MARKETING CHANNEL AND EFFICACY OF AMAN

RICE IN SOME SELECTED AREAS OF CUMILLA

DISTRICT

ALIF ABDULLAH AL HADI

DEPARTMENT OF AGRICULTURAL STATISTICS

SHER-E-BANGLA AGRICULTURAL UNIVERSITY
SHER-E-BANGLA NAGAR, DHAKA -1207
 December, 2021
MARKETING CHANNEL AND EFFICACY OF AMAN
RICE IN SOME SELECTED AREAS OF CUMILLA
DISTRICT
BY
ALIF ABDULLAH AL HADI
REGISTRATION NO.: 19-10325

A Thesis
Submitted to the Faculty of Agri-business
Management, Sher-e-Bangla Agricultural
University, Dhaka,
In partial fulfillment of the
requirements for the degree of

MASTER OF SCIENCE
IN
AGRICULTURAL STATISTICS
SEMESTER: JULY-DECEMBER 2019

Approved by:

Md. Zakir Hossain Zulfikar Ahmed Reza

Professor and Chairman Professor

Department of Agricultural Statistics Department of Agricultural Statistics

Supervisor Co-Supervisor

Professor Md. Zakir Hossain

Chairman
Examination Committee
Department of Agricultural Statistics
 CERTIFICATE

This is to certify that thesis entitled, “MARKETING CHANNEL AND EFFICACY OF

AMAN RICE IN SOME SELECTED AREAS OF CUMILLA DISTRICT” submitted to

the Faculty of Agribusiness Management, Sher-e-Bangla Agricultural University,

Dhaka, in partial fulfillment of the requirements for the degree of MASTER OF

SCIENCE IN AGRICULTURAL STATISTICS, embodies the result of a piece of

substantive research work carried out by ALIF ABDULLAH AL HADI bearing

Registration No. 19-10325 under my supervision and guidance. No part of the thesis

has been submitted for any other degree or diploma.

I further certify that such help or source of information, as has been availed

of during the course of this investigation has duly been acknowledged.

------------------------------------
Md. Zakir Hossain
Professor
Department of Agricultural Statistics
 Abstract

Aman rice is a popular variety of rice grown in Bangladesh, particularly in the Aman season (June-
November). The marketing channel efficacy of Aman rice in Bangladesh is critical for the success
of farmers, traders, and other stakeholders involved in the rice supply chain. The purpose of this
thesis is to evaluate the effectiveness of different marketing channels used to distribute and
promote Aman rice in selected areas of Cumilla districts.
Marketing channels for Aman rice include traditional channels such as wholesale markets,
retailers, and local vendors. The study adopts a survey research design, where data collected from
135 respondents, comprising of farmers, wholesalers, retailers, and consumers in the study area.
This thesis examines the marketing channel efficacy of Aman rice in selected areas of Cumilla
district, utilizing General Formulas of Gross Marketing Margin, Marketing Cost, Net Margin, and
Shepherd's Formula for Efficacy Model. The research aims to identify the most effective marketing
channels for Aman rice and recommend strategies for enhancing their effectiveness.
The results reveal that there are four marketing channels for Aman rice in the study area, namely,
channel I (farmer to faria to consumer), channel II (farmer to bapari to consumer), channel III
(farmer to aratder to consumer), and channel IV (farmer to miller to consumer). Using the
composite index formula, the study finds that channel IV has the highest marketing effectiveness,
followed by channel III, channel II, and channel I.
The findings of such research can provide insights into the most effective marketing channels for
promoting and distributing Aman rice, as well as the potential for expanding market reach and
increasing sales through innovative marketing strategies.
Keywords: Aman rice, marketing channels, efficacy, Cumilla districts, Bangladesh.

i
 ACKNOWLEDGEMENTS

All praises are due to the omnipotent, omnipresent and omniscient Allah, who
enabled the author to pursue his higher studies in Agricultural Statistics and to
complete the research work and this thesis successfully for the degree of Master
of Science in Agricultural Statistics.

The author likes to express his sincere appreciation, sense of gratitude and
immense indebtedness to his respected supervisor, Md. Zakir Hossain,
Professor and Chairman, Department of Agricultural Statistics, Sher-e-
Bangla Agricultural University, Dhaka-1207 for his active, sincere, ingenious,
and untiring guidance, unfailing interest, constructive criticism, valuable
suggestions, helpful comments, and continuous supervision throughout the
period of this research.

The author wishes to express his profound respect, deep sense of gratitude,
grateful appreciation to his co-supervisor Md. Zulfikar Ahmed Reza,
Professor, Department of Agricultural Statistics, Sher-e- Bangla Agricultural
University, Dhaka-1207 Bangladesh for his valuable suggestions, pedagogic
supervision and guidance, constructive direction, affectionate encouragement
and kind co-operation at every step throughout the research and generous help
in the successful preparation of this manuscript.

The author also acknowledges his debt to all respondents of the study areas,
without willingness to provide information this study would not have been
possible.
The author expresses his profound thanks to all of his friends and well-wishers.

ii
 CONTENTS
CHAPTER TITLE PAGE
ABSTRACT I

ACKNOWLEDGEMENTS ii

CONTENTS iv

LIST OF TABLES viii

LIST OF FIGURES ix

LIST OF APPENDICES ix
ACRONYMS AND ABBREVIATIONS x

SOME MRAKETING CONCEPTS xi

I INTRODUCTION
1.1 Introduction 1
1.2 Justification of the Study 6
1.3 Objectives of the Study 9
1.4 Scope of the Study 10
1.5 Limitations of the Study 10
1.6 Organization of the Study 10
II REVIEW OF LITERATURE 11
Review of Empirical Marketing Studies in 11
2.1 Aman Rice
III METHODOLOGY 18
3.1 Introduction 18
3.2 Selection of Study Area 18
3.3 Sampling Design 20
3.4 Research Instruments 21
3.5 Type of Data and Its Sources 21
3.6 Period of Data Collection 22
3.7 Collection of Data 22
3.8 Editing and Tabulation of Data 23
3.9 Analytical Techniques 23

iv
 CONTENTS
CHAPTER TITLE PAGE

3.9.1 Estimation of marketing cost 24

3.9.2 Estimation of gross marketing margin 24
3.9.3 Net marketing margin 25
3.9.4 Estimation of marketing efficiency 25
3.10 Problems Faced During Data Collection 26

IV SOCIO-ECONOMIC 28
CHARACTERISTICS OF RESPONDENT
FARMERS AND INTERMEDIARIES
4.1 Introduction 28
4.2 Age Distribution 28
4.3 Family Size and Composition 29
4.4 Occupational Status 29
4.5 Educational Status 30
4.6 Household Income 30
4.7 Socio-economic Characteristics of 31
Intermediaries
4.7.1 Age distribution of the intermediaries 31
4.7.2 Occupational status 31
4.7.3 Educational status 32

V MARKETING SYSTEM OF AMAN 33

PADDY
5.1 Introduction 33

5.2 Marketing Channels of Aman Paddy 33

5.3 Market Intermediaries 35

5.3.1 Faria /Bepari 35

5.3.2 Arathdar 36

v
 CONTENTS
CHAPTER PAGE
TITLE
5.3.4 Rural retailer 37

5.4 Role of Rice Mills 39

5.4.1 Rice millers as paddy buyers 40

5.5 Volume of business 40

5.6 Storage of Paddy 41

5.7 Grading of Paddy 41

5.8 Paddy Processing 42

5.9 Financing 42

5.10 Risk in the Paddy Marketing 43

5.11 Market Information System 43

5.12 Pricing 44

VI MARKETING COST AND MARGIN 45

OF THE INTERMEDIARIES

6.1 Introduction 45

6.2 Marketing Cost of Farias 45

6.3 Marketing Cost of Beparis 46

6.4 Marketing Cost of Millers 47

6.5 Marketing Cost of Arathdar-Cum-wholesalers 49

6.6 Marketing Cost of Retailers 50

6.7 Marketing Margin of Intermediaries 50

VII EFFICIENCY OF PADDY 53

MARKETING SYSTEM

vi
CHAPTER TITLE PAGE

VII 7.1 Introduction 53

7.2 Channel Wise Marketing Margin 54

7.3 Channel Wise Producer’s Share, Marketing 56

Cost, Margin and Profit

7.4 Deviation between Maximum and Minimum 56

Price

7.5 Seasonal Price Variability 57

7.6 Channel Efficiency Measures 59

VIII CONSTRAINTS TO PRODUCTION AND 60

MARKETING OF AMAN PADDY

8.1 Introduction 60

8.2 Producer’s Constraints 60

8.3 Constraints to Aman Rice Value Chain 62

8.3.1 Production related constraints 63

8.3.1.2 Value Adding Constraints 64

IX SUMMARY, CONCLUSIONS AND 65

RECOMMENDATIONS

9.1 Summary of the Findings 65

9.2 Conclusions and Recommendations 66

REFERENCES 68

APPENDIX 71

vii
 LIST OF TABLES
TABLE TITLE PAGE
1.1 Production, Area, and Yield of Aman Rice: 2

3.1 Category of sample respondents in the study areas 20

4.1 Shows how old Aman paddy farmers are in relation to the size of their 28
farms
4.2 Shows the family makeup of Aman paddy producers in relation to farm 29
size
4.3 Aman paddy producers' occupations by size of farm 30
4.4 Shows the Aman paddy farmers' level of education. 30
4.5 Shows the Aman paddy farmers' annual household income 31
4.6 Shows how old the intermediates are 31
4.7 The intermediates' professions 32
4.8 Various sample intermediaries' literacy rates 32

5.1 Mode of transportation used by farmers and intermediaries 41

5.2 Source of finance of the Aman intermediaries 43
5.3 Sources of market information of the intermediaries 44
6.1 Marketing cost of Farias 46
6.2 Marketing cost Beparies 47
6.3 Marketing cost of millers 48
6.4 Marketing cost of Arathdar-cum-wholesalers 49
6.5 Marketing cost of retailers 50
6.6 Marketing margin of different Intermediaries 51
7.1 Shows how the producer's part of the price varies by channel 55
7.2 Shows marketing expenses and middlemen's profit for various Aman
marketing channels
56

7.3 Deviation between the Highest and Lowest Price in Each Channel 57
7.4 Seasonal price variations for peak season by channel 58

7.5 Seasonal pricing variations for the lean season by channel 58

7.6 Measures of channel efficiency 59
8.1 62
Sample farmers' production, marketing, and institutional issues

viii
 LIST OF FIGURES
FIGURE TITLE PAGE
1.1 Area (‘000ha) Under Aman Rice Cultivation 4
1.2 Production (‘000mt) of Aman rice over the years 5
1.3 Yield (t/ha) of Aman rice over the year 6
3.1 Map of Cumilla District 19
5.1 Marketing channels of Aman paddy in the study area 34
5.2 Aman Paddy Marketing Channels for Small Farmers 37
5.3 Aman Paddy Marketing Channels for Medium Farmers 38
5.4 Paddy Marketing Channels for Large Farmers 38
6.1 Marketing Margin of Intermediaries 52

LIST OF APPENDIX TABLES

TABLES TITLE PAGE
I Total Rice Area (000’ ha) in Bangladesh 71

ix
 ACRONYMS AND ABBREVIATIONS

DAE Department of Agricultural Extension

HYVs High Yield Varieties
BARI Bangladesh Agricultural Research Institute
BBS Bangladesh Bureau of Statistics
BKB Bangladesh Krishi Bank
cm Centimeter
CDP Crop Diversification Programmers
DAM Department of Agricultural Marketing
et al. et alia (and others)

etc. et cetera
gm Gram
GOEP Government of East Pakistan
ha Hectare
i.e. That is
Kg Kilogram
m. tons Metric Tons
MS Master of Science
No. Number
pp. Pages
Tk. Taka (Bangladeshi currency)
USDA United States Department of Agriculture

x
 Some Marketing Concepts

Market and Marketing: The word "market" can mean many different things. Market was
described as a space for transaction by Abbott and Makeham (1979). Additionally, it refers to
the locals who have the money and the need to purchase a good. As a result, there can be a
"local," "domestic," and "global" market. Instead of a physical boundary fence, this type of
market's boundaries is determined by how easily products and money can move without being
hindered by political, administrative, or other political hurdles.

Because marketing typically consists of several interconnected structures along the

production, distribution, and consuming units supporting the economic process, Mendoza
(1995) also described marketing as a system. Casavant et al. (1999) defined marketing as all
commercial operations that are carried out to steer the flow of products and services from the
producer to the consumer or final user. Six steps are often used to categorize these tasks. These
include manufacture, assembly, processing, distribution, wholesale, retail, and consumption.

Marketing Channels: The system of marketing institutions via which commodities or

services are moved from the original producers to the ultimate users or consumers is referred
to as the "channels of distribution" according to Giles (1973). Most of the time, a physical
product transfer is required, although on occasion, a middle marketing organization may
acquire title to commodities without ever touching them.

Marketing Efficacy: The transfer of goods from producers to consumers at the lowest cost
possible while still delivering the service that consumers want and can afford is referred to as
market efficacy. It is possible to assess a market's effectiveness (one method) by comparing
the price and quality of the services offered through the existing channels. The going rate of
interest should be reflected in the current price along with a profit margin that is just large
enough to cover investment costs. In respect to price and customer demand, service quality
shouldn't be either too high or too low. Examining the structure, conduct, and performance of
marketing enterprises allows one to assess factors that affect efficacy (Abbott and Makeham,
1981).

xi
The shepherd's formula is used to state the marketing efficacy model. 100% efficient market
hypothesis is the highest level of efficacy. Over 100% is considered excess profit. The
shepherd's formula is provided by (Oscar and Chukwuma, 2008).

V
E= − 1 ∗ 100
I

Where E = market efficiency,

V = Value of marketed Rice (value added or
profit),
I = Total marketing cost.

