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Market Expansion and Trade Liberalization Policy: Bangladesh Opportunities Through Production and Exchange of Selected Vegetables

Md. Rezaul karim
Senior Scientific Officer
Agricultural Economics Division, BARI Joydebpur, Gazipur-1701

Q. M. Alam
Chief Scientific Officer
Agricultural Economics Division, BARI Joydebpur, Gazipur-1701

M. A. Rashid
Senior Scientific Officer
T & C Wing, BARI, Joydebpur, Gazipur

Abstract/ Executive Summary:

The report was prepared for the single year i.e. 2005-06 with a view to intensify the vegetable export market expansion and trade liberalization policy. Fifty four kinds of different vegetable were exported from Bangladesh. The importing countries were mostly in the Middle East. The demand for summer vegetable was found higher than that of winter vegetables. Total export quantity was found 6046 metric tons of vegetables and earned foreign exchange in terms of Tk. 1120 million. It was found to be only 0.0118 percent from total vegetable production. Among the export marketing cost items, air freights charges was found highest. For all the vegetables, DRCs were observed to be less than unity implying that Bangladesh had comparative advantage in vegetable production. On an average, DRC was found far below i.e. 0.35.

Keywords: Market Expansion, Trade Liberalization, Vegetables

Location:

Start Date:

End Date:

Program Area: Seed Technology

Non-commodity: Price behavior, Market analysis

Objectives:

i. To evaluate the efficiency of production in relation to comparative advantage of vegetables

ii. To draw implications of the findings for price policy formulations in the country

Methodology:

In order to evaluate the efficiency of production in relation to comparative advantage, cost of both domestic resource and non-traded inputs and traded inputs for production of vegetables are needed. Domestic resource and non-traded inputs include human labour, animal labour, seed, manure, irrigation, land rent, interest on operating capital etc while traded inputs include Urea, TSP, MP and Gypsum. Using the above information, domestic resource cost (DRC) was estimated for different vegetables. The domestic resource cost (DRC) provides a measure of efficiency with implications for the level of incentives offered to producers. Whether it is efficient for a country to produce a commodity as opposed to importing it, depends on the opportunity cost of domestic production relative to the value added. The DRC is the ratio of cost of domestic resources and non-traded inputs (valued at their shadow prices) of producing the commodity to the net foreign exchange earned or saved by producing the good domestically. Formally DRC is defined as Cost of domestic resource and non-traded inputs for producing vegetable/metric ton DRC=- Value of tradable vegetable/metric ton – Value of tradable inputs/metric ton Mathematically ?DijVi DRC= ---------------- (j= 1-------------m, k= 1-----------n) Bi - ?TikVk Where, Dij= domestic resource and non-traded inputs j used for producing vegetable i/metric ton, Vi= Price of domestic resource and non-traded inputs j, Bi= Border price of vegetable i/metric ton, Tik= Quantity of tradable inputs k for producing vegetable i/metric ton and Vk= Border price of tradable inputs k/metric ton.

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

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

It was observed that the vegetable export from Bangladesh is declining day day. In 1997-98 annual vegetable export was 23,597 tons but in 2006-07 it was only 4361 tons. This situation in exports may be due to variety of reasons of which the reduced outflow of migrant workers, higher air freight charge and quality deterioration of vegetables may be more prominent. Highest export earning was found by exporting potato followed by brinjal, pointed gourd, latiraj etc. In the year 2005-06, the total export earning from vegetable was estimated Tk. 1120 million. Total export earning was found to be 0.0118 percent from total vegetable production. As many as 23 items of exporting costs were involved. Of these, air freights charges was found to be Tk 111250.00/MT for Middle East countries while it was Tk 160000.00/MT for UK. Among the cost items, air freights charges found highest. In spite of the highest air freights charges, the exporters earned profit Tk. 31983.31/MT and it was found to be Tk.31.98/kg in the Middle East countries. The lion share of vegetables was exported to the Middle East countries. Among vegetables, the lowest DRC was found in snake gourd while it was found highest in bitter gourd. Besides, the DRCs were found far below the one. The DRCs for all the vegetables were observed to be less than unity implying that Bangladesh had comparative advantage in vegetable production. On an average, DRC was found far below i.e. 0.35. It is, therefore, concluded here that exporting vegetables to Middle East countries has the comparative advantage in vegetable production to a greater extent.

Knowledge Management: Report/Proceedings