Secondary Crops Based Farming Systems and Their Integration with Processing and Marketing in Bangladesh

UNESCAP-CAPSA The Centre for Alleviation of Poverty through Secondary Crops’ Development in Asia and the Pacific (CAPSA) is a subsidiary body of UNESCAP. It was established as the Regional Co- ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific (CGPRT Centre) in 1981 and was renamed CAPSA in 2004.

Objectives CAPSA promotes a more supportive policy environment in member countries to enhance the living conditions of rural poor populations in disadvantaged areas, particularly those who rely on secondary crop agriculture for their livelihood, and to promote research and development related to agriculture to alleviate poverty in the Asian and Pacific region.

Functions 1. Co-ordination of socio-economic and policy research on secondary crops. 2. Networking and partnership with other international organizations and key stakeholders. 3. Research and analysis of trends and opportunities with regard to improving the economic status of rural populations. 4. Production, packaging and dissemination of information and successful practices on poverty reduction. 5. Dissemination of information and good practices on poverty reduction measures. 6. Training of national personnel, particularly national scientists and policy analysts. 7. Advisory Services.

CAPSA Working Papers currently available:

Working Paper No. 86 Enhancing Sustainable Development of Diverse Agriculture in Viet Nam by Dao The Anh, Le Duc Thinh and Vu Trong Binh

Working Paper No. 85 Enhancing the Sustainable Development of Diverse Agriculture Through CGPRT Crops in Myanmar: Current Status of CGPRT Crop Agriculture and Identification of its Development Constraints by Aung Kyi

Working Paper No. 84 Status and Prospects of Feed Crops in Thailand by Chamras Rojanasaroj, Siriporn Wonlertprayoon, Pachara Krittaphol, Wareeporn Phojeen, Panee Pattamawipak and Sopapan Ninragsa

Working Paper No. 83 Enhancing Sustainable Development of Diverse Agriculture in Sri Lanka by A.R.M. Mahrouf

Working Paper No. 82 Enhancing Sustainable Development of Diverse Agriculture in India by R.P. Singh, N.P. Singh and Ranjit Kumar

Working Paper No. 81 The Status and Prospect of Feed Crops in Indonesia by Dewa K.S. Swastika, Made O.A. Manikmas, Bambang Sayaka and Ketut Kariyasa

Working Paper No. 80 Enhancing Sustainable Development of Diverse Agriculture in Bangladesh by Jahangir Alam

Working Paper No. 79 Prospects of Feed Crops in Malaysia by Tunku Mahmud bin Tunku Yahya and Sarmin bin Sukir (Continued on inside back cover)

Secondary Crops Based Farming Systems and Their Integration with Processing and Marketing in Bangladesh

“UNESCAP-CAPSA: Centre for Alleviation of Poverty through Secondary Crops’ Development in Asia and the Pacific”

The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area of its authorities, or concerning the delimitation of its frontiers or boundaries. The opinions expressed in signed articles are those of the authors and do not necessarily represent the opinion of the United Nations.

WORKING PAPER 87

Secondary Crops Based Farming Systems and Their Integration with Processing and Marketing in Bangladesh

Jahangir Alam

UNESCAP-CAPSA Centre for Alleviation of Poverty through Secondary Crops’ Development in Asia and the Pacific Table of Contents

Page List of Tables ...... ix List of Figures ...... xi List of Abbreviations ...... xiii Foreword ...... xv Acknowledgements ...... xvii Executive Summary ...... xix

1. Introduction 1.1 The main findings of the first phase study ...... 1 1.2 Research issues ...... 3 1.3 Objectives of the study ...... 3 1.4 Scope of the study ...... 4

2. Conceptual Framework and Methodology 2.1 Conceptual framework ...... 5 2.2 Research methodology ...... 5 2.2.1 Selection of crops ...... 5 2.2.2 Selection of research sites ...... 6 2.2.3 Selection of respondents ...... 6 2.2.4 Sampling technique ...... 8 2.2.5 Timeframe of the study ...... 8 2.2.6 Methods of analysis ...... 8 2.3 Formation of study team ...... 9 2.4 Concluding summary ...... 10

3. Profile of the Study Site, the Respondents and Their Household 3.1 Profile of the study site ...... 11 3.1.1 Geographic and administrative settings ...... 11 3.1.2 Demographic profile ...... 11 3.1.3 Economic profile ...... 13 3.1.4 Agricultural profile ...... 13 3.1.5 Extent of unemployment and poverty ...... 14 3.1.6 Extent of environmental problems ...... 15 3.1.7 Condition of public infrastructure relevant to CGPRT farming and industry ...... 15 3.2 Profiles of the respondents and their household ...... 16 3.2.1 The respondents’ profile ...... 16 3.2.2 The household profile ...... 17 3.3 Concluding summary ...... 19

4. Analysis of CGPRT Farming Systems 4.1 Average size of farm ...... 21 4.2 Patterns of cultivation ...... 21 4.3 Labour use ...... 24 4.4 Farm productivity ...... 24

v 4.5 Cost-revenue structures and farm profitability ...... 26 4.6 Profile of household consumption of CGPRT crops ...... 30 4.7 Profile of household level processing of CGPRT crops ...... 30 4.8 The role of diversified farming systems in risk mitigation ...... 32 4.9 Impacts on employment, income and environment ...... 32 4.10 Potential and constraints to farming operations ...... 33 4.10.1 Potential of farming operations ...... 33 4.10.2 Constraints to farming operations ...... 33 4.11 Concluding summary ...... 33

5. Analysis of the Marketing System of CGPRT Products 5.1 Forms of CGPRT crop based products traded and the distribution channel ...... 35 5.1.1 Type of products processed from CGPRT crops by large-scale processors ...... 35 5.1.2 Products processed from CGPRT crops by small-scale processors .... 36 5.1.3 De-husking pulses and the distribution channel ...... 37 5.1.4 Feed miller ...... 38 5.2 Factory gate price and margin of CGPRT products ...... 38 5.2.1 Marketing margins of the traders of large-scale processed products ... 38 5.2.2 Marketing margins of the traders of processed pulses ...... 41 5.2.3 Marketing margins of the traders of feed meal ...... 41 5.3 Nature of market structure and competition ...... 41 5.4 Potential and constraints in the marketing system ...... 42 5.5 Concluding summary ...... 42

6. Analysis of Industrial CGPRT Product Processing 6.1 Types of processed products and annual production ...... 43 6.1.1 Types of processed product by large-scale processors ...... 43 6.1.2 Types of product processed by small-scale processors ...... 44 6.2 Production capacity and its utilization by different industrial processors ...... 46 6.3 Cost-revenue structure and business profitability ...... 46 6.3.1 Business profitability of large-scale processors ...... 46 6.3.2 Business profitability of small-scale processors ...... 49 6.4 Potential and constraints to industrial processing businesses ...... 49 6.5 Potential and constraints to small-scale processors ...... 50 6.6 Concluding summary ...... 50