Marketable Surplus: Marketable surplus, according to Atteri et al. (2003), is the remaining
amount of agricultural produce that a farmer keeps after fulfilling his needs for family use,
farm demands (seed and feed), kind payments, etc. It is widely acknowledged that growing
the marketable surplus is essential to supplying the growing demand from the non-farming
population for food, raw materials, and other agricultural products. If an economy's
marketable surplus does not increase, it may likely operate as a basic constraint on the rate of
development by lowering the supply of goods available for exports, industry, and urban
consumption.

xii
 CHAPTER I
1.1 INTRODUCTION
Bangladesh's primary meal is rice, which is also a symbol of food security. Many people
in Asia, Latin America, the Caribbean, and Africa rely heavily on rice for their sustenance.
95 percent of the world's production is produced in developing nations, with China and
India alone accounting for close to half of it. When Bangladesh's population was about
70.88 million in 1971, the nation produced roughly 10.59 million tons of rice overall. To
feed its 160 million citizens, the nation is currently producing roughly 36.6 million tons.
This demonstrates that rice production increased considerably more quickly than the
population. The adoption of contemporary Aman rice cultivars was largely responsible for
this increase in rice production. The country produced 13.83 million tons of Aman rice
between 2020 and 2021, exceeding the stated production goal, according to the
Department of Agricultural Extension (DAE). 11.30 million tons of Aman rice were
produced between 2019 and 2020, according to BBS. The production of hybrid rice and
High Yielding Varieties (HYVs) was discovered to be better this year, according to DAE
field level authorities. The maximum yield (6 t/ha) was produced by the recently launched
super hybrid rice variety BRRI-49 in Bangladesh. The DAE has also predicted that crop
cutting programs in the districts of Mymensingh and Jhinaidah will provide the maximum
yields of BRRI-49 Aman rice.

Regrettably, 230 acres of agricultural land are being transferred daily to non-agricultural
uses. Although the amount of arable land has decreased due to the rapid population growth,
Bangladesh has continued to have an annual shortfall of roughly 1.5 million tons of food
grains despite a tripling of rice output since the introduction of new varieties in the early
1970s. However, the nation produces about 35 million tons of rice annually, which is
nearly enough to feed its population of over 160 million people. Seasonal variations affect
Bangladesh's rice production. Currently, Boro from January to June, Aman from July to
December, and Aush from March to July are the seasons with the largest harvests.

1
Due to the urbanization process, every city resident is dependent on their ability to
purchase rice. Rice therefore moves from rural to urban regions. When compared to
wealthy households, the poorest spend a far higher percentage of their income on rice.
According to research, the bottom 55% of rural households spend 45% of their income on
rice and wheat, compared to the worst 40% of urban households, who spend 25%. With a
per capita consumption of just over 130 kilos of milled rice yearly, rice is among the top
foods consumed worldwide. It averages 155 kg every year in Bangladesh. It provides 62
percent of the total protein intake and 74 percent of the total calories consumed by the
average Bangladeshi. It's one of the highest ratios in the entire planet (Monthly
Technology Today, May 2019, P.32).

Table 1.1 Production, area, and yield of Aman rice in Bangladesh.

Year Production (‘000’ ton) Area (‘000’ha) Yield (t/ha)
2007-08 11427.0 3651.89 3.13
2008-09 11620.5 3676.84 3.16
2009-10 12266.0 3771.34 3.25
2010-11 12422.2 3799.84 3.27
2011-12 12537.1 3823.5 3.28
2012-13 12937.1 3923.79 3.3
2013-14 13075.3 3936.81 3.32
2014-15 13165.0 3950.1 3.33
2015-16 13462.0 3957.85 3.4
2016-17 13609.0 4006.31 3.4
2017-18 14059.0 4116.6 3.42
2018-19 14654.0 4270 3.43
2019-20 15003.0 4310 3.48
2020-21 15737.0 4460 3.53
Source: BBS, Ag wing

Over time, there has been a rise in the availability of rice. The main factor behind the
constant rise in rice supply is domestic production. The overall amount of rice produced
in 2008-2009 was 293.18 lac tons, and the anticipated amount in 2009-2010 was 345.60
lac tons, of which Aus makes up 27.40 lac tons, Aman makes up 131.00 lac tons, and Boro
makes up 187.20 lac tons.

2
The following statistics will aid in our comprehension of the area ('000' ha), tonnage ('000'
tons) and yield (t/ha) of Aman rice. According to the figure, area Aman rice is essentially
the same across years, while production and yield gradually rise over time.

However, because domestic production cannot satisfy the nation's whole demand,
Bangladesh must import significant quantities of rice from abroad each year to feed its
people. Imports of rice are influenced by the country's stockpiles, demand, and level of
domestic production during a given year. After gaining its independence, Bangladesh's
population continued to grow. As a result, a significant amount of food was imported from
other nations because the country's food supply could not keep up with the population's
rate of growth.

3
 Area (‘000’ha)

4500

4000

3500

3000

2500

2000

1500

1000

500

Figure 1.1: Area (‘000’ha) under Aman rice cultivation.

4
 Production (‘000’ ton)

16000

14000

12000

10000

8000

6000

4000

2000

Figure 1.2: Production (‘000’ ton) of Aman rice over the years.

5
 Yield (t/ha)

3.6

3.5

3.4

3.3

3.2

3.1

2.9

Figure 1.3: Yield (t/ha) of Aman rice over the year.

1.2 Justification of the Study

The most crucial step in the development process is marketing. This is understandable given
that economic growth essentially entails larger-scale productive activities. However, we are
unable to increase production until the commodities produced are completely sold out, and this
depends on the ideal marketing circumstances (Prasad and Prasad, 1995). The income of
farmers, processors, dealers, and consumers is all greatly impacted by the successful marketing
of Aman rice. Farmers, consumers, traders, investors, and other people who require the
information for their specific reasons may benefit from this information. Since the chosen areas
are the nation's primary producer of Aman rice, it is crucial to have detailed knowledge of how
the Aman rice market currently operates in order to evaluate its advantages and disadvantages
and develop effective intervention strategies with the aid of government and non-governmental

6
organizations. Additionally, the findings would provide as a guide for scientists conducting
comparable or related study in other regions of the nation.

In the past 15 years, development economists have increasingly acknowledged the beneficial
relationship and interaction between the objectives of development planning and the design,
operation, and effectiveness of the market system. Efficiency in the marketing system results
from effective resource management in that area, without which unnecessary marketing
expenses as well as qualitative and quantitative losses in the process of creating time, place,
and form usefulness of the products grow. Additionally, within the framework of the marketing
system, commodity prices that serve the purposes of resource allocation, intersectional income
distribution, and capital formation are generated. These three tasks of price will be carried out
inefficiently if a market structure lacks forces that encourage the generation of efficient pricing.
So, this study will be valuable for exploring the current market structure.

Are the agricultural markets operating within the bounds of the current state of technology and
other environmental considerations, while adhering to the socially and economically
recognized norms of efficiency? It is important to identify the reasons behind reported
inefficiencies and to consider institutional and technological changes that could improve both
physical and financial performance.

Even a cursory glance at the agricultural markets in developing nations will reveal how heavily
the marketing system is influenced by government involvement and regulation. Many of these
policies have their roots in sociopolitical and economic considerations, which are frequently
based on inaccurate and imprecise knowledge of how the current organization functions. Such
assumptions have a great potential to be shown wrong by impartial empirical investigations,
which would then give policymakers greater information and tools for starting workable
marketing improvement initiatives.

Agricultural policy in many early conceptions of economic development is characterized by

political assault, regulation, and displacement of the core food grain commerce. Because they
affect pricing relationships and the effectiveness of market processes, these policies have

7
significant effects on how agriculture and other sectors evolve. Such policies must be founded
on in-depth understanding of how markets function in order to be effective in promoting the
operation of price signals and the optimal use of resources. One needs to know how efficiently
transportation and communication networks enable market integration and cross-market
transfers, how efficiently storage facilities enable the transition of commodities from one
season to another, and how efficiently processing facilities change the form of commodities.
By understanding these procedures, a foundation for judgments about the scope and methods
of improving market functioning will be established. Price signals that emerge at the consumer
level are not adequately communicated to the producers if the marketing system is inefficient.
Because of this, farmers are not sufficiently encouraged by prices to raise the production of the
goods. Thus, ineffective marketing strategies have a negative impact on the standard of life of
both producers and final customers.

As markets initiate the process of growth, agriculture marketing is crucial in Bangladesh for
promoting and maintaining the pace of rural and economic development. Marketing maintains
the right balance between supply and demand as well as serving as a commercial link between
producers and customers. Without the aid of an effective marketing system, the goals of rapid
economic expansion and equitable distribution of products and services could not be met. The
presence of numerous middlemen between producers and final customers is one of the key
aspects of agricultural marketing, particularly in developing nations. The term "marketing
channel" refers to the path that produce takes from its producers to its final customers. For any
given product, many marketing channels are used in a certain geographic area. It appears that
the best route is the one with the fewest intermediaries, albeit this does not necessarily mean
that it is the most lucrative for the creators. It is crucial to understand what fair fees for these
intermediaries' services should be, as well as the best marketing channels for certain goods.
Studying the marketing margins and costs across different channels is crucial for this reason.

Understanding the relationship between pricing in geographically distinct markets is the

fundamental tenet of market integration measurement (Goletti and Babu, 1994). Therefore,
markets that are interconnected do not have pricing for differentiating products that behave
independently (Monke and Petzel, 1984). Areas are referred to as segmented if price changes

8
 for a commodity in one market have no bearing on anticipated price changes for the same
commodity in other markets (Kumar and Sharma 2003).

In other words, two markets are geographically integrated anytime trade occurs between them
and if the price difference for a given good is equivalent to the costs of transferring that good
between the two markets. However, flaws in the market, particularly those brought on by trader
activity, are typically seen as significant contributors to the emergence of divergent price
fluctuations in various markets. The protection of producers' and consumers' interests is the
primary goal of the price policy. The producer's interests can be best protected if he receives
fair compensation for his output. If markets are properly integrated, he receives fair prices. In
marketplaces with good integration, the middlemen's cut should be fair, and consumers should
pay reasonable rates for their produce. Therefore, it is crucial to comprehend whether
commodities markets operate well. When these are included in pricing relationships, markets
run smoothly. This study will be carried out with the following precise goals in mind.

1.3 Objectives of the Study

The overarching goal of this research was to evaluate the efficiency of the Aman rice market.
The following were the specific goals of this research:

➢ To determine the Aman rice marketing channel in the study locations.

➢ To assess the marketing efficacy of Aman rice across various distribution channels.
➢ To determine the issues with Aman rice marketing in the study locations.
➢ To make sensible recommendations for improving Aman rice marketing.

9
1.4 Scope of the Study

The research is limited to the Aman rice marketing system, with a focus on different market
levels, market player roles in market channels, price setting, cost-benefit analysis of Aman rice
production, cost-margin for producers and traders, buying and selling strategies, transportation,
and market information, as well as market integration and marketing efficiency. As a result,
there is a sufficient space for future study in this sector, such as demand and price forecasting,
as well as an in-depth investigation of rice market structure, conduct, and performance, price
fixation, and approval process.

1.5 Limitations of the Study

The hardest part of the poll was gathering the trader's data. Most of the time, dealers are hesitant
to provide accurate information because they associate it with taxes and other costs. In
addition, they had an interview that had a strict time limit. The intermediaries buy and sell
Aman rice according to their own standards, thus even though the researcher was aware of the
impact of quality on price, she was still able to investigate it (this might be a problem in most
of the agricultural markets in Bangladesh).

1.6 Organization of the Study

Following the aforesaid succinct introduction, the thesis' remaining section is structured as
follows. The literature study on marketing analysis from various sources is presented in
Chapter 2. Chapter 3 then provides a description of the study area and techniques. Both
descriptive and econometric results are presented and thoroughly explored in chapters 4, 5, 6,
and 7. The summary, conclusion, and policy implications of the study's findings are presented
in the final portion, chapter 8.

10
 CHAPTER II

REVIEW OF LITERATURE

In this chapter, the findings of a few earlier studies that are relevant to the current study project
are briefly reviewed. Any research project must include a review of related literature since it
gives the opportunity to determine the body of knowledge that is pertinent to the planned
inquiry. This information offers guidelines for developing a future research problem and
approving fresh discoveries.

2.1 Review of Empirical Marketing Studies in Aman Rice

One of the most significant food crops in the world is paddy. All business operations involved
in the movement of commodities from the manufacturer to the final consumer are referred to
as marketing. The most crucial task in generating significant economic gains and prosperity,
particularly in the agriculture sector, is marketing any product. Aman and Boro, two of
Bangladesh's three rice seasons, are the most productive and extensively planted. In this
section, research that were carried out in Bangladesh and other countries that are connected to
the current study are briefly reviewed.

Ahmed and Bernard [1] calculated the correlation coefficient between the rice prices in the
districts of Aman and Australia. They discovered that, in the case of the Aman price, 51 out of
the 63 statistically unimportant associations related to Barisal, Patuakhali, Dinajpur, and
Bogra. They concluded that the first three were far behind in terms of infrastructure
development. They also showed that there may have been an imbalance in price fluctuations
between these three and the other rice markets in Bangladesh due to production concentration
and outdated infrastructure.

Farruk [2] used field data collected over the course of three crop seasons to examine the nature
of spatial pricing correlations of rice in several local markets. The price spread, costs, and
margins between various markets were examined in his study. He demonstrated how rice prices
are seasonal and how they relate to storage costs. He discovered that pricing differences did

11
not exceed the entire expenses associated with transporting a stock during the storage period
in the absence of structural or environmental defects.

Ismail and Verbeke [3] investigated at whether the regional/divisional rice markets were
spatially interconnected after the rice market was liberalized. Using co-integration analysis and
a vector error correction model, wholesale weekly coarse rice prices at six divisional levels
were used to gauge the extent of market integration in Bangladesh (VECM). The test resulted
in at least three co-integrating vectors, suggesting that the Bangladeshi rice markets were
somewhat interconnected during the study period and that the long-run equilibrium was stable.

In order to determine how much the price in the reference market affects local prices, Ravallian
[4] created a market integration model. Prior to and throughout the 1974 famine in Bangladesh,
he used his model to predict rice prices. His experiment was equivocal about short-term market
integration, but it did reject the idea that the rice market is split, or completely devoid of
integration.

Ali et al [5] investigated the profit efficiency using behavioral and stochastic frontier
approaches. The goal of this study is to quantify the profit inefficiency of farms in Pakistan's
North-West Frontier Province by utilizing behavioral profit functions and stochastic frontier.
It concluded that small farm ownership should be promoted because they appear to be more
productively efficient than large farms.

Coelli et al. [6] briefly studied the method of performance measurement that can be applied to
a variety of firms and provided the summary of relative merit and demerits of each
measurement methods.

The gap between actual and potential agricultural production in developing nations has gained
attention in the development community once again, and modernization to technical efficiency
has a significant impact on productivity, according to Herdt et al. [7] 's study on modern
technology and economic efficiency of Philippine rice farmers.

Rajagopal [8] used both primary and secondary data to conduct a case study on the economic
effectiveness of the Madhya Pradesh paddy marketing system. To assess the financial success
of the marketing channels, he used a few measures. A producer's share, a marketer's margin, a
middlemen's margin, a price deviation, a peak period seasonal price variability, a lean period

12
seasonal price variability, and a price deviation were the indicators. He concluded that channel
III has the highest marketing efficiency, followed by channel II and channel IV.

