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Changes in Marketing System of Raw Jute in Bangladesh

M. M. U. Molla
Principal Scientific Officer, AERS Division, BARC, Dhaka

S. A. Sabur
Professor, Dept. of Agribusiness & Marketing, BAU, Mymensingh

I. A. Mia
Professor, Dept. of Agribusiness & Marketing, BAU, Mymensingh

Abstract/ Executive Summary:

The study examined the changes in raw jute marketing system in Bangladesh. Ten primary and two secondary markets were selected purposively from five intensive jute growing and two jute trading areas of the country, respectively during 2010-11. Between two terminal markets, annual arrival of raw jute was found higher in Khulna (Daulatpur) than that of Narayanganj. Most of the total raw jute is exported through Chittagong and Mongla sea ports of the country. The mode of payment for raw jute trading was mostly dependent on credit system with higher pay off period. None of the selected farmers sold any raw jute to the government purchased centres during the study periods. The number of licensed ‘dealer of jute’ as well as kutcha and pucca presses have increased over the years. The study identified more markets participants involved in the raw jute marketing system over the previous studies. In terms of profit (net margin) making, the performance of the millers and the faria was relatively better than that of other participants. Marketing costs and margins have increased over the years, but their net margins as percentage of total investment were not much higher. The existing raw jute marketing system can be identified an efficient system in terms of producers’ share of the consumers’ prices. The study showed higher seasonal variability and deviation in raw jute prices in the study area. Raw jute should be purchased directly from jute growers under public procurement programme with minimum support price.

Keywords: Marketing system, Marketing margin, Raw jute, Bangladesh

Location: Talma, Kanaipur and Khalilpur under Faridpur district, Ulipur and Durgapur under Kurigram, Katuadah and Baragangdia under Kustia, Monirampur under Jessore, Raniganj and Nandina under Jamalpur districts

Start Date: 00-00-2010

End Date: 00-00-2011

Program Area: Socio-economic and Policy

Non-commodity: Market analysis

Objectives:

The major thrust of this study is to examine the marketing efficiency of jute in Bangladesh in terms of producers’ share, marketing costs, marketing margins, seasonal price variability, etc. This study will able to pickup the clear scenario of raw jute marketing system in Bangladesh over the changing period.

Methodology:

Study Area and Sample Selection Ten primary/secondary markets (where jute is assembled from farms and primary markets and is processed for the first time into kutcha bales) such as Talma, Kanaipur and Khalilpur under Faridpur district, Ulipur and Durgapur under Kurigram, Katuadah and Baragangdia under Kustia, Monirampur under Jessore, Raniganj and Nandina under Jamalpur districts were selected for collection of marketing related data from farmer, faria, bepari, commission agent and kutcha baler. Narayanganj and Daulatpur (Khulna) terminal markets (where jute is finally processed into pucca bales and exported to overseas countries) were selected for collecting data from pucca baler cum exporters. According to the objectives of the study, a total of 140 traders of raw jute including 50 faria, 50 bepari, 10 kutcha balers and 30 pucca baler cum exporters were selected purposively. Data were collected from the selected respondents during the period from July 2010 through June 2011 through face to face interview method. Key informants from BJMC, BJMA, BJSA, BJGEA and Bangla crafts were also interviewed to pickup a clear scenario of this sector as a whole. Marketing Efficiency Measures Six performance indicators were used for measuring efficiency such as: (i) percent of product which flows out through the channel (ii) producers' share to consumers price, (iii) relative marketing costs, (iv) level of middlemen’s' margin, (v) price deviation i.e., differences of maximum and minimum price of raw jute in a month (vi) price variability (Chauhan et al., 1994) [indicator (ii) to (vi) are proposed by Rajagopal, 1986].

Source of Information: Bangladesh J. Agric. Econs. XXXVI, 1&2 (2013) 19-33

Article Link (Online Journal): DOI: 10.22004/ag.econ.256210

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The study found that the annual arrival of raw jute between two terminal markets was higher in Khulna (Daulatpur) than Narayanganj. The study identified five major channels in the study areas according to the quantity of raw jute handled by the selected intermediaries. Among the channels, the highest quantity of raw jute were routed through producers–faria– bepari–pucca baler cum exporters in the selected study period. The modes of payment for raw jute trading, mostly dependent on credit system with higher pay off period and the faria are mostly affected from this transaction system. Moreover, the percentage of cash payment for purchased products was higher compared to other traders. The raw jute market faced high seasonal variability and deviation in prices in the study area. The implication of this variability and deviation in prices of jute is that it causes instability in income level of the producers and marketers as well and this will go a long way in affecting their welfare. For reducing that government should establish more storage facilities at intensive jute cultivation areas with private participation in order to store enough jute. The produce should be purchased directly from jute growers throughout the year under public procurement programme with minimum support price. It is expected that the seasonal price variability and deviation in the marketing of jute can be reduced by implementing this support programme. Moreover, government should offer some special incentives for the traders so that they can establish at least one kutcha press in each primary jute markets. The farmers’ response to the channel-IV may be encouraged and facilitated in terms of policy adoption. These measures should be taken by the government so that the farmers can use this efficient channel of raw jute marketing.

Knowledge Management: Journal