7. Analysis of Institutional Support 7.1 Economic policies ...... 51 7.1.1 Price support ...... 51 7.1.2 Credit support to farming, processing and marketing ...... 51 7.1.3 Food diversification policy ...... 51 7.1.4 International trade policies ...... 52 7.1.5 Investment policy ...... 52 7.2 Infrastructure provision ...... 53 7.2.1 Irrigation ...... 53 7.2.2 Transportation ...... 53 7.3 Development of farm, processing and marketing technology ...... 53 7.3.1 Marketing ...... 53 7.3.2 Agro-processing ...... 54 7.3.3 Development of the extension service network ...... 55

vi 7.3.4 Institutional settings ...... 56 7.3.5 Potential and constraints to the development of technology in the extension service network ...... 57 7.4 Concluding summary ...... 57

8. Prospect for Enhancing the Sustainable Development of Diverse Agriculture 8.1 Overall assessment of potential ...... 59 8.2 Overall assessment of constraints ...... 60 8.3 Search for strategies and policies to enhance sustainable development of diverse agriculture ...... 60

9. Conclusion and Recommendations ...... 63

10. References ...... 65

Appendices ...... 67

vii

viii List of Tables

Page Chapter 2 Table 2.1 Size of the sample covered by the study ...... 6 Table 2.2 Number of CGPRT crop growers covered by the study ...... 8 Table 2.3 Timeframe of the study ...... 8

Chapter 3 Table 3.1 Administrative settings of the selected areas ...... 12 Table 3.2 Economic profile of the study areas (1999-2000) ...... 13 Table 3.3 Area, yield and production of major cereals and CGPRT crops in the study areas (1999-2000) ...... 14 Table 3.4 Extent of unemployment and poverty at the study sites ...... 15 Table 3.5 Affect of floods in Bangladesh agriculture ...... 15 Table 3.6 Length of roads in the study areas ...... 15 Table 3.7 Age distribution of stakeholders in the survey ...... 16 Table 3.8 Educational distribution of stakeholders under study ...... 17 Table 3.9 Occupational status of the CGPRT crop based stakeholders ...... 17 Table 3.10 Household profile of the surveyed samples ...... 18 Table 3.11 Income of the CGPRT crop based stakeholders (taka) ...... 18 Table 3.12 Landholdings of the surveyed households by tenure status ...... 19

Chapter 4 Table 4.1 Average farm size of the CGPRT farmers and the share of CGPRT crops in the study areas ...... 22 Table 4.2 CGPRT based cropping patterns in the study areas ...... 23 Table 4.3 Crop calendar for the CGPRT crops in the study areas ...... 23 Table 4.4 Labour use for CGPRT based cropping patterns in the study areas ...... 24 Table 4.5 Per hectare production and value of CGPRT crops in the study areas ...... 25 Table 4.6 Production of CGPRT based cropping patterns in the study areas ...... 25 Table 4.7 Use of inputs in CGPRT crop production ...... 26 Table 4.8 Per hectare cost of production of selected CGPRT crops (taka) ...... 27 Table 4.9 Profitability of CGPRT crop production ...... 28 Table 4.10 Profitability of CGPRT crop based cropping patterns ...... 29 Table 4.11 Household level consumption patterns of CGPRT crops ...... 30 Table 4.12 Percentage of CGPRT crops processed by different devices and the means of processing ...... 31 Table 4.13 Cost of processing CGPRT crops and their products at the household level in the study areas (Using traditional methods) ...... 31 Table 4.14 Share of CGPRT crop income to agricultural and total household income in the study areas ...... 32 Table 4.15 Regression results for household income ...... 32 Table 4.16 Potential of CGPRT crops in the farming system ...... 34 Table 4.17 Constraints to CGPRT based cropping systems ...... 34

ix Chapter 5 Table 5.1 Type of product processed from CGPRT crops by large-scale processors ...... 35 Table 5.2 Profile of processed CGPRT products distributed by small-scale producers in different locations ...... 36 Table 5.3 Marketing channel of feed meal ...... 38 Table 5.4 Marketing margin of the CGPRT crop based products of large-scale processors (taka) ...... 39 Table 5.5 Marketing margin of different types of pulse processors (taka/quintal) ...... 40 Table 5.6 Marketing margin of feed millers (taka/quintal) ...... 40

Chapter 6 Table 6.1 Types of processed products and annual production by large-scale processors 44 Table 6.2 Types of processed products and annual production by small-scale processors 45 Table 6.3 Production capacity and its utilization by different industrial processors ...... 46 Table 6.4 Cost-revenue structure and business profitability of large-scale processors ..... 48 Table 6.5 Cost-revenue structure and business profitability of small-scale processors ..... 49

Appendices Table A.1 Area, production and yield of major cereals in Bangladesh ...... 67 Table A.2 Area, production and yield of selected CGPRT crops in Bangladesh ...... 68 Table A.3 Per hectare cost and return of modern rice cultivation in Bangladesh ...... 71 Table A.4 Per hectare cost and return of modern wheat cultivation in Bangladesh ...... 72 Table A.5 Duration of the cropping season and crops cultivated in each season ...... 72 Table A.6 Per unit cost and return of CGPRT crop based products of large-scale processors ...... 73 Table A.7 Per unit cost-revenue structure and business profitability of small-scale processors ...... 74 Table A.8 Public research expenditure in Bangladesh compared to other regions of the world ...... 74 Table A.9 Public research expenditure in Bangladesh compared to other regions of the world (lakh taka) ...... 75 Table A.10 New varieties of CGPRT crops released by BARI ...... 76

x List of Figures

Page Chapter 2 Figure 2.1 Map of Bangladesh showing the study areas ...... 7

Chapter 5 Figure 5.1 Marketing channel of pulses ...... 37

Chapter 7 Figure 7.1 Organizational structure of the Ministry of Agriculture ...... 58

xii List of Abbreviations

Organizations AGRIDIV : Identification of Pulling Factors for Enhancing the Sustainable Development of Diverse Agriculture in Selected Asian Countries BADC : Bangladesh Agricultural Development Corporation BARC : Bangladesh Agricultural Research Council BARI : Bangladesh Agricultural Research Institute BJRI : Bangladesh Jute Research Institute BRRI : Bangladesh Rice Research Institute CAPSA : Centre for Alleviation of Poverty through Secondary Crops’ Development in Asia and the Pacific CGPRT : Coarse grains, pulses, roots and tubers DAE : Department of Agricultural Extension DFID : Department of International Development EEC : European Economic Community ESCAP : Economic and Social Commission for Asia and the Pacific GOB : Government of the People’s Republic of Bangladesh MOA : Ministry of Agriculture NGOs : Non-governmental Organizations OECD : Organisation for Economic Co-operation and Development SOEs : Small and Medium Enterprises