In Haryana, Kumar and Sharma [9] conducted research on the spatial price integration and
pricing effectiveness of paddy at the farm level. The prospect of farmers receiving a greater
net price by selling more carefully in a market with a positive significant coefficient of distance
traversed was demonstrated even though it was in a very remote area, specialized market.

Using a case study of the Banda area in Uttar Pradesh, Chauhan et al. [10] examined the
economic performance of various paddy marketing channels and determined which one was
most effective. They employed several performance metrics, including the producers' share,
marketing expenses, middlemen's margin, price deviation, peak season price variability, and
lean season price variability. The producers' portion of the final product price varied by
marketing channel, with channel II having the highest share, followed by channels IV and III,
and channel I am having the lowest share. The producer's share in each channel appeared to be
quite small, compared to the large marketing expenses and middlemen's margins. The
regulated markets were advised to offer more incentives by the governments to increase the
producer share.

Inuwa et al. [11] carried out an investigation on profitability analysis of rice processing in
Nigeria. The study established the rice processing and marketing sector's profitability in Kano
State. The study's goals were to analyze the value contributed to the commodity at each stage
in the study area, measure the profitability levels of rice processing and marketing, and identify
the most productive services. Based on the findings, it was advised that the traders should
strengthen the current co-operative societies, stimulate bulk purchases of milled rice, and pay
the parboilers for their services separately from the expenses of input for parboiling. Both the
high price of milled rice and the cost of transportation will decrease as a result.

Noonari et al. [12] conducted a study on rice profitability and marketing chain in Sukkur Sindh
Pakistan and examining rice marketing and profitability in Jakarta was the study's goal.
Utilizing a survey methodology, the study was conducted in the north, west, and east of Jakarta.

Ali et al. [13] carried out a study on profit efficiency among Basmoti rice producers in Pakistan
Punjab and a variable-coefficient profit frontier was used to estimate the farm-specific profit

13
inefficiency of Basmati rice producers. They concluded that education levels in farm
households, employment outside of agriculture, and credit restrictions were socioeconomic
factors that contributed to profit loss. Water restrictions and the fertilizer's tardy application
were institutional factors that contributed to profit loss.

Balcombe et al. [16] studied on technical efficiency of rice producers in Bangladesh. This study
uses Bayesian approaches to assess and explain the technical efficiency of a sample of
Bangladeshi rice producers. The findings shed light on the distribution of technical
effectiveness and pinpoint significant factors that affect rice cultivation.

According to Coelli et al. [17], when programming techniques are used to precise data for 406
rice farms in 21 villages during 1997, inefficiency measurements are produced that are very
different from the outcomes of straightforward yield and unit cost measures. Overuse of labor,
which may indicate population pressure, and of fertilizer, where prescribed rates may need to
be revised, are the causes of allocation inefficiency. Large families are more inefficient,
according to second-stage regressions, whereas farmers with greater access to input markets
and those who perform less off-farm employment tend to be more effective. The extension
agents could assist inefficient farmers by using the knowledge on the causes of inter-farm
performance differences. Given that survey data are frequently gathered at significant expense,
there are few justifications for such sub-optimal usage.

Hossain [18] studied on marketing system of Katarivog rice in some selected areas of Dinajpur
district and the purpose of this study was to examine the rice value chain in a few key locations
in the dinajpur district. The study's goals were to evaluate the activities linked to value addition,
quantify the value added to rice by various players, and pinpoint the opportunities and
constraints present in the rice value chain.

Islam [19] examined the functionaries' behavioral patterns and calculated the marketing
expenses and profit margins for each one. Due to increasing marketing expenses, he concluded
that the middlemen's profit margin was not substantial. He said that there was plenty of room
to cut back on marketing expenses and transportation losses, and that by enhancing marketing
infrastructure and physical facilities, efficiency could be increased.

14
Islam [20] looked studied the distribution networks, calculated the margin and expenses of
marketing, and identified the issues that the producers and middlemen of aromatic rice in the
Dinajpur district were dealing with. In the research area, he discovered a sophisticated
marketing chain made up of Faria, Bepari, the miller, Arathdar, the wholesaler, the store, and
the consumer. According to the survey, Miller received the biggest margin followed by
merchants. Retailer had the biggest profit, expressed as a percentage of the marketing margin
followed by Miller. Low prices, a lack of capital, a dysfunctional communication and
transportation system, insufficient credit facilities, and other marketing issues were the main
ones that manufacturers and intermediaries had to deal with.

In certain parts of the Sherpur district, Khan [21] studied on the processing of Boro paddy and
its commercialization. The study was carried out to examine the rice marketing system,
evaluate the marketing costs and margins of various intermediaries, and pinpoint issues and
limitations of millers and intermediates with potential recommended solutions. Prior to other
intermediaries, millers had the biggest margin. Additionally, the millers made the most money,
followed by the native rice varieties Arathdar and Bepari. The lowest profit was made by the
retailers. Additionally, they received some recommendations for resolving these issues,
including the availability of paddy supplies, the provision of bank loans, more affordable
electricity rates, consistent electricity supply, the availability of working capital, and the
improvement of transportation infrastructure, among others.

A study on Boro paddy marketing was carried out by Miah [22] in a few regions in the Tangail
district. According to the study, a complicated marketing channel was created by Faria, Bepari,
Miller, Arathdar, and retailer who participated in the marketing of Boro paddy and rice. The
cheap cost of Boro paddy, inadequate finance and transportation facilities, inadequate storage
facilities, etc. were the main issues in the research area.

Tasnoova and Iwamoto [23] used primary data that was purposefully gathered from 24 farmers
and 65 intermediaries in Sadar Thana of the Dinajpur region to evaluate the marketing systems
of Kataribough rice in Bangladesh. Primary data were collected during the months of January
and March 2000. To estimate marketing costs and margins, as well as to investigate possible
suggestive solutions to marketing issues, efforts were undertaken to discover the Kataribough
rice marketing system. A complicated marketing channel was developed in the research area

15
by Faria, Bepari, the miller, Arathdar, and the retailer who were all involved in the marketing
of Kataribough rice. The millers had the biggest margin, followed by the retailer Bepari,
Arathdar, and Faria. Lack of money, inadequate storage facilities, inadequate market
knowledge, excessive market tolls, a lack of market facilities, and poor communication and
transportation infrastructure were the main issues that farmers and intermediaries had to deal
with.

In some chosen locations of the Jamalpur district, Uddin [24] studied the marketing of boro
paddy and discovered that millers saw the highest profits and marketing expenses. According
to the report, the main marketing issues were poor communication, a lack of suitable market
officials and information, price fluctuations, a lack of adequate marketing and storage facilities,
a greater market toll, and unpredictability in the supply of electricity.

The primary goal of the case study undertaken by Zaman et al. [25] was to determine how
farmers participate in the paddy/rice market. In that paper, it is also examined how much rice
is sold and how surpluses are marketed. According to the analysis, the price support program
and open market participation are least beneficial to small farmers. Direct selling from home
and selling at a local market were determined to be the two main marketing strategies. They
end by highlighting the necessity of raising surpluses to enhance small farmers' capacity to
engage in the market.

A case study was also carried out by Zaman et al. [26] to investigate the rice processing method
and marketing in Bangladesh. One of the most important rice-trading organizations in the
research region was the rice processing industry (millers). According to their findings, the
processing industry gives rural residents a sizable number of jobs. According to seasonal
employment patterns, there were many job opportunities during the harvesting of the Boro
(spring paddy) crop. Additionally, it was discovered that the millers' selling price exceeded the
break-even price, proving that rice trading is a successful industry in Bangladesh.

Through the investigation carried out by Bapari [27], both conventional and high yielding rice
production were studied in terms of their causes, costs and benefits, and resource allocation in
Bangladesh's Rajbari district. A pre-tested questionnaire was used to collect data from 300
regular rice growers of both conventional and high yielding varieties in the study area. Random
selection approach was used to choose the respondents from this group. The findings also

16
demonstrated that both varieties of rice were grown inefficiently by the study area's farmers.
The main policy recommendations for growing more rice in the study area with more
efficiency in the future included a constant supply of electricity, flexible credit, and
strengthening the existing resources.

Hasan et al. [28] studied on profitability analysis and socio-economic characteristics of rice
cultivating fermers at jhenaidah. This study's primary goal was to examine the socioeconomic
traits and financial viability of Bangladesh's Jhenaidah district's rice farmers. The primary data
used for this study came from 112 farmers who grow rice. In 2016, a survey was done on the
production years between 2014 and 2015. The findings indicated that most farmers in the study
area only had an elementary education and borrow money for farming. Production of the rice
in Boro yielded larger profits than that of the rice in Aus and Aman.

In a research of Boro paddy prices in a few key districts of Tangail district, Akter [29]
discovered that millers, Paikers, and Kutials had bigger margin shares than merchants, Farias,
and Beparies. This occurred because of the former group's engagement in paddy processing.
Most intermediaries relied on unofficial credit since they lacked access to bank loans.

Using data from a farm level survey conducted in April and May of 2016, Sujan et al. [30]
examined the profitability and resource use efficiency of boro rice growing in the Bogra area
of Bangladesh. They showed that the primary production factors such as human labor,
irrigation, insecticide, seed, and fertilizer had a statistically significant impact on yield,
according to a Cobb-Douglas production function study. MVP and MFC ratio research
revealed that most of the resources were allocated by farmers during the logical stage of
production.

From the above review of literature, it appears that several studies on paddy/Boro rice
marketing system have been conducted in different areas of Bangladesh and in nearby
countries. But there have a few studies exclusively on Aman rice marketing system of
Bangladesh. So, an attempt has been made by the researcher to study the efficiency of Aman
rice marketing system in Bangladesh.

17
 CHAPTER III

METHODOLOGY

3.1 Introduction

Any research must include methodology as a necessary and vital component. The right
approach was followed in the research, which has a significant impact on how reliable the
results are. Exotic outcomes are generally the product of improper approach. A researcher must
therefore take careful considerations to follow a logical and scientific technique when doing
his research. It is very important for the researcher to be very clear about the types of research
designs, methods, and procedures that should be used when choosing the study areas, using
sampling techniques, analyzing the data that has been collected, and interpreting the findings
to reach the correct conclusion. The methods employed in this investigation is provided below
in chronological order.

3.2 Selection of Study Area

A crucial first step in any research project is choosing the research topic. The selection of the
study locations should consider the greater concentration of mills for processing and
manufacturing of paddy as well as the researcher's ease of access. Because of the larger
concentration of Aman paddy production, processing mills, and the availability of logistical
assistance for data collecting, Cumilla district was purposefully chosen for the current study.
Again, three Upazilas—Borura, Laksham, and Brahmanpara—were chosen for collecting
primary data after discussion with the agriculture officer and subagricultural assistant officer
of each Upzilla. The next sections and Figure 3.1 provide a thorough explanation of the
research district.

The study district: Comilla has a total area of 3146.30.17 square kilometres. It is bounded
by Brahmanbaria district and Narayanganj district of Dhaka division to the north, Munshiganj
district of Dhaka division and Chandpur district to the west, Noakhali and Feni districts to the
south and the Indian state of Tripura to the east. The district headquarters of Comilla is located
close to the Indian border, with the town of Sonamura on the other side. Major rivers passing

18
through Comilla include the Gumti and the Little Feni. It is hot in summer and cold in winter.
According to the 2011 Bangladesh census, Comilla District had a population of 5,387,288, of
which 2,575,018 were males and 2,812,270 females. Rural population was 4,546,962 (84.40%)
while the urban population was 840,326 (15.60%). Comilla district had a literacy rate of
53.32% for the population 7 years and above: 54.08% for males and 52.65% for females.
Muslims make up 95.10% of the population, while Hindus are 4.79% of the total population.
There are nearly 5,000 Buddhists in the district.

Figure 3.1 Map of Cumilla district.

19
3.3 Sampling Design

Sampling plays a crucial role in survey work. Due to time and resource limitations, it was not
possible to interview every farmer and intermediary in the research area. The target population
for the study is every individual from the point of production to the point of consumption of
the rice industry (farmers, market intermediaries, consumers, etc.). As a result, accurate
sampling is required to accurately represent the population. However, in this study, random
selection was used to choose paddy farmers and intermediaries (i.e., millers, wholesalers,
Beparis, Farias, and retailers) from the study areas. For the study, 60 farmers who produce
Aman were chosen 15 from each Upazila. Again, 75 intermediaries in total, including miller,
retailer, Faria, Bepari, and Arathdar, were chosen for this investigation. Using a pre-tested
interview schedule, first-hand interviews with the respondents were used to gather primary
data.
Table 3.1 displays the numbers of samples that were arbitrarily chosen from the district that
was purposefully chosen.

Table 3.1 Category of sample respondents in the study areas

Respondent category Sample size

Farmer 60
Faria 15
Bepari 15
Wholesaler 15
Miller 15
Retailer 15
Total 135

20
3.4 Research Instruments

The effectiveness of a research project or survey depends on how well the schedule is created.
A preliminary structured interview schedule and checklist were carefully created with the
research objectives in mind to gather information from the chosen respondents. The researcher
himself pre-tested the initial timetable on a few farms in the study area. The draft schedule was
enhanced, adjusted, and rearranged considering the actual and practical experience gained from
the pretesting during the interview process if any corrections, changes, or revisions were
required. Finally, a straightforward schedule was created to ensure that precise information
could be acquired without duplication or misunderstanding. When creating a schedule, the
researcher followed the three key components: the general form, the order of the questions,
and the formulation and language of the questions. For each group of intermediates, a distinct
set of questions was prepared. The questionnaire had the kinds of questions that are pertinent
to the study (e.g., cost of production, cost of buying and selling, cost of milling, quantity of
mills, price of different intermediaries in various channels, etc.).

3.5 Type of Data and Its Sources

Both primary and secondary data, which were gathered from various sources, were required to
achieve the study's stated goals. The ensuing subsections detail the different types of data and
their sources.
Primary data: Cross-sectional data are often information on one or more variables gathered
at the same time The researcher gathered information from producers and intermediaries in the
study areas about the cost of buying and selling paddy, the cost of paddy cultivation, and the
challenges that producers and intermediaries, respectively, faced when producing and
managing paddy and their businesses at a particular time. Personal interviews with respondents
in the study areas were used to gather primary data.
Secondary data: The study also made use of secondary data, the majority of which were time
series data. Regular time intervals, such as daily, weekly, monthly, quarterly, or annually, can
be used to collect time series data (Gujarati, 2003). Secondary data were gathered from a
variety of published sources, including the DD office of the Cumilla district, the Internet, the
DAE, BBS, BRAC, DAM, and BRRI.

