahbag (the largest wholesale flower market in Dhaka), Farmgate (Khamar Bari), Mirpur and Gulshan area of Dhaka City were selected for getting information about the marketing system as these areas have defined market place for flower trading where flower farmers and traders from all over Bangladesh. Primary data was collected through semi structured interviews with flower farmers using a structured survey questionnaire which was filled up by the interviewer. The questionnaire was tested before final survey was made with 5 farmers and 5 traders for appropriate amendments to improve it. A stratified random survey method was used to collect data from 32 farmers from the Guptergaon under Phulpur Upazila in Mymensingh district and 21 traders from different areas of the Dhaka City. Thus the total sample size was 53 which include flower farmers, retailers, wholesalers and retailer cum wholesalers. The present study covered six month period from July 2006 to December 2006. Data were collected during the period from August 2006 to October 2006 through direct interviews with the interviewers at their work site or homestead. In addition to primary data secondary data were also collected from various sources. Some information was collected from the record books of BRAC. Besides, various books, journals, newspaper, documents of Bangladesh Bureau of Statistics (BBS), Department of Agricultural Economics of Bangladesh Agricultural University and related websites were consulted for appropriate secondary data.

Data analysis Primary data was recorded into Microsoft Excel worksheet and economic analysis was carried out for determining costs and returns. In this study, cost and return analyses were done on both variable and total cost basis. To achieve the objective of the study a simple tabular analysis was completed. The following profit equation was developed to assess the profitability of flower cultivation and vegetable cultivation. Π = Gross return − (Variable cost+Fixed cost) Here, Π = Profit per hectare Gross return = Total production × per unit price

Variable costs, i. Cost of seedling or plantlet ii. Cost of human labor iii. Cost of animal power iv. Cost of power tiller v. Cost of fertilizer vi. Cost of irrigation vii. Cost of insecticide

Fixed costs, i. Family labor ii. Family supplied animal power iii. Land use cost iv. Interest on operating capital

The separate activity analyses of farm producing different combination of flowers are also performed by tabular analysis. Per hectare profitability of flower cultivation from the view point of individual farmers was measured in terms of gross return, gross margin, net return and benefit cost ratio (undiscounted). Assuming the null hypothesis that there is no significant difference between the profit of two sectors (Flower cultivation and vegetable cultivation) a t-test was done for finding the significance level justifying the hypothesis.

Source of Information: Bangladesh J. Agril. Res. 37(1): 77-95, March 2012 ISSN 0258-7122

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

This study finds that flower-farming shows encouraging results to improve farmer’s socioeconomic condition, increases self-employment opportunity, promotes entrepreneurship in both urban and rural areas and boosts export-trade to earn foreign currency, it proves to be a potential tool for poverty alleviation and sustainable growth in the economy of Bangladesh. Specifically findings from the study are as below: (a) Flower Farmers under “Centralized Full Management Contract” farming system of Bangladesh Rural Advancement Committee (BRAC) produce good quality flowers for both local and international market, (b) Flower farming generates more revenue (almost double) than is cultivation of vegetables per hectare, (c) Marketing margin is higher for retailer than wholesaler-cum-retailer than BRAC and Return on investment of wholesaler-cum-retailer was higher than other traders, (d) Lack of mother stock and their high price, price of fertilizer and insecticides, lack of scientific knowledge & training, damage by pest and disease, lack of extension work came out as major financial and technical problems of the flower farmer, (e) Inadequate and underdeveloped transportation and communication system, low market price, lack of market information, unstructured market are among major market and marketing related problem, (f) Marketing intermediaries specified price instability, lack of adequate market information, lacking storage facilities, unsold flower, inadequate shop-space, demand fluctuation, strikes as their problems and constraints.

Knowledge Management: Journal