Measures CPI : Consumer Price Index DRC : Domestic Resource Cost EPC : Effective Protection Co-efficient ERP : Effective Rate of Protection Kcal : Kilo Calorie kg : Kilogram NPC : Nominal Protection Co-efficient NRP : Nominal Rate of Protection SID : Simpson Index of Diversity SP : Specialization Index

Commerce and Trade c.i.f. : Cost, Insurance and Freight f.o.b. : Free on Board AMS : Aggregate Measure of Support HYV : High Yielding Variety HIES : Household Income and Expenditure Survey PSE : Producer Subsidy Equivalent PRSP : Poverty Reduction Strategy Paper RNF : Rural Non-Farm Shogorip : Shosha Godam Rin Prokalpa (Crop Storage Credit Project) VAT : Value Added Tax

xiii Local Terms Cheena : Proso millet (Penicum miliceum L.) Gur : Molasses (Brown Sugar) Kaon : Foxtail millet (Citera italica) Lakh : One Lakh = One hundred thousand Taka : Bangladeshi Currency (Tk 59 = US$ 1, approximately, in the reference year, 2003-2004) Upazila : Sub-district Char : Raised land mass in the river formed by silt SAAO : Sub-assistant Agricultural Officer

xiv Foreword

Most Asian countries succeeded in multiplying major cereal production through the ‘Green Revolution’. This was made possible by the introduction of high yielding varieties and policy support which promoted the construction of irrigation facilities and the use of modern inputs such as chemical fertilizers and pesticides. Recently however, the growth in the productivity of major cereals has reached a plateau. Agricultural diversification has a number of positive effects, among others, food security, risk mitigation, labour absorption and the conservation of biodiversity. It is crucial to be aware of the driving forces and constraints to agricultural diversification to formulate policy options which realize the coexistence of sustainable agricultural development and poverty reduction in rural areas.

Responding to this vital need, UNESCAP-CAPSA conducted a three-year research project, “Identification of Pulling Factors for Enhancing the Sustainable Development of Diverse Agriculture in Selected Asian Countries (AGRIDIV)”, from April 2003, in collaboration with eight participating countries, namely Bangladesh, India, Indonesia, Lao People’s Democratic Republic, Myanmar, Sri Lanka, Thailand and Viet Nam.

It is my pleasure to publish “Secondary Crops Based Farming Systems and Their Integration with Processing and Marketing in Bangladesh” as a result of the second phase of the Bangladesh country study of the project. This volume presents rural surveys and case studies to collect primary data to support policy recommendations to realize poverty alleviation through agricultural diversification.

I thank Dr. Jahangir Alam for his efforts. Continuous support from the Bangladesh Agricultural Research Council (BARC) is highly appreciated. Prof. Hitoshi Yonekura, Graduate School of Agricultural Science, Tohoku University, Mr. Tomohide Sugino and Dr. Parulian Hutagaol provided useful guidance at every stage of the study as Regional Advisor, Project Leader and Associate Project Leader respectively. I extend thanks to Mr. Matthew Burrows for his editing.

Finally, I would like to express my sincere appreciation to the Government of Japan for its financial support of the project.

November 2005 J.W. Taco Bottema Director UNESCAP-CAPSA

xvi Acknowledgements

This publication is the outcome of my research work for the second phase of the project entitled “Identification of Pulling Factors for Enhancing the Sustainable Development of Diverse Agriculture in Selected Asian Countries” financed by the UNESCAP Centre for Alleviation of Poverty through Secondary Crops Development in Asia and the Pacific (CAPSA). I would like to thank the international organization for financing, supervising and publishing this study. Many academicians and researchers made significant contributions in conducting this study. Among them, I note a deep sense of gratitude to Mr. Fakir Azmal Huda, Assistant Professor and Dr. M. Akteruzzaman, Professor, Department of Agricultural Economics, Mr. Nazmul Islam Bhuiyan, M. S. in Agricultural Economics (Marketing), Bangladesh Agricultural University (BAU), Mymensingh, Mr. Mohammed Ismail Khan, Assistant Professor, Department of Agricultural Economics, Bangabandhu Sheik Mujibur Rahman Agricultural University (BSMRAU), Salna, Gazipur, and Dr. Md. Abdul Quayyum, Principal Scientific Officer, On-Farm Research Division, Bangladesh Agricultural Research Institute (BARI) for collection, supervision and analysis of data for this study. Other members of the study team, namely Dr. Kazi Mesbahul Alam, Principal Scientific Officer, Agricultural Economics Division, BARI, Dr. S.M. Fakhrul Islam, Associate Professor, Department of Agricultural Economics, BSMRAU, Ms. Fatema Wadud, Deputy Director, Shoshaya Godam Rin Prokalpa, Directorate of Agricultural Marketing (DAM), Dhaka, Mr. Md. Fozlul Haque, Deputy Director (Monitoring), Directorate of Agricultural Extension (DAE), Dhaka, Mr. Ershadullah Khan, Deputy General Manager (Research), Bangladesh Bank, Dhaka, Mr. Md. Abdullah, Deputy General Manager (Statistics), Bangladesh Bank and Dr. S.M. Elias, Former Director General, Bangladesh Jute Research Institute (BJRI), Dhaka attended meetings and provided information, guidance and comments. I am grateful to all of them. There were many people who contributed in some way to this research work. There is space to mention only a few of them. I am thankful to several post–graduate students of BAU for their assistance in collecting data from the respondents through a structured questionnaire. Also I acknowledge my debt to all farmers, processors and market intermediaries of the selected secondary crops, without whose willingness to provide information this study would not have been possible. I am particularly grateful to Mr. Tomohide Sugino, AGRIDIV Project Leader, Dr. M. Parulian Hutagaol, Associate Project Leader, UNESCAP-CAPSA, Indonesia and Professor H. Yonekura, Tohoku University, Japan for supervising the study. I am also grateful to Dr. Ir. Taco Bottema, Director, CAPSA for his support of this study. Above all, I must record my sincere gratitude to Dr. M. Nurul Alam, Executive Chairman, Bangladesh Agricultural Research Council (BARC), for allowing me to conduct this study.