21
3.6 Period of Data Collection

Data were gathered from the chosen Aman rice producers and traders. In the study locations,
June through September were predicted to be the Aman paddy's peak and lean seasons,
respectively. Data for this study, however, were gathered from the Cumilla district between
July and September 2022.

3.7 Collection of Data

The researcher himself conducted face-to-face interviews with the respondents to gather data.
The study's goals were made known to the respondents during the data gathering process so
they could answer candidly. Interviews with the traders took place in Haats and paddy markets.
Producers were questioned in the Cumilla district's chosen communities. For the respondents
to answer readily, the interviews were conducted during their free time. The material was
entered on the interview schedule and the questions were asked methodically and simply. Data
were collected in local units to reduce mistakes. These units were later changed to conventional
units, though. All feasible steps were made to prevent errors and guarantee the accuracy of the
data from the field/study location. For instance, each schedule was examined and validated
after each interview to ensure that the responses to each item had been accurately recorded.
The respondents were re-interviewed to obtain pertinent corrections if any things were missed
or inconsistent. Adequate steps were taken to ensure the data was accurate and reliable, making
it significant for the current study.
The following information was gathered using a pre-tested questionnaire:

Information was gathered on the amount of Aman rice sold, the price of the rice sold, the total
amount of Aman rice grown land, the cost of production inputs, the output's size, access to the
market, market knowledge, land ownership, credit availability, and family size.

Aman rice purchase and sale prices as well as expenses related to various facets of its marketing
were gathered and used to examine the marketing costs, margins, and profits of various
intermediaries.

22
 The Aman rice market's structure and operations were examined using the information that
was gathered from a sample of informants using a questionnaire, including information on the
market information system, exchange agreements, storage system, transport facilities, price
setting strategy, purchasing strategy, selling strategy, and entry barriers.

3.8 Editing and Tabulation of Data

The first step was to carefully examine each schedule's data to look for any discrepancies or
omissions in the data collection process and to weed out unnecessary information. To ensure
that there were no scheduling or information-recording problems, the data were extensively
edited. To make tabulation easier, processed data were uploaded to an excel spreadsheet and
assembled. Local units originally gathered information. After being examined, these were
scored appropriately to turn them into quantitative form. The data were summarized, and the
necessary tables were created. According to the study's goals, the acquired data were analyzed.
Data inconsistencies were eliminated. The relevant version of the software, Microsoft Excel,
was used for the analysis.

3.9 Analytical Techniques

To reach a meaningful conclusion is the research's primary and final goal. To accomplish the
stated goals in this regard, tabular, statistical, and graphical analysis were used. The main
statistical techniques used to assess the effectiveness of various channels and the margin earned
by middlemen by middlemen were average, percentage, and simple statistical tools. The
following formula was used to estimate the marketing margins, marketing costs, and net
margins of various intermediaries:

23
3.9.1 Estimation of marketing cost

The following formula was used to determine the overall marketing expense borne by growers
and middlemen in a channel:

MC = MCp + MCm1 + MCm2 + MCm3 +…. + MCmi.

Here,
MC = Total marketing cost in a channel
MCp = Marketing cost paid by the producer
MCmi = Marketing cost incurred by the ith intermediaries in the process of buying and selling
of rice in a channel (i= 1, 2. 3… n).

3.9.2 Estimation of gross marketing margin

The difference between the purchase price and the sale price is called the gross marketing
margin. The following three techniques can be used to determine the marketing margin:
1. By choosing certain truckloads of a commodity and tracking them using the marketing
system.
2. By calculating the difference between the quantity handled at various stages in the marketing
channel's buy and sale prices.
3. By contrasting prices at various marketing levels.
The specific study objectives and the investigator's own interests will determine the relative
benefit of various strategies. The second technique of calculation was used to calculate the
marketing margin in the current study. Marketing margins of different categories of
intermediaries are calculated individually to analyze their relative performance of marketing
activities. The following formula was used in this study to estimate the marketing margin:

MMg = Ps - PP,
Where, MMg = Gross marketing margin
Ps = Sale price of Aman rice
Pp = Purchase price of Aman rice

24
3.9.3 Net marketing margin

The difference between gross marketing margin and marketing expense was used to calculate
net marketing margin, or profit. The calculation was made using the following formula:
Net margin (Tk. /mound) = Gross marketing margin (Tk. /mound)-Marketing cost
(Tk. /mound).

3.9.4 Estimation of marketing efficiency

There are many other sorts of measurements that can be used to gauge market performance,
each with their own benefits and drawbacks, but no one can provide a comprehensive picture.
The effectiveness of Aman rice marketing in the research areas was assessed using the
following performance measures (Rajagopal, 1986). The indicators include (1) the proportion
of a product that is sold through a channel, (2) the producer's share of the price paid by
consumers, (3) relative marketing expenses, (4) the level of middlemen's margin, (5) price
deviation, or the difference between the maximum and minimum prices of Aman paddy in a
month, and (6) price variability. All of these criteria were applied in accordance with the
several Aman rice’s channels. Below is a discussion of some analytical tools for evaluating the
performance criteria.

Producer's share to the consumer’s price: The producers' share was calculated as the
difference between the producers' gross/net price and the weighted average selling price of
Aman rice. This formula was used to calculate it:
Ps = (Pp ÷ Pr) × 100
Where, Ps = Producer's share to the consumers price (%)
Pp = Producers' selling price
Pr = Retailers’ selling price/consumers’ price

Relative marketing costs and margins: Based on marketing channels and the price of a unit
of Aman rice, the cost of marketing was calculated. The lowest cost marketing channel
received a ranking of 1. Using the same methodology, the channel with lower middleman
margins was ranked first.

25
 Deviations between maximum and minimum price: The channel that had the smallest
difference between the maximum and minimum pricing of Aman rice was given the top spot.
The following equation was used to get the average price deviation:
Dp = ∑di ÷ N

Where, Dp = Average price deviations

di = Price deviations in ith month (i = Jan to Dec)
N = Number of total months (12 months)

Seasonal price variability: The following standard deviation (∂) formula was used to calculate
the price variations in the lean and peak seasons:
∂ = √(1÷T) ∑Wt (Pt - P)2
Where, ∂ = Seasonal price variability index
P = Average price of the whole season (12 months average) Pt = Average price for a particular
period
T = Total months (12 months), and

𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑠𝑜𝑙𝑑 𝑡ℎ𝑟𝑜𝑢𝑔ℎ 𝑎 𝑝𝑎𝑟𝑡𝑖𝑐𝑢𝑙𝑎𝑟 𝑐ℎ𝑎𝑛𝑛𝑒𝑙 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑚𝑜𝑛𝑡ℎ (𝑆𝑡)

Wt = 𝑇𝑜𝑡𝑎𝑙 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑠𝑜𝑙𝑑 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑚𝑜𝑛𝑡ℎ 𝑖𝑛 𝑎𝑙𝑙 𝑐ℎ𝑎𝑛𝑛𝑒𝑙 Σ𝑖Σ𝑡 𝑆𝑖𝑡

For each time, the standard deviations (∂) were individually computed. A smaller number of
suggests that seasonal variations won't have an impact on farmer prices, and vice versa.
Ranking 1 went to the channel with the lowest standard deviation. The following index formula
was used to get the final ranking of each of the six indicators for each of the channels:
R = (Ri ÷Ni)
Where, Ri = Total value of ranks of all indicators, and Ni = Number of indicators.

3.10 Problems Faced During Data Collection:

The researcher ran into the following issues during the data collection period:
Most responders lacked a solid education in the study areas. They had never heard of such a
study before. They were suspicious about the researcher and therefore did not want to
cooperate for the first time and it was therefore difficult to explain the purpose of this research
to convince them. Due to our efforts, the respondents were ultimately persuaded.
26
The producers and intermediates occasionally weren't available at their homes or places of
business because they were still working outside. Due of this, it was occasionally necessary to
make multiple visits to obtain information from them. Therefore, the researcher had to put in
extra time and effort to get the necessary data.
Most farmers in Bangladesh do not document their annual or daily transactions or activities in
writing. As a result, it was quite challenging to get data, and the researcher was forced to
depend solely on farmers' memories.

27
 CHAPTER IV

SOCIO-ECONOMIC CHARACTERISTICS OF RESPONDENT

FARMERS AND INTERMEDIARIES

4.1 Introduction
The area under Aman paddy production and marketing, as well as the characteristics of the
Aman paddy producers, are significantly influenced by their socioeconomic backgrounds and
characteristics. Therefore, a brief explanation of characteristics is required to evaluate the
major goals of the current study. As a result, data on the respondents' age, family structure,
level of education, occupation, annual income, etc. were gathered for the study. Listed below
is a quick explanation of these traits.

4.2 Age Distribution

Following the data collection, the respondents were divided into three age groups: 20 to 40
years old, 41 to 55 years old, and over 55 years old. According to Table 4.1, 55.55%, 53.57%,
and 50% of small, medium, and big farmers, respectively, were between the ages of 20 and 40.
27.77%, 25%, and 28.57% of small, medium, and big farmers, respectively, were between the
ages of 41 and 55. 16.66%, 21.42%, and 21.42% of small, medium, and big farmers,
respectively, were between the ages above 55.
Table 4.1 shows how old Aman paddy farmers are in relation to the size of their farms.

Farm size Age groups

20-40(%) 41-55(%) Above 55(%)
Small 55.55 27.77 16.66
Medium 53.57 25 21.42
Large 50 28.57 21.42
All farms 53.04 27.11 19.84

28
4.3 Family Size and Composition
In the current study, a family is defined as a group of people who live together, eat meals
together, and live under the direction of a single person. It includes a husband, a wife, a son, a
daughter who is not married, a parent, etc.
According to this criterion, Table 4.2 shows that 77.77% male and 22.22% female in small
farm group, 75% male and 25% female in medium farm group, and 85.71% male and 14.29%
female in large farm group, it also reveals that for small, medium, and large farmers, the
average family size was 4.50, 5.00, and 7.50 people, respectively. Large farmers had the largest
families, followed by medium-sized and small-sized farmers, indicating a strong correlation
between family size and land ownership.
Table 4.2 shows the family makeup of Aman paddy producers in relation to farm size.
Farm size Male (%) Female (%) Family size (No.)
Small 77.77 22.23 4.50
Medium 75 25 5
Large 85.71 14.29 7.5
All farms 79.50 20.50 5.66

4.4 Occupational Status

The primary occupation of a farmer was that one, meaning it was where most of the family's
revenue came from. According to Table 4.3, agriculture accounted for 74.17 percent of farmers'
primary occupations, while business and service accounted for 20.40% and 5.42%. Most of
the sample farmers were found to be engaged in agriculture, accounting for 77.77%, 71.42%,
and 73.33 percent of the small, medium, and big farmers, respectively. The remaining farmers
in each category indicated that their primary occupation was either business or service.

29
 Table 4.3: Aman paddy producers' occupations by size of farm

Farm Size Agriculture (%) Business Service

(%) (%)
Small 77.77 16.66 5.55
Medium 71.42 17.85 10.71
Large 73.33 26.66 0
All farms 74.17 20.40 5.42

4.5 Educational Status

A nation's agricultural development can be accelerated in large part through education. The
educational attainment of the Aman paddy growers in the research area is displayed in Table
4.4.
Table 4.4 shows that 52.91 percent of farmers were illiterate, while 18.78 percent had a primary
education, 15.07 percent had a below secondary education, 5.95 percent had a secondary
education, and 7.27 percent had a higher secondary degree.

Table 4.4 shows the Aman paddy farmers' level of education.

Education level Small Medium Large All farms

(%) (%) (%) (%)
Illiterate 44.44 57.14 57.14 52.91
Primary (Class I-V) 27.77 21.42 7.14 18.78
Below secondary (Class VI-X) 16.66 7.14 21.42 15.07
Secondary 0 3.57 14.28 5.95
Higher secondary 11.11 10.71 0 7.27

4.6 Household Income

The farmers who were chosen worked mostly in agriculture, which also provided most of their
income. Business and services were also sources of revenue. For small, medium, and big farms,
respectively, the respondents' total yearly incomes were TK. 78000, TK. 120000, and TK.
210000. Their respective average monthly incomes were TK. 6500, TK. 10000, and TK.
17500.

30
 Table 4.5 shows the Aman paddy farmers' annual household income.
(In Taka)
Farm size Total Average annual Average income per
income month
Small 78000 6500
Medium 120000 10000
Large 210000 17500
All 136000 11333

4.7 Socio-economic Characteristics of Intermediaries

The selected intermediates' socioeconomic traits, such as age, education, and profession, are
addressed below.

4.7.1 Age distribution of the intermediaries

The chosen Aman paddy intermediaries were divided into three age groups: 20–40 years, 41–
55 years, and over 55 years. According to Table 4.6, roughly 36 percent of merchants were
between the ages of 20 and 40, followed by about 41.33 percent of traders between the ages of
41 and 55, and the remaining 22.66 percent were over the age of 55. Table 4.6 makes it clear
that the age range of 41 to 55 years was home to the greatest number of distinct intermediaries.

Table 4.6 shows how old the intermediates are.

Intermediaries Age group
20 to 40(%) 41 to 55(%) Above 55(%)
Farias 53.33 20 26.66
Beparis 46.66 40 13.33
Millers 20 46.66 33.33
Arathdar 26.66 46.66 26.66
Retailers 33.33 53.33 13.33
All 36 41.33 22.66

4.7.2 Occupational status

According to Table 4.7, 46.66 percent intermediaries are related to business and rest 53.33
percent are involved in business and agricultural activities.

31
 Table 4.7: The intermediates' professions.
Intermediaries Business Business + Agriculture
Farias 66.66 33.33
Beparis 60 40
Millers 33.33 66.66
Arathdar 26.66 73.33
Retailers 46.66 53.33
All 46.66 53.33

4.7.3 Educational status

Effective marketing of Aman paddy depends in large part on education. Because they would
be more informed and would make logical marketing judgments, educational middlemen.
Table 4.8 details the education level of intermediaries. The chosen intermediaries were divided
into four categories based on their educational background after data collection.

