Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
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A recent study of rice markets in the main production zone supplying the capital city
(Dhaka) finds that although this traditional value chain still dominates, an “intermediate”
or “transitional” value chain is emerging, in which the role of the traditional village
broker/trader is much diminished.112 In the area surveyed for the study, only 7 percent of
paddy was sold directly to the village trader; 35 percent was sold to a wholesaler or
wholesale markets, 32 percent to a miller, 32 percent to a wholesaler at the mill, and the
remaining 1 percent through other channels. Farmers sold about two-thirds of their paddy
directly to wholesalers either at the wholesale market or mill.
The proportion of farmers selling directly to mills has grown significantly, along with the
number of rice mills, which increased from 6,155 in the 1960s to 50,868 in the 1990s. The
scale and technology of the mills has changed as well. During the 2000s, larger automatic
and semi-automatic mills gradually began to displace the small mills.
Several factors caused the structure of the rice market to change in the study areas. They
include the proliferation of rural wholesale markets; better road links to cities; better
access to electricity; and the spread of mobile phones, giving farmers information about
marketing options.113 Seventy-one percent of rice farmers in the study reported using a
mobile phone to contact buyers. Of the farmers that used mobile phones, 90 percent had
contacted other buyers, and 58 percent had agreed to a price by phone.
Farmers’ share of total value added was higher than typically assumed, partly because
village traders’ role in the rice value chain was being eliminated and more farmers were
selling directly to mills, and partly because mills were selling directly to city wholesale
markets rather than through rural wholesalers. Farmers were able to capture 79 percent
of the urban retail price for common rice. Interestingly, although farmers received a small
premium of US$ 20 per ton to produce fine rice, they captured only 52 percent of the
urban retail price for fine rice. When it came to sales of fine rice, the share of total margins
(the urban retail price) of rural and urban wholesalers combined in the value chain
jumped from 7 percent to 16 percent between the rice qualities. The gain for the miller
was more modest, from 5 percent to 8 percent. The urban traditional retailer’s share in
total margins jumped from 8 percent to 24 percent.114
POTATOES
With rising incomes and urbanization, domestic demand for fruit, vegetables, and
especially potatoes has surged. Per capita consumption of potatoes has risen from an
average of 4 kilograms in 1973/74 to 23 kilograms today. Production of potatoes
increased almost nine-fold between 1980 and 2011 . The rapid growth in
consumption and demand for year-round supplies, together with the release and adoption
of new potato varieties and improvements in infrastructure and technology, have helped
to transform potato value chains in Bangladesh and multiply marketing options for
farmers.115
112 Reardon et al. (2012).
113 Reardon et al. (2012).
114 Reardon et al. (2012).
115 Reardon et al. (2012).