Jahangir Alam Member Director Agricultural Economics and Rural Sociology Division Bangladesh Agricultural Research Council (BARC)

xvii

xviii Executive Summary

Introduction

This report is an outcome of the study on the second phase of the AGRIDIV project sponsored by UNESCAP-CAPSA. The first phase of the study (Alam, 2005) was confined to the analysis of data on production and profitability of some selected secondary crops (secondary to major staple foods) in different locations of Bangladesh. The profitability of secondary crop based farming systems was not examined in the first phase. Some of the secondary crops have high potential for agro-processing. An investigation on the magnitude of profit earned by the large and small-scale processors is another issue to be understood for enhancing diversified consumption of the products of secondary crops. The extent of current use and future demand for secondary crops by those industries need to be examined. The constraints and opportunities faced by large and small-scale industries in the use of secondary crops also deserve careful investigation. The second phase of the study examines the performance of a few important secondary crops in the farming systems of some selected areas in Bangladesh. The analysis is limited to the productivity and profitability of different combinations of crops within the secondary or CGPRT (include coarse grains (CG), pulses (P), roots and tubers (RT), based cropping system. Another important focus of this study is on value addition of selected CGPRT crops through agro-processing. Both small and large-scale industries and business units have been carefully investigated. The constraints to diversified uses of CGPRT products and the actions needed to remove those constraints have been identified.

Objectives

The general objective of the study was to make a descriptive and quantitative assessment of the performance of CGPRT crop based farming systems and their vertical integration in relation to private sector processing and institutional arrangements. Specific objectives were: • Quantitative analysis of the impact of diversified agricultural systems on the rural economy and welfare, and the environment; • Analysis of constraints and opportunities faced by farm growers to diversify production; • Investigation of the industrial importance of CGPRT crops and products in the market and diversified ways of consuming them; • Analysis of constraints and opportunities facing households and small-scale establishments to enhance diversification in the production and consumption of CGPRT products; • Analysis of government policies, institutional arrangements and local factors that determine the use of local CGPRT crops for agricultural processing; and • Formulation of strategic proposals and measures to counter the inhibiting factors of CGPRT crops in terms of production expansion and their industrial absorption at national and local levels.

xix Focus of the study This study focuses mainly on diversification of the crop sector for enhancing sustainable and environmentally friendly production systems and increasing output. The main objective of diversification is to mitigate production risk and ensure food security, increase labour employment and stabilize income. The crop sector is the main economic sector in rural Bangladesh, its diversification is likely to help improve livelihoods and alleviate poverty in the country. Diversification of the crop sector can be viewed both horizontally and vertically. Horizontal diversification refers to cultivation of more crops within a cropping system, while vertical diversification refers to various downstream activities such as post-harvest processing, value addition and marketing. This study generates data on both aspects of diversification relating to CGPRT crops. CGPRT crops are grown in Bangladesh within the traditional cropping system mainly under a harsh environment. Expansion of these crops through horizontal diversification depends on their relative profitability in the cropping system. Thus a system-wise profitability study was required for CGPRT based cropping patterns in the country. This was done by collecting primary data through farm surveys of selected areas in Bangladesh. Vertical diversification of CGPRT crops depends on the extent of processing and marketing facilities available in the country for these crops. In order to understand the current situation, data was collected from small and large-scale processors, food manufacturers, market intermediaries and traders on processing, consumption, marketing, activities and promotional factors.

Methodology

The study relied mainly on collection and analysis of primary data to fulfil the objectives. Other than the collection of primary data, secondary data on production, processing, consumption and marketing of CGPRT crops was collected from publications of public and private authorities. The crops chosen to analyse the performance of CGPRT crop based farming systems were maize, kaon (Foxtail millet: Citera italica) and cheena (Proso millet: Penicum miliceum L.) (coarse grains); lentil and mungbean (pulses); and potato and sweet potato (roots and tubers). A total of seven CGPRT crops along with other primary and secondary crops grown in the cropping systems were selected for inclusion in the study. The selected crops are not grown intensively all over Bangladesh. For that reason, specific areas were chosen where these crops and their products are normally found. Thus, Islampur upazila of Jamalpur district, Pirgonj upazila of Rangpur district, Sadarpur upazila of Faridpur district, Mazira upazila of Bogra district, Iswardi upazila of Pabna district and Sadar upazila of Munshigonj district were selected for farm survey. In addition, Dhaka, Mymensingh, Narsingdi, Brahmanbaria, Comilla and Chittagong districts were selected to gather information on the processing and marketing of CGPRT crop products. A total of 100 CGPRT crop growing farmers, at least 14 for each of the crops, were investigated for the year 2003-2004. In addition, 40 small-scale processors, 10 large-scale processors, 10 pulse processors and 10 market intermediaries were interviewed. In all, data from 100 CGPRT crop growing farmers (covering six districts) and 70 processors and market intermediaries (170 producers and processors from 12 districts) were gathered and analysed to fulfil the objectives of the study. Farm business analytical techniques such as enterprise costing and gross margin analysis were used to determine the cost, return and profitability of producing CGPRT crops at the farm level. Regression analysis was used to quantify the impact of diversified agricultural systems on

xx household income. To determine the value chain in different marketing channels, marketing costs and margins were calculated. Moreover, a thorough cost and return analysis was carried out to examine the profitability of large and small-scale enterprises using CGPRT crops. Data was collected and analysed from June 2004 to May 2005 using appropriate techniques.

Main findings This study generated data on cropping systems through a farm survey. The districts covered by the farm survey are predominantly rural, contributing about 19 per cent to the country’s GDP. These districts are home to 10.38 per cent of the total population. Most of the people in these districts are engaged in agriculture. The intensity of cropping is high and CGPRT crops perform well in these districts. The average yield of different crops in the selected districts does not differ much from that of the national average. The per capita availability of land is 0.15 hectares indicating that CGPRT crop producers of the selected areas operate under severe scarcity of land. The main occupation of the processors and market intermediaries of CGPRT crops is business. They have a higher level of education and have higher per capita income than the CGPRT crop growing farmers. The average income of the households has increased in recent years but the extent of unemployment and poverty is still endemic in the study areas. Also, there are indications of environmental problems. Roads and communication, cold storage and processing facilities have been developing recently in these areas. An analysis of CGPRT based cropping systems shows that the average size of farm was 1.01 hectares. The share of CGPRT crops to the total cropped area of the selected farms was 26.76 per cent. Most of the CGPRT crops were grown on low to medium-low land and the soil types were sandy, loamy and alluvium. CGPRT crops are grown mainly in the winter season. These crops contributed 39.13 per cent of the total agricultural income and 33.36 per cent of the total household income of the surveyed families. The study revealed that potato based cropping patterns generated higher net returns followed by maize, sweet potato, mungbean, lentil, kaon and cheena based cropping patterns. The undiscounted BCRs for individual CGPRT crops were 2.26, 1.69, 1.61, 1.76, 1.52, 1.50 and 1.29 for potato, sweet potato, maize, mungbean, lentil, kaon and cheena, respectively. The use of hired labour was more for high income generating CGPRT crops, while the lower valued CGPRT crops, such as kaon and cheena used more family labour. Results of the study show that if the area under CGPRT crops was increased by 1 per cent, annual household income would be increased by 0.3 per cent. It indicates that horizontal diversification of the crop sector with CGPRT crops would lead to a significant increase in family income. A large number of CGPRT crops are processed in different ways by the different types of processors resulting in vertical diversification of the crop sector. Processors are grouped into large and small-scale categories. The marketing channels of those processors of CGPRT crop products were analysed. The large-scale processors distribute their products through a developed marketing network. There are a number of actors in the marketing chain including traders, wholesalers and retailers who take the processed food to the consumers. In the case of small-scale processors, the marketing channel is short and simple. The processors take the processed food originating from CGPRT crops directly to the consumers. The share of large- scale processors in the total marketing margin is higher than other participants in the marketing channel because they make the investment over a long time and take the risk of uncertainties. In the case of de-husking pulses and preparing ready feed, the miller received a higher margin than the others. The marketing of snacks like potato chips, chanachur and fried pulses have been gaining popularity in Bangladesh over the years. The demand for these products has also been increasing rapidly in recent years. Currently, imported snacks made from CGPRT crops are sold in the domestic market. On the other hand, some of the domestic companies are also exporting snacks to other countries of the world. A sustainable market expansion for CGPRT crop based