Table 4.8 various sample intermediaries' literacy rates

Educational Status Faria Bepari Miller Arathdar Retailer All
% % % % % %
Illiterate 26.66 33.33 46.66 33.33 20 32
Primary (Class I- 20 13.33 20 40 33.33 25.3
V) 3
Below secondary 13.33 20 20 20 13.33 17.3
(Class VI-X) 3
Secondary 26.66 26.66 13.33 6.67 20 18.6
7
Higher secondary 13.33 6.66 0 0 13.33 6.66

32
 CHAPTER V

MARKETING SYSTEM OF AMAN PADDY

5.1 Introduction
The marketing system can be viewed as the cord or the link that connects manufacturers and
customers. Physical distribution, which is concerned with the handling and transfer of products
as they move from producers to consumers, is one of the two key responsibilities played by
the marketing system. Additionally, it increases the value of agricultural products and
streamlines the exchange procedure between buyers and sellers (Kohls and Uhl, 1985). Based
on primary data such as marketing channels, market intermediaries, and their roles or
functions, this chapter discusses the various paddy marketing system elements in Bangladesh.
Below, the three parts of the Aman paddy marketing system are briefly discussed.

5.2 Marketing Channels of Aman Paddy

A marketing channel is the network of middlemen between producers and consumers that
facilitates the exchange of goods. To accomplish the marketing goals of the producing farms,
a marketing channel is a road made up of middlemen who carry out the necessary tasks to
ensure the safe, orderly, and sequential movement of goods and services from producers to
consumers. Through market intermediaries like Faria, Bepari, miller, Arathdar, and retailer,
paddy is transported from the producer-seller to the consumers in the research areas. It was
noted that Aman paddy had to travel a great distance from the points of production to the points
of consumption.

33
Figure 5.1 displays the Aman paddy marketing channels that were seen in the study area.

Farmer

Faria Bepari

Paddy Arathdar

Miller

Local Arathdar-
cum- Wholesaler
Wholesaler

Retailer

Retailer

Consumer

Consumer

Fig 5.1 Marketing channels of Aman paddy in the study area

Source: Field survey,2022

34
 The following channels were found in the study areas based on Figure 5.1.

5.3 Market Intermediaries

Bangladesh's paddy marketing is carried out by a network of middlemen. They are millers,
assemblers, distributors, and retailers. Although there is a lack of information on these
intermediaries, some significant topics are explored in order to comprehend their significance
and position in the marketing channel. The data from the Cumilla district are the main source
of the debate that follows.

5.3.1 Faria /Bepari

Faria /Bepari based on the size of their operations, Farias and Beparis are distinguished slightly
in the Bangladeshi literature on food marketing. They are classed as various types of agents in
some studies and as the same type of agent in other investigations. The DAM has not provided
any specific instructions for us to follow on their role. For the sake of clarity, the terms
Faria/Beparis were used to refer to the same kind of paddy assemblers.

35
 Small-scale, unlicensed paddy assemblers working mostly in village markets include Faria and
Beparis. They don't have a fixed place of business; instead, they move from village to village
buying paddy straight from the growers. They occasionally also purchase paddy at the local
market. Some of the individuals in this category serve as paddy Arathdar agents. Most of them
are seasonal. Some of them also worked at small farms, selling their labor to others, and other
related jobs. They typically invest their own money into running a firm. From the grower's
home to their own home and from their home to the market, they transport paddy using
rickshaws and vans.

5.3.2 Arathdar
The commission agents that typically work for the millers are Paddy Arathdar. However, some
paddy Arathdar work independently and do not represent the miller. In the upazila market,
both types of businesses have a fixed location. They typically buy paddy at the upazila market.
Some Arathdar purchase paddy directly from the growers with the understanding that they may
request payment at any moment. Arathdar typically receives funding from the millers. After
receiving an order, they provide paddy to the millers within 3 to 7 days. These Arathdars, who
were employed by millers, had little discretion over what they bought and sold. They adhere
to the millers' judgments. To decide whether to buy the paddy at the going rates or not, they
are constantly in contact with the millers. They buy the remaining 75% of the paddy from the
Bepari/Piker and roughly 25% from the farmers.

For buying paddy, they typically received Tk. 2, 90,000 in advance from the millers; any
remaining money, if any, was paid once the complete amount of paddy was delivered. Millers
pay for the entire cost of purchasing paddy. They travel to the Arathdar location to pick up the
paddy for delivery. Occasionally, Arathdar will send the purchase volume via truck or other
vehicle along with the purchase receipt, and the millers will then pay the remaining balance.
Arathdar was compensated for his services with a fee of Tk. 12.00 for every 40 kg of paddy.
People who run their businesses freely and without acting as the millers' agents invest their
own money in them.

36
5.3.3 Rural retailer.
Rice is mostly sold seasonally by rural shopkeepers. At the local market, these little vendors
directly buy paddy from the farmers. Family effort was used to parboil and dry food in the
backyard. The dried paddy is then brought to the neighboring small rice mills for milling,
which are located close to the village market. The retailers were charged Tk. 40.00 per mound
by rice millers for grinding the paddy. Once the rice has been milled, it is sold to villagers
during the weekly (Haat) and daily bazaar days. Their monthly paddy transactions range from
0.7 to 1.0 tons. In general, rickshaw or van pullers, marginal and landless producers, and these
businesses. These rice merchants are also day laborers for the Arathdar. For various categories
of farmers in the study locations, distinct marketing channels were discovered (i.e., small,
medium and large). The following graphs display:

Figure 5.2 Aman paddy marketing channels for small farmers

Source: Field Survey, 2022
The marketing channels for large and medium farm groups were different from those for the
small farm group, as shown in Figures 5.1 to 5.4. They have access to the rice mill directly.

37
The presence of numerous rice mills involved in the paddy and rice marketing was a significant
aspect of the survey region. The paddy is purchased by rice millers from various itinerants,
particularly from local Bepari, Faria, and Arathdar (commission agency).

Figure 5.3 Aman paddy marketing channels for medium farmers

Source: Field Survey, 2022

Figure 5.4 Aman paddy marketing channels for large farmers

Source: Field Survey, 2022

38
5.4 Role of Rice Mills
The paddy must be treated before being consumed once it is gathered from fields. The several
steps in the processing of rice include parboiling, drying, and milling. Both at home (on a small
scale) and at rice mills, these are carried out (large scale). The noncommercial, at-home milling
business is possibly the oldest and essentially defunct way to grind rice in Bangladesh. After
being parboiled and dried, paddy is processed using this technique. Most of the Bangladesh's
paddy processing and milling is done in the rice mills. The term "commercial milling center"
refers to these mills. In Bangladesh, there are two different types of commercial mills: the first
type is the rice miller, who either buys paddy directly from the local bazaar or Haat or through
their agents. After parboiling, drying, and milling the paddy, these facilities typically supply
the completed milled rice to the wholesalers and assemblers of the major cities.

The processed paddy, on the other hand, is milled into finished rice in a tiny husking machine
that is in the neighboring village bazaar after being parboiled and dried at home. These huskers
also husk paddy for the village's tiny traveling merchants. Huskers from vendors have recently
become available in the communities.

The number of industrial rice millers has grown throughout time. These industrial processing
facilities have been essential to the rice marketing system. In Bangladesh, three different types
of rice mills are available. These are husky, major, and automatic rice mills, according to the
Ministry of Food (FPMU, 2009). A total of 29 mills from Laksham, Cumilla were chosen at
random for the study, of which 19 were auto rice mills and the remaining 10 were husky rice
mills. Data were gathered regarding many topics. Data collection from the rice millers was
challenging. They were initially dubious about the goal, but after repeated requests and a clear
explanation of the purpose, they agreed to speak with the researcher. However, in some
instances, the millers did not answer as required. The researcher had also gathered some
thorough data from a single auto rice miller to get around some of these issues. Although the
research may have certain limitations and the sample sizes may not fully represent Bangladesh,
our attempts will give a good overview of the features and functions of the commercial rice
mills in the study area.

39
5.4.1 Rice millers as paddy buyers
The most important players in the marketing system in the research areas are the rice millers.
They are essential to the buying and selling of paddy. They can purchase paddy directly from
farmers or through a commission agent named Arathdar who maintains a fixed place of
business in the upazila market. These commission agents receive capital (cash) up front from
the millers in exchange for supplying the mills with paddy. Money amounts differ from mill
to mill. Within three to seven days of buying paddy, Arathdar provided the mill with paddy.
The millers decided and had control over how much paddy would be bought and at what price.
Following payment, Arathdar are required to stay in contact with the millers to receive the
essential instructions regarding the paddy buying procedure. Millers regularly monitor
surrounding market information regarding the price and quantity of paddy traded at each
market during the Haat day. The millers can use this information to direct their suppliers' next
steps. Arathdar followed the instructions and gave the millers the required amount of paddy in
exchange for a set fee. Most of the time, millers pay for everything. For the Arathdar, buying
and delivering the paddy at the mill gate carries little danger. Paddy is not only supplied to the
millers by Arathdar; the millers also buy paddy from growers and Bepari/Faria.

5.5 Volume of business

According to the current study, Faria handled 540 mound of Aman paddy on average per region
(sit twice in a week). The observation revealed that the Beparis in the research areas bought
and sold 900 mound of Aman paddy annually on average. Each miller bought on average 2500
mound of Aman paddy before selling the finished rice. They provided shops, regional
Arathdar, and wholesalers from other districts with their processed rice. By head load/shoulder
load, cycle and rickshaw van, the Farias moved 10%, 10%, and 80% of their Aman paddy,
respectively. The Beparis used rickshaw vans and pickup to transport 10% and 90%,
respectively, of their Aman paddy. However, most of the time when moving Aman paddy from
the primary market to the secondary market, the millers and Arathdar used trucks. A tractor or
van were occasionally utilized. Trucks carried 85 percent of the paddy for the millers and 95
percent for Arathdar. The remaining passengers traveled in rickshaw vans and truck. 70 and
30 percent of the rice was transported by rickshaw and van, respectively, by the retailers.

40
 Table 5.1 Mode of transportation used by farmers and intermediaries
Mode of Farmers and intermediaries
transport Farmer Faria Bepari Miller Arathd Retailer
(%) (%) (%) (%) ar (%)
(%)
Head load/ 10 - - - - -
shoulder load
Bicycle 10 15 - - - -

Rickshaw 80 65 70 30 20 50

Tractor - 10 - - - 30

Truck - 10 30 70 80 20

Source: Field survey, 2022

5.6 Storage of Paddy

Making products available when needed is the main goal of the storage function. It produces
useful time. For agricultural commodities to lose as little as possible, proper storage facilities
are crucial. However, the study location did not have a well-developed system for storing
Aman paddy. Gola and Dole were utilized by almost 70% of farmers to store their paddy.
Bamboo and clay are used to make Gola, whereas bamboo is used to make Dole.

In the study area, on average, 58% of paddy marketing intermediaries lacked dedicated grain
storage facilities. The Farias typically kept their crops in a portion of their homes for at least
15 to 25 days. There were no long-term storage facilities on the Beparis. But occasionally they
made use of other people's warehouses, for which they had to provide a one-time payment.
The millers had private grain storage facilities, which were often tin sheds or buildings. Their
store was utilized by Arathdar to store Aman paddy. Retailers kept their purchased rice in their
store.

5.7 Grading of Paddy

One of the fundamental tasks in manufacturing is grading, which is the classification of goods
based on a set of measurements (Kohls and Uhl, 1980). Grading allegedly has an impact on

41
 how things are bought and sold as well as how prices are set. Aman paddy quality testing was
shabbily arbitrary. Eye estimation determines quality. The moisture meter measured the
amount of moisture present. When acquiring paddy at the government procurement center, the
following factors were considered. However, there was no evidence of a common grading
scheme being used by the intermediates in the research region.

Component Percentage

Moisture content(maximum) 13.0

Foreign materials 0.75
Admixture of different verities 7.5
Immature and damaged grain 3.0
Immature dried grain 0.75

5.8 Paddy Processing

Processing is mostly done to create useful forms; by changing a product's form, it raises its
worth. The main task of food producers or processors is to transform raw materials into useful
forms. Rice is made from milled paddy. Processing paddy into rice was a foundation and
essential task in the marketing of rice. At the neighborhood market, the millers purchased the
paddy from Faria and Bepari before turning it into rice. They either processed the paddy
themselves or contracted out the work to other millers.

5.9 Financing
Like other paddy marketing, funding is a key component of Aman paddy marketing. Except
for millers, most of the other traders had their own funding. The dealers required sufficient
funds in addition to their own capital to run their firm successfully. The sources of funding for
Aman paddy traders are displayed in Table 5.2. Around 60% of Farias, 70% of Beparis, 45%
of millers, 40% of Arathdar-cum-wholesalers, and 80 % of shopkeepers conducted their
businesses solely with their own funds.

42
 Table 5.2 Source of finance of the Aman intermediaries
Sources of Intermediaries Averag
finance Faria Bepari Miller Arathdar Retaile e
r
Own 53.33 46.66 40 66.66 60 53.33

Institutional 26.66 40 26.66 33.33 20 29.33

Non-institutional 20 13.33 33.33 -- 20 17.33

Source: Field survey, 2022

Only 26.66% of Farias, 40% of Beparis, 26.66% of Millers,33.33% of Arathdar and 20% of
retailer borrowed money from a bank or other institutional source (i.e., Krishi Bank, Sonali
Bank, etc.). The remaining funds were borrowed from private sources. The percentage of
Farias, Beparis, and retailers who received funding from non-institutional sources like
Mohajan, payday lenders, friends, and family was around 20%,13.33%,33.33% and 20%,
respectively.

5.10 Risk in the Paddy Marketing

For paddy intermediaries in the research areas, risk is a key element. However, it was
discovered that local market traders in the research area took on their own risk. Because they
disliked taking chances, they didn't turn to insurance. However, in the secondary market, the
millers and Arathdar-cum-wholesalers use insurance policies to shield themselves from risk.

5.11 Market Information System

For the marketing system to operate effectively, market knowledge serves as a facilitative
function. Most intermediaries obtained their market knowledge from other dealers as well as
from personal observations, market trips, and other sources. To get information, Millers and
Arathdar-cum distributors typically used the telephone (Table 5.3). There is no information on
the price of Aman rice, despite the DAM of Bangladesh's ongoing efforts to consistently
disseminate market prices for agricultural products through newspapers, weekly bulletins, and
radio.

