Marketing

Role of Storage in Agricultural Marketing in Bangladesh

Storage of farm products is an essential marketing service. It is important at various stages of the marketing sequence from producer to consumer—in assembly, in preparation for consumption and in distribution. Inadequate and inefficient storage facilities can result in serious wastage of foodstuff and aggravate seasonal fluctuations.

Storage facilities are needed at the farm and at all stages of marketing. In countries where there are large-scale farming and where grain is produced on a commercial scale, only a very small portion of the grain produced is stored on the farm and this is generally confined to seed and livestock feed. The surplus which is very considerable is usually stored most in country elevators.

Later some may be stored at the port elevators for export. In countries where there are small scale farms as in Japan and most of the developing countries, such farm products as rice corn and wheat form the staple diet of the people and as such even in surplus foodgrain producing countries like Thailand and Myanmar, a good portion of the grain produced is retained by the farmer for home consumption and for seed purposes.

In food deficit countries where average holdings are smaller the quantity retained by the farmer may be much higher. For example, farm storage of rice in Japan averages about 50 per cent. In Bangladesh (formerly East Pakistan) the Master Survey of Agriculture in 1963-64 conducted by the East Pakistan Bureau of Statistics showed that on the average as much as 90 percent of paddy produced is retained by the farmer for home consumption and for seed purposes.

It was estimated that more than 10 million tons of rice was lost in the world in 1947-48 because of inadequate storage. According to other estimates, losses in storage from rodents, insects and other sources vary from a few per cent to as much as one third. Substantial product savings can be brought about by wider application of techniques already available and by further construction of storage, drying and fumigating facilities.

The San Lorenzo irrigation and settlement project authority in Peru found it necessary to provide storage for settler’s grain while awaiting sale with the alternative that heavy wastage losses would discourage continued production. Further planting of mango trees in suitable areas of Columbia were held up because about 20 per cent of the existing crop was wasted for lack of enterprises to freeze the pulp of those which could not be sold fresh at a profit.

The seasonality of production, coupled with the low price elasticities of food grain and also with the limited resources of the farmers are the causes of wide fluctuations in the prices of food grains in most of the developing countries. When grain floods the market immediately after the harvest, prices generally fall to the lowest level of the year and the larger the crop the greater the fall.

This is the time when most farmers have to sell their produce because they need cash or in debt or have no adequate storage facilities. F.A.O. studies have shown that the seasonal price variation is very wide in those countries where the marketing system is less developed with inadequate storage facilities. It may be as high as 300 to 400 percent as in the case of maize price at some of the markets in Nigeria and Dahomey.

Even in Pakistan, there are distinct fluetuations in prices, although the seasonal variation may not be as great as in the above countries. For example, in Pakistan (former West Pakistan) there is usually a very sharp break in prices of wheat at the begining of the harvesting season in May and it remains low for the next two months or so after which it climbs to a peak just before the next harvest.

The same is true of the rice prices in Bangladesh. Here the Aman crop accounts for 70 percent of the total annual price movement. Therefore, generally the December price is the lowest in any year because it is the peak supply period of the Aman rice. From January prices begin to rise and the trend continues upto June. In July, with the arrival of the Aus crop in the market the prices begin to fall and continue the decline.

Marketing of agricultural products in Bangladesh like other underdeveloped countries, is characterized by large sales by the grower immediately after harvest which cause a slump in the market and as a result of which the grower receives a very low price for his crop. One of the important reasons why he is constrained to dispose of his produce immediately after harvest is the lack of facility for storing his produce and to borrow against it.

A number of Commissions on Agriculture and credit appointed in the Indo-Pak-Bangla sub-continent recommended for establishment of licensed warehouses to remove the handicaps. An act for regulation of licensed warehouses was passed in 1946 in the former North-West frontier province of Pakistan but it was never implemented.

The East Pakistan Licensed Warehouse Ordinance, 1959 was promulgated through-out the country in September, 1959. It provides for the re-gulation of warehouses setup under the Act, defines the duties of the warehouseman, makes the warehouse receipt a negotiable instrument and provides for licensing and regulation of weighers and graders working in the warehouses.

It is a permissive act—any person desirous of running a warehouse under the Ordinance shall be subjected to the regulations prescribed under the Ordinance. In Bangladesh no special types of storage or warehousing facilities are available in the villages, while the godowns available in the towns for storage of the farm produce are inadequate and defective in construction wherever the godowns are available for storage of farm produce they are not built for protection against moisture, vermin, etc. Organised warehouses as they exist in foreign countries have not made their appearance so far in this country.

Provision of cold storage facilities is essential for orderly marketing of perishable farm products, especially for fresh fruits and vegetables, viz, apples, potatoes, potato seeds, ;eggs, fish and meat. Absence of cold storage facilities accounts for wide seasonal fluctuations in the prices of perishable farm produce. For example, in Bangladesh, the prices of table potatoes generally goes down to 12-19 paisa per seer in the har-vesting season, which rises to Tk. 1.50 to Tk. 2.00 per seer during the end of the season.

In 1966 the cold storage capacity of the country was 4.7 million cubic feet. It was proposed to increase the capacity to 13 million cubit feet by 1970. It is contemplated to establish markets for fresh fruits and vegetables in the main assemblying markets of the country where storage facilities shall also be provided.

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