xxi products at home and abroad will require a reduction in production costs and improvements in the quality of domestic products in future. An investigation was conducted on different types of snacks made from CGPRT crops, ready feed and de-husked pulses. Moreover, the cost and revenue structure of various processing industries was analysed. Different food and feed products processed by large-scale processors include chanachur, potato crackers, fried pulses, ready feed and de-husked pulses. Small-scale food processors prepare and sell a large number of food items including fuchka, chatpati, chanachur mix, jilapi, potato flakes, fried maize, puffed maize, French fries, steamed cake and boiled sweet potatoes. The study revealed that the processing of CGPRT crop products is economically profitable. Many large and small-scale industries have been set up in the country to process CGPRT crops and a large amount of employment and self-employment has been created by those industries, which contribute significantly to the alleviation of poverty. There is, however, a scarcity of quality raw materials for large-scale industries that results in underutilization of capacity. There are also storage and marketing problems. The small-scale processors, on the other hand, suffer from a lack of capital. Also they do not have any registration and they are disorganized. Efforts to solve those problems will help promote the processing of CGPRT crops and vertical diversification of the crop sector. Bangladesh has favourable economic policies for crop diversification, agro-processing and export promotion. With a view to promote diversification, interest on agricultural loans provided for the production of pulses, mustard seeds, spices and maize will be reduced in 2005- 06. Recently an agro-processing zone was set up in Iswardi with facilities for agro-based export-oriented industries. Cash incentives are provided for agricultural exports at the rate of 30 per cent. However, special effort to promote the processing and exporting of CGPRT crops is yet to be made in the country. There are several research organizations and extension agencies to generate and transfer technologies in the crop sector, but they do not have enough focus on CGPRT crops. The allocation of funds to agricultural research is much lower in Bangladesh compared to other developing countries in the world. Such allocation is quite insignificant for CGPRT crops. As a result, research and development activities have stagnated in this area. In order to promote crop sector diversification, special programmes for research and development should be undertaken to encourage the production of CGPRT crops in the country. Higher budgetary allocation to the agricultural sector would be required to serve this purpose.

Conclusion and recommendations

xxii Although the production of CGPRT crops is profitable and the scope of vertical diversification has increased over time, farmers have predominantly shown reluctance to diversify and produce more of these crops. The main reason is that rice is the main food of Bangladeshi people and that the farmers want to grow more rice to satisfy their consumption needs. With the expansion of irrigation facilities farmers find it more profitable to cultivate HYV rice. At the same time, farmers also increased the cultivation of wheat. Thus, the cultivation of minor cereals and pulses received low attention from the farmers. These crops are grown mainly on marginal and less fertile land with minimum inputs and less care under rainfed conditions. Thus, per unit production of these crops is low. The low yield of CGPRT crops is attributed to a lack of improved seeds and management practices. Research and breeding programmes on millets, pulses and sweet potato are far behind what has been done for the production of major crops. This has to be overcome through concerted research and development efforts on CGPRT crops in the country that will require higher budgetary allocation to agricultural research, particularly to research on CGPRT crops. Research-extension-farmer linkages for CGPRT crops is weak and needs to be strengthened. A separate window should be opened in the Directorate of Agricultural Extension for the promotion of CGPRT crops and carrying new extension messages to farmers. Quality seeds and other necessary inputs should be supplied by BADC and other related agencies to the farmers at affordable prices. CGPRT crops are mainly grown in specific areas under harsh environments. Suitable soil conditions and topography also dictate the production of CGPRT crops. Therefore, area- based farmers’ groups should be developed to enhance production, marketing and the utilization of CGPRT crops. The government should undertake a special development project to promote CGPRT crops in specific areas. A special credit programme is also needed. The demand for secondary crops can be increased through processing, value addition and product diversification. For that reason the agro-processing sub-sector has to be supported and protected from external competition. There should be sufficient incentives for export and disincentives for imports of snacks prepared from CGPRT crops. The low working capacity of processing plants is a major constraint to increase business profitability of industries that use CGPRT crops as raw materials. To overcome this constraint, financial problems have to be resolved through providing credit on simple terms and the supply of quality products has to be assured through the increased production of secondary crops. Moreover, alternative arrangements for supplying electricity have to be made and processing mills have to be operated properly with trained manpower. Storage facilities should be improved and cold storage facilities should be extended to save products from post-harvest losses. Farmers should be encouraged to cold-store perishable products through the supply of electricity to cold storages at a highly subsidized rate. Cold storage owners should be provided with bank loans to buy gas-run generators to mitigate power outages. At the same time, gas connections are needed to cold storages to run the generators. Research for the generation of new techniques of processing, preservation and product diversification is an important condition for the sustainable development of the agro-processing sub-sector. Establishment of a new institute for research on agro-processing within the National Agricultural Research System may be required in the near future. A separate division for agro- processing should be created within the Ministry of Agriculture to facilitate and promote agro- processing activities in the country. Small-scale processing firms are disorganized. They should be registered and organized into co-operatives. They also need to improve the standard of their products and store food items in a hygienic manner. Regular inspection of snack food is necessary to ensure sanitary standards and certify their quality.