43
 Table 5.3 Sources of market information of the intermediaries

Sources of Intermediaries Averag

information Faria Bepari Miller Arathda Retaile e
r r
Market visit and 70 75 20 30 85 56
personal observation
Fellow traders 30 15 45 10 15 23

Mobile phone - 10 35 60 - 21

Source: Field survey, 2022

5.12 Pricing
Before a product is made available to the intended customers for purchase, the marketing
management of a firm determines its monetary value. Unlike commercial businesses, the paddy
producers in Aman did not create a marketing strategy. The amount of produce, cash needs,
and debt held by the farmers all had an impact on their sales decisions. The quantity of goods
offered for sale and the number of purchasers that attended the market primarily influenced the
price. All the middlemen who were involved in the purchasing and selling of Aman paddy in
the study areas used open negotiation to set the prices of their goods, and as contrasted to the
middlemen, individual farmers had little negotiating power. Because of an eye evaluation of
the lot, intermediaries provided price quotes for each transaction separately.

44
 CHAPTER VI

MARKETING COST AND MARGIN OF THE INTERMEDIARIES

6.1 Introduction
Marketing expenses are the fees incurred by middlemen when they carry out various marketing
tasks to get a good from the producers to the final consumers. Various costs, including those
for transportation, loading and unloading, market tolls, personal expenses, etc., were borne by
the various middlemen in the Aman paddy marketing channel. Aman paddy marketing costs
have been attempted to be quantified in the study, but only for the intermediaries of Farias,
Beparis, millers, Arathdar, and retailers.

6.2 Marketing Cost of Farias

The Farias bought paddy from different local marketplaces and sold it to those markets and
secondary markets in its natural state without any processing. These services come with a price
tag that covers things like transportation, loading and unloading, market tolls, bag costs,
weighing fees, personal expenses, etc. For their trading, they transported Aman paddy in carts,
vans, or rickshaws. When the distance was relatively close, they occasionally transported
Aman paddy by bicycle. The price of Farias per quintal is shown in Table 6.1.

Tk. 32.95 was the total marketing expense per mound of Aman of Farias. Purchase and sales
expenses made up 54.62 and 45.37 percent of the whole marketing expense, respectively.
Farias's biggest expense (53.10%) was for transportation, which was followed by loading and
unloading (16.38%). They were required to pay 11.53% market tolls. During operating their
firm, other expenses included the cost of the bag (6.06%), the weighting fees (4.55%), and
personal expenses (6.06%), among others. Additionally, they spent 2.27% on others.

45
 Table 6.1 Marketing cost of Farias
Cost heading Cost (Tk./Mound)
Average cost % Of total
A. Buying cost
Transportation 8 24.27
Loading and unloading 3.2 9.71
Market tolls 3.8 11.53
Cost of bags 2 6.06
Personal expenses 1 3.03
Sub-total 18 54.62
B. Selling cost
Transportation 9.5 28.83
Loading and unloading 2.2 6.67
Personal expenses 1 3.03
Weighing charges 1.5 4.55
Others 0.75 2.27
Sub-total 14.95 45.37
Grand total (A+B) 32.95 100

Note: a) Average cost = Total cost/Total amount

Percentage of total cost = One item/Total cost*100
Personal expenses. Bidi, Cigarette, betel leaf, sweet meats, tea etc.
Others: loss of grain, weight, problem extra labor cost, charity etc

6.3 Marketing Cost of Beparis

Aman paddy was typically bought by the Beparis from farmers and Farias. They offered their
unprocessed Aman rice to the millers. Rent, loading and unloading, transportation, the price of
the bags, market tolls, energy, personal expenses, etc. were some of the costs associated with
providing these services. For their trading, they transported Aman paddy via truck, wagon, and
rickshaw.

The marketing cost of the Beparis per quintal is shown in Table 6.2. Aman paddy from Beparis
had a total marketing expense of Tk. 39.6 per mound. Costs associated with purchasing and
selling made up 65.15% and 34.84%, respectively, of the overall marketing expense.
Transportation costs made up most marketing expenses (27.77%), followed by loading and
unloading costs (29.03%). They also incurred other charges, including market tolls (21.71%),

46
 bag costs (5.80%), personal costs (5.04%) rent (2.52%), energy (3.03%), and others (5.05%).
Table 6.2 Marketing cost Beparis
Cost items Cost (Tk/Mound)
Average cost % Of total
A. Buying cost
Rent 1 2.52
Loading and unloading 6.5 16.41
Transportation 11 27.77
Cost of bags 2.3 5.80
Marketing tolls 4 10.10
Personal expenses 1 2.52
Sub-total 25.8 65.15
B. Selling cost
Electricity 1.2 3.03
Loading and unloading 5 12.62
Market tolls 4.6 11.61
Personal expenses 1 2.52
Others 2 5.05
Sub-total 13.8 34.84
Grand total (A+B) 39.6 100

Note: a) Average cost = Total cost/Total amount

Percentage of total cost = One item/Total cost*100
Personal expenses. Bidi, Cigarette, betel leaf, sweet meats, tea etc.
Others: Extra labor cost, weight problems, loss of grain etc.

6.4 Marketing Cost of Millers

At the local market and secondary markets, the millers bought paddy from farmers Farias and
Beparis. Following the requisite Aman paddy processing, they sold rice. They used their own
mills to process their Aman paddy. They thereafter sold their rice to the Arathdar and
merchants in the town of Cumilla.
The millers spent Tk. 112.8 on average each mound. Table 6.3 shows that buying and selling
expenses made up, respectively, 17.02 percent and 82.97 percent of the total marketing
expense. The cost for processing and grinding the Aman paddy was the highest at 44.32
percent, followed by the Arathdar commission at 13.29 percent. For their sales, they were
required to give Arathdar commission at a rate of Tk. 15.00 per mound. They also incurred

47
additional expenses, such as the cost of bags (1.86%), loading and unloading (3.71%),
transportation (10.63%), market tolls (1.95%), telephone charge (0.88%), labor cost (12.41%),
electricity (2.21%), permanent labor (3.98%), rent (0.35%), association membership (0.79%),
maintenance cost (1.77%), and others (0.88%).

Table 6.3 Marketing cost of millers

Cost items Cost (Tk/Mound)
Average cost % Of total
A. Buying cost
Cost of bags 2.1 1.86
Loading and unloading 1.9 1.68
Transportation 12 10.63
Market tolls 2.2 1.95
Others 1 0.88
Sub-total 19.2 17.02
B. Selling cost
Processing and milling charge 50 44.32
Arathdar commission 15 13.29
Telephone charge 1 0.88
Labor cost 14 12.41
Electricity 2.5 2.21
Permanent labor 4.5 3.98
Rent 0.4 0.35
Loading and unloading 2.3 2.03
Subscription for association 0.9 0.79
Maintenance cost 2 1.77
Other costs 1 0.88
Sub-total 93.6 82.97
Grand total (A+B) 112.8 100

Note: a) Average cost = Total cost/Total amount

Percentage of total cost= One item/Total cost*100
Personal expenses. Bidi, Cigarette, betel leaf, sweet meats, tea etc.
Others: loss of grain, weight, problem extra labor cost, charity etc

48
6.5 Marketing Cost of Arathdar-Cum-wholesalers
Rice was bought by the Arathdar from the millers and then sold to other wholesalers and other
Arathdar. The Arathdar purchased and sold rice in various locations throughout Bangladesh.
The overall cost of marketing Arathdar was Tk. 26.30 per mound, as shown in Table 6.4.
Transport expenses accounted for the greatest marketing expense (28.51%), followed by labor
costs (11.78%) and Loading & Unloading (17.1%). Even though they bought Aman rice from
the neighborhood millers in the Cumilla district of Upazilas, transportation was expensive.
They utilized a rickshaw, truck, and van.

According to the volume of demand from other Arathdar-cum wholesalers, they purchased
rice. They distributed their rice throughout many districts. Transaction volume fluctuated
occasionally.
Table 6.4 Marketing cost of Arathdar-cum-wholesalers

Cost items Cost (Tk/Mound)

Average cost % Of total
A. Buying cost
Marketing tolls 1.1 4.18
Sweeper 1.7 6.46
Weighting charge 2 7.60
Cost of bags 0.5 1.90
Transportation 7.5 28.51
Loading and unloading 2.2 8.36
Sub-total 15 57.03
B. Selling cost
Loading and unloading 2.3 8.74
Rent 1.9 7.22
Electric charge 0.9 3.42
Labour charge (permanent) 3.1 11.78
Telephone charge 2.1 7.98
Others
1 3.80
Sub-total 11.3 42.96
Grand total (A+B) 26.3 100
Note: a) Average cost = Total cost/Total amount
Percentage of total cost= One item/Total cost*100
Personal expenses. Bidi, Cigarette, betel leaf, sweet meats, tea etc.
49
 Others: Charity, weight problems, extra labor cost, loss of grain etc.
6.6 Marketing Cost of Retailers
Typically, retailers buy rice from millers and sell it to customers. Only two stores out of thirty
bought Aman paddy from the farmers. The overall marketing expense incurred by merchants
was Tk. 10.55, as shown in Table 6.5. They spent the most on Transportation (36.01%), rent
(26.54), and electricity (18.48%) costs.

Table 6.5 Marketing cost of retailers

Cost items Cost (Tk/Mound)

Average cost % Of total
A. Buying cost
Transportation 3.8 36.01
Sub-total 3.8 36.01
B. Selling cost
Rent 2.8 26.54
Electricity 1.95 18.48
Loading and unloading 1.1 10.42
Others 0.9 8.53
Sub-total 6.75 63.99
Grand total (A+B) 10.55 100

Note: a) Average cost = Total cost/Total amount

Percentage of total cost= One item/Total cost*100
Others: Charity, weight problems, extra labor cost, loss of grain etc.

6.7 Marketing Margin of the Intermediaries

The difference between a commodity's buy price and sale price is the marketing margin for
that stage of the product flow. The difference between what customers pay and what the
producer receives is what characterize as the marketing margin.

The purchase price of Aman paddy was subtracted from the sale price to calculate the
marketing margin for each intermediary, and the marketing cost per quintal was subtracted
from the marketing margin to calculate the net margin. Table 6.6 shows that the expected

50
marketing margins for Faria, Bepari, the miller, Arathdar, and the retailer per mound were 45,
60, 120, 50, and 70 TK, respectively. Miller had the greatest margin, followed by Arathdar,
Bepari, and retailer. By creating form utility and time utility, the miller was able to increase
the value of their goods and increase their marketing margin. They purchased Aman paddy,
processed it, and stored it during the harvest. Later, they marketed it for the highest price.

The same Table shows that the anticipated marketing expenses for Faria, Bepari, the miller,
the arathdar, and the retailer per mound were 32.95, 39.6, 112.80, 26.3, and 10.55, TK
respectively. Miller had the largest marketing expenses, followed by Bepari, Faria, and
Arathdar. The store in the research area, however, had the lowest marketing expense at Tk.
10.55 per mound.

Table 6.6 Marketing margin of different intermediaries

(Tk per mound)

No Intermediaries Purchase Sale price Marketing Total Profit or net

price margin marketing cost margin
A B C = B-A D E = C-D
1 Faria 1025 1070 45 32.95 12.05
2 Bepari 1070 1130 60 39.6 20.4
3 Miller 1130 1250 120 112.8 7.2
4 Arathdar 1250 1300 50 26.3 23.7
5 Retailer 1300 1370 70 10.55 59.45

The estimated net margins or profits for Faria, Bepari, the miller, Arathdar, and the retailer per
mound were 12.05, 20.4, 7.2, 23.7, and 19.45 taka, respectively. The retailer received the
greatest net margin per mound, at Tk. 59.45.

51
Figure 4 displays the marketing margin, total marketing expense, and net margin.

Marketing Margin of Intermediaries

120
112.8

70

60 59.45

50
45
39.6
32.95
26.3
23.7
20.4
12.05 7.2 10.55

1 2 3 4 5

Marketing margin C = B-A Total marketing cost D Profit or net margin E = C-D

Fig. 6.1: Marketing Margin of Intermediaries

52
 CHAPTER VII

EFFICACY OF AMAN PADDY MARKETING SYSTEM

7.1 Introduction

The definition of marketing efficacy is a challenging task. For other people, it has a distinct
meaning. Marketing professionals and economists see the concept of marketing efficiency
from several angles. The optimization of the input-output ratio is how Kohls defined marketing
efficiency. The numerous resources of land, labor, capital, and management that are used to
carry out the various marketing services are the inputs of marketing. The pleasures gained from
using those products and services are referred to as the outcome of marketing.

The transfer of goods from producers to consumers at the lowest cost possible while still
delivering the service that consumers want and can afford is referred to as market efficiency.
It is possible to assess a market's effectiveness (one method) by comparing the price and quality
of the services offered through the existing channels. The going rate of interest should be
reflected in the current price along with a profit margin that is just large enough to cover
investment costs. In respect to price and customer demand, service quality shouldn't be either
too high or too low. Examining the structure, conduct, and performance of marketing
enterprises allows one to assess factors that affect efficiency (Abbott and Makeham, 1981).

In the current study, six performance indicators were used to gauge the effectiveness of various
marketing channels. The producer's share of consumers' prices, relative marketing expenses,
level of middlemen's margin, price deviation—the difference between the maximum and
minimum prices of Aman paddy in a month—and price variability—were the six performance
measures of efficiency. In the study locations, which were previously indicated, various
marketing channels for Aman paddy/rice were in use. However, not all channels were equally
significant in the studied locations. The following channels were more important channels
based on the priority given by the respondents during their marketing of Aman paddy in the
study areas:

53
7.2 Channel Wise Marketing Margin

High marketing margins are frequently seen as "Prima facie" proof of blatant marketing
inefficiency, and middlemen are frequently held responsible for these high margins due to their
inefficiency or overabundance (Matin, 2004). Because great customer service is rarely
connected with high marketing margins in less developed economies, high marketing margins
have historically been interpreted as a sign of ineffective marketing.

In other words, these countries' marketing systems have a lot of room for development (Rashid
and Chaudury, 1973). Therefore, the size and make-up of the marketing margin can be utilized
as an effective indicator of efficiency. Table 7.1 displays the marketing expense, margin, and
net margins for various channels. Channel IV had the largest net margin, while channel I had
the lowest. Due to Channel IV's involvement of a greater number of intermediaries than other
channels, the biggest marketing margin was apparent. Although Aman paddy Arathdar were
present in channels I and III and were added because of their presence as just one additional
channel member, the researcher regarded them as a medium of exchange for Aman paddy from
farmers and/or Farias to millers rather than a channel member because of their extremely low
marketing costs and returns. As a result, Channel IV involved a lot of intermediates.

