Marketing

Is Regulated Market for Jute possible in Bangladesh

When we shall consider the feasibility of establishing regulated markets in jute in Bangladesh we should first consider the cost of establishing such markets in jute. The cost of establishing a regulated jute market will include land and possibly goodwill of an established market, fencing and buildings, including an office, weighing room, godown, etc.

Recurring charges would include salaries of the officer-in-charge and his subordinates. Income would include license fees for dealers, weighmen etc.’

The Royal Commission on Agriculture as well as a number of subsequent official committees on jute have suggested the establishment of a number of regulated markets in some of the primary and secondary markets in Bangladesh (formerly East Pakistan), as a means of reducing marketing costs and increasing the farmer’s share of the price.

In a research study some respondents were asked as to the possibility of regulated markets in this country. 37% of the respondents considered that the introduction of regulated markets would be useful to them only if the same could be properly organised. Some of the respondents mentioned that if there were enough banking and storage facilities in these markets and if these were managed properly it would be possible to eliminate some of the wastes prevalent in the existing marketing process which might have a favourable effect on their business.

However, 30 % felt that regulated markets would affect their business adversely. In Bangladesh, the possibility of regulated markets is very shy. Under the existing circumstances—social and economic—regulated markets would not be suitable. We may place the following grounds in support of our opinion :

(1) In the present situation regulated markets in the proper sense of the term would not be practicable as the same would presuppose honest and efficient supervision and the existence of intelligent and literate growers and lower intermediaries using them which conditions do not exist at present.

(2) Regulated markets would impose restrictions on the time place and terms of transactions. As jute growers in Bangladesh are small farmers, they prefer to sell at their homes and as transport is mostly seasonal and expensive and as purchase of jute requires considerable selection, restriction would only raise the cost of trade by introducing more formalities.

(3) For a commodity like raw jute, which is dependent on export outside the country, imposition of control on internal trade would kill the incentives of the traders which might adversely affect the machinery as a whole.

In fine, the success of a scheme of regulated markets in jute would depend in no small measure are how far the scale of production as well as of marketing can be substantially increased and how far these markets can be efficiently and honestly administered. If these conditions do not obtain, regulated markets, although theoritically an idea, would not prove successful.

The Royal Commission on Agriculture examined the question as to whether regulated markets should be established under ad hoc legislation, or under bye-laws framed under the Municipalities Act or the District Boards Act. For Berar, special legislation was passed and the same was also done in Bombay. The Royal Commission came to the conclusion that special legislation was advisable and made recommendations to this effect.

But the Bengal Jute Enquiry Committee did not recommend the establishment of regulated markets under special legislation. The committee advised that an early endeavour be made, without legislation, to establish regulated markets in a few places, where the assistance of the buyers could be relied on.

It also believed that such assistance will not be difficult to obtain and that there are many places where local influence would lend its support in eliminating unfair competitiion. The markets thus established would afford all the advantages to sellers, such as standard weights and market information which the regulated markets under legislative protection do and, if necessary, they could be run through a committee representing growers as well as buyers.

Inspite of the above facts some are of the opinion that legislation is necessary. Their opinion is : “It is not possible to start even a few regulated markets in Bengal without legislation. Unless there is a danger of breach of the peace, the right to open markets in Bengal outside the limits of a muncipality is unrestricted.

Within a muincipal area, markets can be established either by the municipality or with its sanction. As soon as any regulated market will be started… the middlemen are likely to boycott it and try to make a failure of it, by starting an unregulated market close by. If the regulated market is to attain success, all unregulated markets within a certain radius will have to be prohibited by legislation. The initiative for starting such organised markets most come from the Govermment.

As the Royal Commission on Agriculture observes : ‘The need for the establishment of regulated markets may not in the begining be appreciated. This makes it necessary that the first few experiments with regulated jute markets should be guided by able and sympathetic Government officers who would try their best to make such institutions a success”

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