xxiii Marketing systems of products originating from CGPRT crops are not perfectly competitive. They necessitate intervention when and where necessary. The marketing cost and profit margin of the market intermediaries dealing with CGPRT products has to be reduced to make them cheaper to the consumers. The number of processing mills and factories for CGPRT crops should be increased through a declaration of incentive packages. Many people in Bangladesh do not know the high calorie and protein content of CGPRT crops. They need to be made aware of it through extension agents, radio, television and newspapers. Some of the neighboring countries of Bangladesh have long experience of processing CGPRT crops and preparing snack food. They should be invited to come forward and establish joint-venture industries in the country. An incentive package may be announced to attract them to invest in Bangladesh. Regional co-operation on research and development of CGPRT crops and versatile uses of their products is required to promote diversification and enhance the sustainable development of agriculture in the region.

xxiv 1. Introduction

1.1 The main findings of the first phase study

Agriculture is the most important sector of the economy of Bangladesh contributing about 23 per cent of the country’s GDP and employing about 62 per cent of the country’s total labour force. The agricultural sector is composed of crop, livestock, fisheries and forestry sub- sectors. The crop sub-sector dominates the agricultural sector accounting for 57 per cent of agricultural GDP. The main crops of the country include rice, wheat, pulses, oilseeds, sugarcane, potato, vegetables, jute and tea. Rice is the staple food of the country, which is grown on over 74 per cent of the total cropped area. Bangladesh has been a food deficit country for several decades. Therefore, emphasis was given to rice and wheat production to achieve self-sufficiency in food grains in the country. The green revolution in the 1970s and beyond promoted rice and wheat production through the adoption of new seed-fertilizer-irrigation technology. As a result, some secondary crops including coarse grains (CG), pulses (P), roots and tubers (RT) (CGPRT), which occupy about 6 per cent of total cropped area, became less attractive. These crops in less favoured environments were largely untouched by the growth process. Some of these crops, for example pulses and sweet potato, exhibited a declining trend. The country became more dependent on imports of maize and pulses. It was, therefore, necessary to examine the possibilities of import substitution and export promotion through diversification of crop agriculture. It was also necessary to find out ways to shift from rice monoculture to diverse agriculture through the increased production of CGPRT crops. This diversification is required to improve soil health, increase productivity, ensure food security, mitigate risk and protect the environment. This would also increase employment opportunities and the income of poor people in Bangladesh. A study was undertaken in 2003 to examine the possibilities of enhancing the sustainable development of diverse agriculture in Bangladesh (Alam, 2005). Both primary and secondary data were collected and analysed to fulfil the objectives of the study. Secondary data available in various statistical bulletins, reports and official records was collected and primary data was generated through field surveys to complement the secondary data. An analysis of historical data collected from secondary sources was made to determine the effect of policy changes on production and diversification of secondary (CGPRT) crops. At the same time primary data was made available from the field surveys to know the recent structure of incentives in agriculture. The study collected primary data from 400 samples selected randomly from 12 districts of the country representing concentrated areas of CGPRT crop production. Data so collected was analysed to determine the financial and economic profitability of producing CGPRT crops in Bangladesh. A measure of comparative advantage was employed to examine the efficiency of using resources for producing CGPRT crop products at home instead of importing them from abroad. To evaluate quantitatively the diversity of crop production, a diversity index was used. The future demand for CGPRT crop products was determined by using an anticipated population growth rate, growth rate of income and income elasticity of demand for these crop products. The income elasticity of demand was computed from cross-section consumption figures obtained through the HIES 2000. Analysis of data shows that there has been a significant increase in agricultural production in Bangladesh for the last four decades. The production of food-grains increased from 9.7 million tons in 1960-1961 to 10 million tons in 1972-1973 and to about 27 million tons in 2002-2003. The production of rice increased by about 3.5 per cent per year over the last decade (1991-2002). The production of wheat experienced a significant increase of 5.5 per cent per year over the aforementioned period but the production of minor grains declined by 0.93 per

1 Chapter 1 cent, pulses by 3.72 per cent, oilseeds by 1.9 per cent, and sweet potato by 2.8 per cent. However, the production of maize and potato has experienced a respectable growth rate during the last decade. Moreover, production of vegetables and spices has also shown an increasing trend over the period. The calculated Simpson Index of Diversity for the allocation of land to different crops revealed a slow improvement in crop diversification over time in Bangladesh. Diversification in crop production was accompanied by considerable diversification in consumption. The share of rice and wheat in the total food basket has declined, while the shares of potato, vegetables and pulses have increased over the reference period. This may lead to further diversification of crop agriculture in future, if there are enough incentives to cultivate minor grains and non-cereal crops. A field study conducted in 12 districts on maize, millets, potato, sweet potato, lentil and mungbean suggests that both financial and economic returns for production of those secondary crops are positive. The financial incentives producing these crops were examined by calculating the Nominal Protection Co-efficient (NPC), Nominal Rate of Protection (NRP), Effective Protection Co-efficient (EPC) and Effective Rate of Protection (ERP). Results showed that there are reasons for protecting these crops at home from import surges. A measure of comparative advantage was used to examine the efficiency of using resources to produce CGPRT crops at home instead of importing them from abroad. Calculated DRC (domestic resource cost) values for maize, millets, lentil and potato suggest that the country will gain from producing more units of these crop products at home instead of importing them from other parts of the world. The DRC values were positive for potato even at export parity level during the most recent years implying that Bangladesh has the potential for export promotion through the production of more potato. The study reveals that the country has substantial potential for the diversification of crop agriculture through the expansion of secondary crops (CGPRT crops). The marketing of CGPRT crop products is not efficient. Over 80 per cent of major CGPRT products are marketed, but they suffer from significant seasonal price fluctuations. Farmers do not receive the benefits of the high prices for their products at later stages. The grower’s share of the consumer’s price during harvest is above 60 per cent for maize, millets and pulses. This share is relatively low for potato and sweet potato. Farmers are likely to benefit from a reduction in marketing costs and margins of tubers. Recent market liberalization has resulted in a reduction of tariff rates and a withdrawal of production subsidies. As a result, imports of some major CGPRT products, particularly maize and pulses have increased. It is possible to have a significant increase in production of these crops provided new technologies are generated and policies are framed conducive to technology adoption. In view of the above circumstances, more investment on yield increasing technology generation and adoption is necessary to meet the current deficit in CGPRT products and accelerate the speed of diversity in agriculture. Bangladesh is a poor country with low per capita income. About 50 per cent of the population live below the poverty line. Most of them suffer from chronic malnutrition. CGPRT crop products are less expensive than major food items and even the poorest of the poor have access to coarse grains, pulses and tubers. These products have a higher nutritional value than major cereals. These products are rich in protein, fat, minerals and fiber. They are also used as livestock feed. Relatively poor farmers under harsh environments cultivate these crops. Expanded production of these crops will intensify the farming system, create additional employment, and reduce the magnitude of poverty and nutritional deficiency in the country. The demand for CGPRT crops is likely to increase with increases in the population. The demand will increase further with the expansion of processing facilities and industrial uses of the crops. However, people are not aware of many processing techniques and the linkages between production, processing and utilization are weak. The increase in purchasing power of the common people and urbanization point to higher demand for processed CGPRT crop