54
Table7.1 shows how the producer's part of the price varies by channel.
Channels
Particulars I II III IV
Producers Average price (A) 700 720 750 770
Price of rice 1250 1270 1300 1330
Price of bran 550 560 550 570
Price of broken rice 500 520 510 520
Price of husk 110 130 100 120
Weighted average price of
rice, bran, broken rice and 970.5 980.75 990.5 995.6
husk (B)
% Of producer’s share 72.12 73.41 75.71 77.34
(A/B) *100
Rank (I) 4 3 2 1
Note: The average recovery ratio for head rice, bran, broken rice, and husk were 50%, 15%,
20%, and 6% respectively goes to wastage during processing.
Producers’ average price
Producers’ Share =
Weighted average price of rice bran, husk & broken rice.

Source: Field survey, 2022

55
 Table 7.2 shows marketing expenses and middlemen's profit for various Aman
marketing channels.
Channels
Particulars I II III IV
A. Transportation 6.7 7.1 4.9 4.2
B. Loading and unloading 4.5 4.8 3.5 3.1
C. Market tools 1.1 1.4 1.2 1.4
D. Cost of bags 2 2.25 2.3 1.7
E. Weighting charge 2.75 3.5 2.4 2.1
F. Labor cost 3.2 3.4 2.8 1.9
G. Personal expenses 0.9 1.2 0.9 2.1
H. Others
1.9 2.1 1.5 1.4
Total marketing cost 23.05 25.75 19.5 17.9
Rank (I2) 3 4 2 1
Margin to middlemen 180 192 165 100
Rank (I3) 3 4 2 1
Net Margin 156.95 166.25 145.5 82.1
Source: Field survey, 2022

7.3 Channel Wise Producer’s Share, Marketing Cost, Margin and Profit

The producer's share, marketing margin, cost, and profit for Aman paddy in various marketing
channels are shown in Tables 7.1 and 7.2. Channel IV had the largest producer net share,
followed by Channels II and I and Channel III had the lowest; similarly, Channel II had the
highest marketing cost and margin, followed by Channels I and III and Channel IV had the
lowest. It was suggested that the producers would have benefited most if they had been able to
sell their goods through millers, wholesalers, or retailers like Arathdar.

7.4 Deviation between Maximum and Minimum Price

Table 7.3 shows the pricing deviations for various channels for each month. Price deviation is
the difference between a month's highest and lowest prices. The difference between the highest
and lowest prices for each month was computed, and after adding all the differences for all the
months, the average deviation was determined. The Table shows that channel I and channel III
both had the lowest pricing deviations. Channel IV had the biggest price variance.

56
 Table 7.3: Deviation between the Highest and Lowest Price in Each Channel
Deviation in Different Channels
Months Max Min I II III IV
Septemb 25 30 28 30
930 900
er
October 960 940 15 18 20 20
Novemb 30 30 50 38
1030 980
er
Decemb 45 30 28 40
1040 995
er
January 1060 1010 32 50 30 32
Σd 147 158 156 160
N 5 5 5 5
Σ𝑑
d= 29.40 31.60 31.20 32.00
𝑁

Rank (I4) 1 3 2 4
Note: N =Total number of month (5 months),
d = Deviation betn the maximum and minimum price in each month in the respective channel
Source: Field survey, 2022

7.5 Seasonal Price Variability

The seasonal price changes of Aman paddy in various channels are shown in Tables 7.4 and
7.5 for the peak season and Table 7.6 for the lean seasons, respectively. The seasonal price
fluctuation of Aman paddy in various channels showed that during peak season, channel I had
the highest price variation and channel IV had the lowest price variation (Table 7.3) for both
types of paddies. It suggested that because this route had the least amount of price volatility,
growers would gain more if they sold their paddy through millers rather than wholesalers or
retailers like Arathdar. Channel IV's producer price was less impacted by seasonality than the
prices of other channels. However, during the lean season, channel IV had the biggest price
volatility while channel I had the lowest (Table 7.4)

57
Table 7.4 Seasonal price variations for peak season by channel
Peak Channels
Season for Months I II III IV
September 789.76 677.88 436.63 297.29
Aman October Wt (Pt - 323.40 318.68 252.37 195.32
P)2
November 212.56 89.97 107.82 25.77

∑Wt (Pt - P)2 1325.72 1086.53 796.82 518.38

Total number of months (N) 3 3 3 3

Σ𝑊𝑡(𝑃𝑡−𝑃)2 21.02 19.03 16.29 13.14

∂= √ 𝑁
Rank (I5) 4 3 2 1

Source: Field survey, 2022

Table 7.5: Seasonal pricing variations for the lean season by channel

Lean Channels
Season for Months I II III IV

December Wt (Pt - 892.12 980.21 987.92 1123.92

Aman January P) 1097.23 1139.80 1391.22 1532.47

Wt (Pt - P) 1989.35 2120.01 2379.14 2656.39

Total number of months(N) 2 2 2 2

Σ𝑊𝑡(𝑃𝑡−𝑃)2
=√ 31.53 32.55 34.49 36.44
𝑁

Rank (I6) 1 2 3 4

Source: Field survey, 2022

58
7.6 Channel Efficiency Measures
Using the composite index formula, the effectiveness of various marketing channels was
determined as the foundation for the ranks of all six performance indicators, and the computed
ranks are shown in Table 7.6. According to the Table, channel IV has the highest marketing
effectiveness, followed by channel I and channel III (both channels achieve the same
composite index number).

Table 7.6 Measures of channel efficiency

Performance Channels
indicator
I II III IV
Producer’s share (I1) 3 2 4 1
Marketing costs (I2) 3 4 2 1
Margin to middlemen 3 4 2 1
(I3)
Price deviation (I4) 1 3 2 4
Peak period seasonal 4 3 2 1
price variability (I5)
Lean period seasonal 1 2 3 4
price variability (I6)
Composite index 2.5 3 2.5 2
∑(Ri/Ni)
Final ranking 2 3 2 1

Note: Ri = Total value of the ranks of performance, N = Total number of performance

indicator

59
 CHAPTER VIII
CONSTRAINTS TO PRODUCTION AND MARKETING OF
AMAN PADDY

8.1 Introduction
The agriculture production and marketing system in Bangladesh is not without issues. At
various stages of the marketing process, from production to sales, growers are dealing with a
variety of issues. The issues listed below are specific to the study area of the researcher, but it
was anticipated that because Aman rice is a uniform commodity, issues faced by farmers and
middlemen in the rice selling chain would be similar across the nation. The examination of
production and marketing restrictions in this section was justified by the idea that the
difficulties faced by farmers and middlemen may decide how effective marketing is, with the
more difficulties present, the less effective marketing is. In the previous section, channel-by-
channel efficiency, or which channel is more efficient than others, was examined. However,
by learning about the problems, one can theoretically infer the market's efficiency, so the
researcher tried to analyze the nature of the issues with the rice marketing system in the
following section.

8.2 Producer’s Constraints

When asked what kinds of issues they are having, the producers in the study areas responded
that they have a variety of issues. Table 8.1 provides an overview of these issues along with a
brief discussion of the main issues.
Shortage of land: The main issue for the producers was a lack of land. Approximately 59%
of farmers responded to the issue. This circumstance forces the farmers to grow rice on rented
or leased land, which immediately affects the amount of Aman rice produced.

Diseases and pests: About 30% of farmers also report having a problem with pests and
diseases. The following illnesses and pests were found to affect rice: wave worm, shoot fly,
and rice blast.

60
Shortage of seed supply and adequate storage facilities: Another issue, according to 23.6
percent of farmers, was this one. Additionally, it was found that 65.8 percent of farmers lacked
modern post-harvest management tools such storage and storage facilities. Farmers sold their
paddy as soon as it was harvested since there were no adequate storage facilities. The farmers
typically used a portion of their residence to store the paddy and other items like cement-filled
containers, gunny bags, etc. However, the techniques used for storing were crude and illogical.
Because of the wetness and bug infestation caused by this, the quality of the paddy was
reduced, resulting in a lower price when it was time to sell.

Malpractice in selling method (Scaling or Weighing): About 31% of the respondents

complained about different frauds, including underquoting prices and scale, or weighing
products.

Lack of market: About 29% of respondents also state that there are issues with the market
because of the low production price and the upkeep of standards and grades. For instance,
when grains are husked, they are split into small pieces (farmers typically utilized traditional
threshing, which involves thrashing the grain with a stick and an ox), and this shattered grain
lowers market demand.

Lack of information exchange: One issue that farmers faced was a lack of interaction or
communication. Sample families also cite a lack of accurate or trustworthy market price,
demand, and supply information as an issue.

Transportation problem: About 70 percent of the farmers in the study were reacting
favorably regarding the transportation issue. The communities were not well connected to the
neighborhood markets. Farmers were able to move their produce to markets that were farther
away and had higher pricing because of the inadequate communication system.

Lack of capital and credit availability: About 48.2% of the sample producers have responded
to the capital shortage problem, while 44% have addressed the credit availability issue. After
harvest, farmers have an acute need for cash. Farmers urgently required cash during this time

61
 even though the price of paddy was always lowest since they had to pay their bills and rent as
well as purchase some essentials. Lack of post-harvest credit frequently forces farmers to sell
their produce as soon as possible after harvest, when prices are low.

Table 8.1 Sample farmers' production, marketing, and institutional issues

Types of problems % Of responses
A. Production aspect
1. Problems of availability of improved rice variety 27
2. Problems of fertilizer supply for rice production 21.3
3. Chemical supply problem 15.5
4. Seed supply problem 21.2
5. Shortage of land 65
6. Disease problem 28
7. Problems of farm implement 17.7
8. Problems of post-harvest technology /storage loss 64
B. Marketing aspect
1. Lack of market 23
2. Problem of price setting 41
3. Malpractice in selling method (scaling or weighing) 22
4. Information exchange problem 63.2
5. Problem of storage facilities 26.3
6. Problems of threshing machine or miller/quality 32.3
C. Financial and institutional aspect
1. Loan repayment problem 46.9
2. Lack of capital availability 42.5
3. Problems of credit facility 68.1
4. Transport problems 34.6
5. Lack of institutional support 13.7
6. Problem of theft 9
7. Problems of excess water (flooding) 28

8.3 Constraints to Aman Rice Value Chain

No player in the study areas made the best advantage of the Aman rice value chain due to
ignorance and a lack of new technologies. According to the study, the following restrictions
exist:

62
 Farmer’s constraints
There were two key obstacles for farmers. The first one dealt with the creation of Aman paddy,
and the second one dealt with value addition.

8.3.1 Production related constraints

Expensive labor, irrigation, and other inputs used in the cultivation of rice. As a result, farmers
did not make the profit they anticipated to pay their production costs. Nearly 90% of the
farmers who responded said their main issues were the high cost of input materials, notably
the high cost of irrigation and fertilizer.
A very low yield was the outcome because modern technologies like the power tiller, disc
harrow, deep tube-well, etc. were unavailable and inaccessible. Additionally, 90% of the
farmers in the study areas used small, fragmented plots of land for the cultivation of paddy.
They were unable to deploy contemporary technologies on their land as a result.

Although most of this study's data came from the previous paddy season, when irrigation was
largely unnecessary barring a few unusual circumstances, however, 70% of farmers noted the
issue of intermittent electricity during the irrigation season. Additionally, the cost of diesel was
exorbitant, making it impossible to obtain timely and adequate irrigation.

Most of the paddy produced by small farmers had to be sold for quick cash. They were unable
to hold out for a lower price in the future.

The development of the roads and highways was lacking, as were the quality of the
transportation amenities. Due to these factors, marketing expenses were considerable. Farmers
were required to sell their goods locally to the Farias and Beparies at a significantly reduced
price at the farm gate.

Lack of agricultural loan support and subsidies. There were no financial institutions to support
credit, and local moneylenders had hefty interest rates. Due to the lengthy credit application
process, marginal farmers were unable to get financial assistance from banks and other NGO's.
Approximately 24% of major farmers have access to bank loans. In the study areas, Krishi

63
 Bank was the only institution offering agricultural financing.

Farmers alleged they were excluded from government procurement programs. Because of this,
they were unable to manage a decent price at the time of harvest.

Most farmers lacked literacy and were ignorant of the pest and disease attacks on their paddy.
They lacked adequate training. More than 78% of farmers said that insect and disease attacks
had a negative impact on their ability to produce paddy.

8.3.1.2 Value Adding Constraints

➢ Most farmers were unaware of the value chain's functions and benefits. Furthermore, the
farmers were unable to benefit from value addition because of urgent monetary needs. The
study discovered the following issues with adding value to paddy fields.
➢ Price fluctuations made adding value by holding paddy risky. Due to the paddy market's
extreme volatility, there was no assurance of receiving a better price when storing.
➢ A distressed sale must be made by farmers. During the harvest season, a significant amount of
paddy was sold to cover family needs and debt payments.
➢ The high cost of transportation contributed to the high marketing costs.
➢ A lack of market data, including prices at nearby and other markets.

64
 CHAPTER IX

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Reviewing the accomplishments of the earlier chapters serves as the introduction to this
section. Broad prospects, a summary, a conclusion, and recommendations were offered based
on these findings.

9.1 Summary of the Findings

The study identifies the most effective marketing channels for promoting and distributing Aman
rice, as well as the potential for expanding market reach and increasing sales through innovative
marketing strategies.

The study's findings are expected to contribute to the existing literature on marketing channel
efficacy in the rice sector, particularly in the context of Aman rice production and marketing in
Bangladesh.

Using the composite index formula, the effectiveness of various marketing channels was
determined as the foundation for the ranks of all six performance indicators, and the channel IV
has the highest marketing effectiveness, followed by channel I, channel II and channel III.

The findings of this study contribute to the development of a more efficient and effective marketing
channel system for Aman rice in Cumilla districts, benefiting farmers, traders, and consumers.

65
9.2 Conclusions and Recommendations
Bangladesh is an agro-based nation, and of its 8.5 crore total work force, around 51 percent is
directly employed in the agriculture industry. When all the members' interests are satisfied
effectively, a market is efficient. When the issues relating to each channel, including the
growers, are effectively resolved, the rice market will become more productive. To protect the
interests of producers on the one hand and of consumers on the other, improvements are
required in several areas, including government pricing and marketing regulations.
Understanding pricing spreads can help one understand how growers, middlemen, and
consumers all earn their living. However, the report offers the following suggestions for
enhancing the current rice marketing system:

The government should increase direct purchases from farmers at the time of harvest when the
price of the paddy is at its lowest to pique their interest in selling to the government depot.
Prices should be provided in cash rather than credit and instantly, and a temporary procurement
center should be opened in the rural areas rather than the upazila market to reduce
transportation costs.
The number of public storage facilities in the region where rice is grown should be increased
so that farmers can store their produce during the harvest season rather than selling it right
away. By keeping storage costs lower than those of private storage facilities, seasonal
fluctuations in rice prices can be reduced. Farmers should be able to easily obtain loans from
the government's credit institution with simple terms and conditions (lower interest rate), and
if possible, they should not be required to sell their paddy at lower prices to repay loans
obtained from regional borrower or private banks.
It would be simple for the government to adopt a centralized effective intervention to achieve
food sufficiency, reduce nutritional deficit, and execute efficient market policy because most
of the rice markets in Bangladesh are effectively integrated.
There are a lot of middlemen in the rice marketing system, which drives up marketing costs
and margins and lowers grower margins. Therefore, the appropriate actions should be done so
that farmers can sell their produce through the effective channel that was mentioned
previously. This means that not only can small farmers sell directly to millers, but also large
and medium farmers.