2 Introduction

products. This will encourage farmers to grow more of these crops for higher consumption and income. It was concluded that maize, millets, pulses, potato and sweet potato (CGPRT or secondary crops) have enough potential for crop diversification, employment creation, income generation, reducing malnutrition and poverty alleviation in rural Bangladesh. These crops are profitable and have comparative advantage in production. The demand for these crops is likely to increase with urbanization and increases in per capita income, and the scope of the industrial uses of these crops is high in the country. Therefore, farmers in Bangladesh should be encouraged to produce more of these crops through area expansion and the adoption of improved technologies for production and consumption. A rational price policy should be formulated to ensure remunerative prices for CGPRT crop growers. This can be made effective through the procurement of produce by the government from the growers.

1.2 Research issues

The first phase of the study was confined to analyses of data on the production and profitability of some selected CGPRT crops in different locations of Bangladesh. The contribution of these crops in the farming systems of the selected locations was not studied. The profitability of CGPRT based cropping systems is another issue, which was not examined in the first phase. The second phase of the study examines the contributions of CGPRT crops in the farming systems of selected locations and analyses the productivity and profitability of different combinations of crops grown in different cropping systems. This was necessary to analyse the importance of CGPRT crops in terms of household income and welfare and to identify the constraints and opportunities faced by farmers in diversifying production. Some of CGPRT crops have high potential for agro-processing. For example, maize, potato and pulses have been used in increasing proportions in the country for preparing processed food and feed but the constraints and opportunities faced by small-scale establishments are not known. The profit earned by small-scale processors and their intermediaries is another issue to be understood for enhancing diversified consumption of CGPRT products. Some large-scale industries are using CGPRT crops as raw materials for their products. The extent of current use and future demand for CGPRT crops by those industries need to be examined. The constraints and opportunities faced by those industries in the use of CGPRT crops also deserve careful investigation. Favourable government policies and institutional arrangements can help enhance production and diversify consumption of CGPRT crops. Thus, an assessment of existing policies and institutions needs to be made carefully to determine policy directions and future courses of action. All the above issues have necessitated the present study, which was undertaken by the author from July 2004 to April 2005 in Bangladesh.

1.3 Objectives of the study

The general objective of the study was to make a descriptive and quantitative assessment of performance of CGPRT crop based farming systems and their vertical integration in relation to private sector processing and institutional arrangements. Specific objectives were: • Quantitative analysis of the impact of diversified agricultural systems on the rural economy and welfare, and the environment; • Analysis of constraints and opportunities faced by farmers to diversify production; • Investigation into the industrial importance of CGPRT crops and products in the market and diversified ways of consuming them;

3 Chapter 1

• Analysis of constraints and opportunities facing households and small-scale establishments to enhance diversification in the production and consumption of CGPRT products; • Analysis of government policies, institutional arrangements and local factors that determine the use of local CGPRT crops for agricultural processing; and • Formulation of strategic proposals and measures to counter the inhibiting factors of CGPRT crops in production expansion and their industrial absorption at the national and local level.

1.4 Scope of the study

This study has examined the importance of a few selected secondary crops (secondary to major staple foods) in the farming systems of some selected areas in Bangladesh. The analysis is limited to the productivity and profitability of different combinations of crops within CGPRT based cropping systems. This study has attempted to identify why farmers have, in general, showed reluctance to diversify despite adequate profit and comparative advantage when growing secondary crops. Another important aspect of this study concerns the value addition of selected secondary crops through agro-processing. Both small and large-scale industries and business units have been carefully investigated. The constraints to diversified uses of CGPRT products and actions needed to remove those constraints have been identified. While identifying the constraints and their solutions, the study paid much attention to the farm level, and to processing and consumption levels to learn clients’ perceptions of constraints to diversification. The findings of the study are based on the field data from some specific areas of the country with a small size of samples. Therefore, the scope of generalization is limited and the results may not represent the actual situation of the whole country. Most of the CGPRT crop growing farms and small-scale processors in Bangladesh do not keep any record of their production, costs or returns. As a result, the accuracy and reliability of data reported here fully depends on their memory and sincerity. The study focuses on the crop sub-sector only, although agriculture also includes agro- forestry, livestock and fisheries sub-sectors. Issues relating to diversification of other sub- sectors in agriculture may be covered by subsequent studies. While this study analysed field data for specific locations using CGPRT crop based farming systems, this may not be representative of the whole country. However, the results of this study are likely to give some useful insights to guide policies to diversify production and consumption in Bangladesh.

2. Conceptual Framework and Methodology

2.1 Conceptual framework

This study focuses mainly on the diversification of the crop sector for enhancing sustainable and environmentally friendly production systems and increasing output. The main objective of diversification is to mitigate production risk and ensure food security, increase labour employment and stabilize income. The crop sector is the main economic sector in rural Bangladesh, its diversification is likely to help improve livelihoods and alleviate poverty in the country. Diversification of the crop sector can be viewed both horizontally and vertically. Horizontal diversification refers to cultivation of more crops within the cropping system, while vertical diversification refers to various downstream activities such as post-harvest processing, value addition and marketing. This study generates data on both aspects of diversification relating to CGPRT crops. CGPRT crops are grown in Bangladesh within traditional cropping systems mainly under harsh environments. Expansion of these crops for horizontal diversification depends on their relative profitability in the cropping system. Thus a system-wise profitability study is required for CGPRT based cropping patterns in the country. This was done by collecting primary data through farm surveys in selected areas of the country. Vertical diversification of CGPRT crops depends on the extent of processing and marketing facilities available in the country for these crops. In order to understand the current situation, data was collected from small and large-scale processors, food manufacturers, market intermediaries and traders on processing, consumption, marketing, constraints and promotional factors. Other than the collection of primary data, secondary data on production, processing, consumption and marketing of CGPRT crops was collected from materials published by public and private authorities. Moreover, government policies relating to the production and processing of CGPRT crops were thoroughly reviewed to conceptualize the present state of diversification in the country.