66
Appointing an efficient and effective monitoring committee that will keep an eye on the
markets, pricing strategies in each market, millers' storage conditions, and any other
inconsistencies in rice marketing channels.
The government should make sure that inputs are delivered smoothly, particularly quality
seeds, and should keep input price fluctuations to a minimum.
More duties for providing producers with market and price information may be placed with
DAM, MoFDM, MoA, and other related government organizations. Since most farmers are
still unaware of current information technology, the material should not be kept just on their
websites but instead distributed in a proper manner.
Transportation and communication systems should be developed, and any illegal activities like
the collection of subscription fees by the road and transportation authority itself and/or others
(local gang), the hijacking/robbery of trucks carrying rice, and so forth, should be effectively
controlled by the government. This is because efficient transportation systems tend to improve
marketing efficiency.
Frequent increases in fuel and electricity costs will raise marketing and transportation
expenses, which customers will pay for through a higher price for rice. Therefore, cutting
government subsidies to the energy industry would not be a wise move. Instead, government
subsidies may be cut to other sectors or sub-sectors that are comparatively less vital to society
than the energy sector.

67
 REFERENCES

[1] Ahmed, R., & Bernard, A. (1989). Rice price fluctuation and an approach to price
stabilization in Bangladesh (Vol. 72). Intl Food Policy Res Inst.

[2] Farruk, M.O (1970), “The Structure and Performance of the Rice Marketing System in
East Pakistan”, Occasional Paper No. 31. Ithaca, N. Y. U.S.A. Cornell University,
Department of Agricultural Economics.

[3] Ismail, Hossain & Verbeke, W. (2010). Evaluation of Rice Markets Integration in
Bangladesh. Lahore Journal of Economics, 15(2). Ravallian, M. (1986), “Testing Market
Integration”, American Journal of Agricultural Economics, Vol. 68(1), February.

[4] Ravallian, M. (1986), “Testing Market Integration”, American Journal of Agricultural

Economics, Vol. 68(1), February.
[5] Ali, F., Parikh, A., & Shah, M. (1994). Measurement of profit efficiency using behavioural and
stochastic frontier approaches. Applied Economics, 26(2), 181-188.
[6] Coelli, T. J., Rao, D. S. P., O'Donnell, C. J., & Battese, G. E. (2005). An introduction to
efficiency and productivity analysis. springer science & business media.
[7] Herdt, R. W., & Mandac, A. M. (1981). Modern technology and economic efficiency of
Philippine rice farmers. Economic Development and Cultural Change, 29(2), 375-399.
[8] Rajagopal, (1980). Economic efficiency of paddy marketing system in Madhya Pradesh: A
case study. Ind. Jr. of Agri. Econ. 41 (4): 583-590.
[9] Kumar, P., & Sharma, R. K. (2003). Spatial price integration and pricing efficiency at the farm
level: A study of paddy in Haryana. Indian Journal of Agricultural Economics, 58(2), 201-217.
[10] Chauhan, B. R. S., Tomar, R. B. S., & Gupta, A. K. (1994). Economic Performance of Paddy
Marketing Channels. A Case Study of Banda District of Uttar Pradesh. Journal of Agricultural
Marketing, 37(2), 6-10.
[11] Inuwa, I. M. S., Kyiogwom, U. B., Ala, A. L., Maikasuwa, M. A., & Ibrahim, N. D. (2011).
Profitability analysis of rice processing and marketing in Kano State, Nigeria. Nigerian Journal
of Basic and Applied Sciences, 19(2).
[12] Noonari, S., Memon, M. I. N., & Jatoi, A. A. (2015). Analysis of rice profitability and
marketing chain: A case study of district Sukkur Sindh Pakistan. International Journal of
Business and Economics Research, 4(3), 133.

68
[13] Ali, M., & Flinn, J. C. (1989). Profit efficiency among Basmati rice producers in Pakistan
Punjab. American journal of agricultural economics, 71(2), 303-310.
[14] BBS (2021), Yearbook of Agricultural Statistics of Bangladesh. Bangladesh Bureau of
Statistics, Statistics Division, Ministry of Planning, Government of the Peoples Republic of
Bangladesh, Dhaka.
[15] Ministry of Finance. 2017. Bangladesh Economic Review. Finance division, Government of
the People’s Republic of Bangladesh, Dhaka.
[16] Balcombe, K., Fraser, I., Rahman, M., & Smith, L. (2007). Examining the technical efficiency
of rice producers in Bangladesh. Journal of International Development: The Journal of the
Development Studies Association, 19(1), 1-16.
[17] Coelli, T., Rahman, S., & Thirtle, C. (2002). Technical, allocative, cost and scale efficiencies
in Bangladesh rice cultivation: a non‐parametric approach. Journal of Agricultural Economics,
53(3), 607-626.
[18] Hossain, M. (2004). Marketing System of Kataribhog Rice in Some Selected areas of Dinajpur
District. MS in Agricultural Economics (Marketing) Thesis, Department of Agribusiness and
Marketing, Bangladesh Agricultural University, Mymensingh. Bangladesh.
[19] Islam, M. Q. (1987). A Study on Market Functionaries Involved in Paddy/Rice Marketing in
Some Selected Areas of Bangladesh. An Unpublished MS Thesis, Department of Agribusiness
and Marketing, Bangladesh Agricultural University, Mymensingh.
[20] Islam, T. M. D. (1998), “A Study on Marketing of Aromatic Rice in Some selected Ares of
Dinajpur District”, An Unpublished M. S. Thesis, Department of Cooperation and Marketing,
Bangladesh Agricultural University, Mymensingh.
[21] Khan, M. B. (2005). Processing of Boro paddy and its marketing in selected areas of Sherpur
district. An Unpublished MS Thesis, Department of Cooperation and Marketing, Bangladesh
Agricultural University, Mymensingh.
[22] Miah, M. A. R. (1999). An Analysis of Boro paddy marketing in selected areas of Tangail
district. Unpublished MS Thesis, Department of Agribusiness and Marketing, Agricultural
University, Mymensingh.
[23] Tasnoova, S., & Iwamoto, I. (2006). Kataribhog rice marketing system in Dinajpur District,
Bangladesh. Memoirs of the Faculty of Agriculture, Kagoshima University, 41(20060220), 19-
50.

69
[24] Uddin, M. K. (1997). A study on marketing of Boro paddy in some selected areas of Jamalpur
district. Unpublished MS Thesis, Department of Cooperation and Marketing.
[25] Zaman, Z. U. Mishima, T. and Hisano, S. (2000), “The Benefits of Market Participation and
the Rice Marketing Systems in Bangladesh”, The Review of Agricultural Economics, Vol. 56
(2000) March, PP. 195-206.
[26] Zaman, Z. U. Mishima, T. Hisano, S. and Gergely, M. (2001), “The Role of Rice Processing
Industries in Bangladesh: A case Study of the Sherpur District”, The Review of Agricultural
Economics, Vol. 57 (2001) March, PP. 121-133.
[27] Bapari, M. Y. (2016). Productivity, Profitability and Resource Use Efficiency: A comparative
analysis between conventional and high yielding rice in Rajbari district, Bangladesh.
Traektoriâ Nauki= Path of Science, 2(10), 5-1.
[28] Hasan, M.M., Osmani, M.A.G. and Hossain, M.E. (2017). Socio-economic characteristics and
profitability analysis of rice producing farmers at Jhenaidah district in Bangladesh.
International Journal of Business, Social and Scientific Research, 5(3):13–17.
[29] Akter, S. (1983), “A Study of Boro Paddy Prices in Some Selected Areas of Tangail District-
An Economic Analysis”, M.S. Thesis, Department of Cooperation and Marketing, Bangladesh
Agricultural University, Mymensingh.
[30] Sujan, M.H.K., Islam, F., Azad, M.J. and Rayhan, S.J. (2017). Financial profitability and
resource use efficiency of boro rice cultivation in some selected area of Bangladesh. African
Journal of Agricultural Research, 12(29): 2404–2411.

70
 APPENDIX

Table 1: Total Rice (Aus, Aman and Boro) Area (000’ha), Production (000’ton) and
Yield (ton/ha) of Bangladesh

Area (000’ha) Production (000’ton) Yield (ton/ha)

Year Aus Aman Boro Aus Aman Boro Aus Aman Boro
1971-72 3001.60 5410.70 866.40 2341.00 5695.00 1738.00 0.78 1.05 2.01
1972-73 2930.00 5713.80 1002.60 2243.00 5587.00 2071.00 0.77 0.98 2.07
1973-74 3107.90 5718.70 1222.70 2801.00 6699.00 2220.00 0.90 1.17 1.82
1974-75 3179.10 5449.90 1161.20 2859.00 6000.00 2250.00 0.90 1.10 1.94
1975-76 3419.90 5759.90 1147.90 3229.00 7045.00 2286.00 0.94 1.22 1.99
1976-77 3217.10 5806.40 854.20 3014.00 6905.00 1650.00 0.94 1.19 1.93
1977-78 3161.70 5771.20 1093.70 3103.00 7422.00 2239.00 0.98 1.29 2.05
1978-79 3234.60 5805.10 1071.80 3287.00 7429.00 1929.00 1.02 1.28 1.80
1979-80 3036.30 5972.70 1148.40 2809.00 7303.00 2427.00 0.93 1.22 2.11
1980-81 3111.20 6035.80 1160.00 3289.00 7964.00 2630.00 1.06 1.32 2.27
1981-82 3145.60 6010.30 1301.70 3270.00 7209.00 3152.00 1.04 1.20 2.42
1982-83 3158.10 5993.00 1432.80 3065.00 7516.00 3548.00 0.97 1.25 2.48
1983-84 3138.70 6006.70 1401.20 3222.00 7843.00 3350.00 1.03 1.31 2.39
1984-85 2937.60 5710.20 1574.40 2783.00 7930.00 3909.00 0.95 1.39 2.48
1985-86 2844.90 6018.90 1533.20 2828.00 8542.00 3671.00 0.99 1.42 2.39
1986-87 2903.60 6052.40 1651.70 3130.00 8267.00 4010.00 1.08 1.37 2.43
1987-88 2788.30 5590.40 1942.60 2993.00 7690.00 4731.00 1.07 1.38 2.44
1988-89 2683.46 5100.80 2438.30 2856.00 6857.00 5831.00 1.06 1.34 2.39
1989-90 2255.00 5702.50 2453.60 2475.00 9202.00 6033.00 1.10 1.61 2.46
1990-91 2107.30 5775.30 2547.90 2261.00 9167.00 6357.00 1.07 1.59 2.49
1991-92 1915.90 5692.30 2634.90 2179.00 9269.00 6807.00 1.14 1.63 2.58
1992-93 1735.10 5843.70 2598.90 2075.00 9680.00 6586.00 1.20 1.66 2.53
1993-94 1649.40 5843.30 2580.80 1850.20 9419.20 6772.20 1.12 1.61 2.62
1994-95 1663.75 5594.17 2663.54 1790.70 8504.00 6538.70 1.08 1.52 2.45
1995-96 1541.85 5646.40 2753.57 1676.00 8790.00 7220.60 1.09 1.56 2.62
1996-97 1592.29 5802.49 2782.59 1870.00 9551.00 7460.00 1.17 1.65 2.68
1997-98 1565.88 5808.45 2888.56 1874.60 8849.80 8137.30 1.20 1.52 2.82
1998-99 1424.26 5165.50 3526.67 1616.90 7735.80 10551.90 1.14 1.50 2.99
1999-00 1351.32 5704.87 3651.89 1734.00 10306.00 11027.00 1.28 1.81 3.02
2000-01 1325.23 5709.96 3761.84 1916.00 11249.00 11920.50 1.45 1.97 3.17
2001-02 1242.18 5647.22 3771.34 1808.00 10726.00 11766.00 1.46 1.90 3.12
2002-03 1243.72 5682.11 3844.84 1850.70 11118.40 12222.20 1.49 1.96 3.18

71
2003-04 1202.58 5677.61 3943.50 1831.80 11520.50 12837.10 1.52 2.03 3.26
2004-05 1024.68 5279.92 4063.79 1500.00 9819.00 13837.10 1.46 1.86 3.40
2005-06 1034.27 5429.01 4065.81 1745.00 10810.00 13975.30 1.69 1.99 3.44
2006-07 905.71 5415.62 4250.10 1512.00 10841.00 14965.00 1.67 3.13 3.52
2007-08 918.66 3651.89 4607.85 1507.00 11427.0 17762.00 1.64 3.16 3.85
2008-09 1065.56 3676.84 4716.31 1895.00 11620.5 17809.00 1.78 3.25 3.78
2009-10 984.22 3771.34 4706.60 1709.00 12266.0 18059.00 1.74 3.27 3.84
2010-11 1112.87 3799.84 4770.00 2132.82 12422.2 18616.00 1.92 3.28 3.90
2011-12 1200.00 3823.5 4780.00 2333.00 12537.1 18759.00 1.94 3.3 3.92
2012-13 1053.00 3923.79 4760.00 2370.00 12937.1 18760.00 2.25 3.32 3.94
2013-14 1122.22 3936.81 4676.00 2130.44 13075.3 18776.88 2.28 3.33 3.98
2014-15 980.45 3950.1 4553.23 2343.12 13165.0 19876.77 3.01 3.4 3.70
2015-16 1011 3957.85 4897.32 2098.44 13462.0 17865.00 1.98 3.4 3.87
2016-17 1098.33 4006.31 4760.32 1908.76 13609.0 18963.98 1.95 3.42 3.65
2017-18 1121.43 4116.6 4567.92 2098.65 14059.0 17655.35 2.21 3.43 3.50
2018-19 998.87 4270 4897.22 2198.09 14654.0 18545.56 2.00 3.48 3.94
2019-20 1021.75 4310 4765.98 2299.08 15003.0 19876.45 2.98 3.53 3.89
2020-21 1269.55 4460 4768.32 2197.65 15737.0 19558.97 2.87 3.13 3.92

72