2.2 Research methodology

The reliability of a scientific study depends, to a great extent, on the appropriate methodology used in the research. This study is based mainly on the field level primary data. Primary data was collected from selected farmers growing CGPRT crops and different types of processors using CGPRT products in the study areas. The whole process of conducting this study is described below:

2.2.1 Selection of crops CGPRT crops include coarse grains (CG), pulses (P), and roots and tubers (RT). In this study, for analysing CGPRT crop based farming systems, the crops chosen were maize, kaon (Foxtail millet: Citera italica) and cheena (Proso millet: Penicum miliceum L.) (Coarse grains); lentil and mungbean (pulses); and potato and sweet potato (roots and tubers). These crops are not grown intensively all over the country. Specific areas are specialized for the production of one or another crop. In this study, a few areas of the country were selected purposively that represent cropping systems based on these crops. A total of seven CGPRT crops along with other primary and secondary crops grown in the cropping systems were selected for this study.

5 Chapter 2

2.2.2 Selection of research sites The selection of the study areas depends on the particular purpose of the survey and the possible co-operation of the farmers. Keeping in view the objectives of the study, Islampur upazila of Jamalpur district, Pirgonj upazila of Rangpur district, Sadarpur upazila of Faridpur district, Mazira upazila of Bogra district, Iswardi upazila of Pabna district and Sadar upazila of Munshigonj district were selected (Map 2.1) for farm survey. In addition, Dhaka, Mymensingh, Narsingdi, Brahmanbaria, Comilla and Chittagong districts were selected to gather information on the processing and marketing of CGPRT crop products.

2.2.3 Selection of respondents It was not possible to include in the study all the CGPRT crop growers and processors of the study areas. A total of 100 CGPRT crop growing farmers, representing at least 14 for each of the crops, were investigated for the year 2003-2004. In addition, 40 small-scale processors, 10 large-scale processors, 10 pulse processors and 10 market intermediaries were interviewed. In all, data from 170 producers and processors was generated and analysed to fulfil the objectives of the study.

Table 2.1 Size of the sample covered by the study Stakeholder Size of Area covered CGPRT crops/ sample Processed products covered CGPRT crop growers 100 Jamalpur, Faridpur, Rangpur, Potato, Sweet Potato, Maize, Bogra, Munshiganj and Pabna Lentil, Mungbean, Kaon and Cheena

Small-scale processor 40 Mymensingh, Dhaka, Bogra, Chanachur, Puffed/Fried corn, Brahmanbaria, Comilla and Chips, Cake, Fuska, French fries Chittagong

Large-scale processor 10 Bogra, Dhaka, Savar, Narsingdi Chanachur, Chips, Fried pulse, and Mymensingh Poultry feed

Pulse processor 10 Bogra, Pabna and Faridpur Mungbean, Lentil, Chickpea, Black gram

Processed product market 10 Mymensingh, Bogra Chanachur, Chips, Fried pulse, intermediary and Dhaka Poultry feed Total 170

6 Conceptual Framework and Methodology

Figure 2.1 Map of Bangladesh showing the study areas

= Study area

7 Chapter 2

2.2.4 Sampling technique The areas of study and the sample of CGPRT crop growers were selected on the basis of the purpose of this study. CGPRT crops are mostly grown in specific areas and samples were drawn randomly from clusters where the specific CGPRT crops were intensively grown. For example, potatoes are mostly grown in different areas of Bogra and Munshiganj. For that reason, these two districts were selected for studying potato. Sweet potatoes are mostly grown in Jamalpur, while maize is produced in Bogra and Rangpur. On the other hand, Pabna and Faridpur districts are well known for lentil and mungbean production. Kaon and cheena are widely grown in Jamalpur district. Thus, the districts mentioned above were selected purposively for undertaking detailed farm management studies on selected crops. A simple random sampling technique was applied to draw samples from clusters. A representative number of samples were chosen for data collection, which are shown in Table 2.2. One can notice from the table that a total of 158 CGPRT crop growers were selected for the study, of which sweet potato, kaon and cheena represented a relatively large number of samples followed by potato and lentil. Mungbean and maize represented a relatively low sample size as these crops are newly introduced to the study areas. The survey of processors and market intermediaries was carried out to fulfil the objectives of the study. At least 10 to 40 samples from each category of respondents were carefully examined from important areas of the country. Processing and marketing data were obtained from secondary sources as well as focus group meetings with processors and consumers.

Table 2.2 Number of CGPRT crop growers covered by the study Stakeholder Area covered Size of sample % of total in Potato Bogra (Mazira), Munshiganj (Sadar) 24 15.19 Sweet Potato Jamalpur (Islampur) 29 18.35 Maize Bogra (Mazira) and Rangpur (Pirgonj) 15 9.49 Lentil Pabna (Ishwardi) and Faridpur (Sadarpur) 24 15.19 Mungbean Faridpur (Sadarpur) and Pabna (Ishwardi) 14 8.86 Kaon Jamalpur (Islampur) 26 16.46 Cheena Jamalpur (Islampur) 26 16.46 Total 158 100.00

2.2.5 Timeframe of the study This research project had a specific timeframe for each participating country. The timeframe for the preparation of the second country report from Bangladesh is shown in Table 2.3.

Table 2.3 Timeframe of the study Activities June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 04 04 04 04 04 04 04 05 05 05 05 05 Field survey/ Data analysis Data analysis/ 2nd country report

2.2.6 Methods of analysis The collected data was compiled, tabulated and analysed according to the objectives of the study. Mostly tabular methods were used to present the findings of the study. Farm business analytical techniques such as enterprise costing and gross margin analysis were used to determine the cost, return and profitability of producing CGPRT crops at the farm level. To

8 Conceptual Framework and Methodology

determine the value chain in different marketing channels, marketing costs and margins were calculated. In addition, regression analysis was used to quantify the impact of diversified agricultural systems on household income. The regression model is specified as follows:

Y = f(X1, X2, X3, D)

The relationship between household income and the relevant variables as specified is as follows:

ln Yi = ln a + b1 lnx1i + b2 lnx2i + b3 lnx3i + b4D+ ui

Where, Y = Total annual income per household (taka) X1 = Family size (number of members) X2 = Area under CGPRT crops (hectare) X3 = Area under other crops (hectare) D = Dummy variable (if there is income from off-farm sources D = 1, otherwise D = 0) ui = Error term b1- b4 = Coefficients of respective variables to be estimated

2.3 Formation of study team

An important element of this research was to form a study team. This was done by selecting experts from different institutes, organizations and universities after receiving their consent. The study team for this phase of research is given below:

1. Dr. Jahangir Alam Chairman Member-Director, BARC

2. Dr. Kazi Mesbahul Alam Member Principal Scientific Officer, Agril. Economics, BARI

3. Dr. Md. Abdul Quayyum Member Principal Scientific Officer, On Farm Research Division, BARI

4. Mr. Md. Fozlul Haque, Deputy Director (Monitoring), DAE Member

5. Dr. S. M. Fakhrul Islam, Associate Professor, Department of Member Agricultural Economics, Bangabandhu Sheikh Mujibur Rahman Agricultural University

6. Mr. Fakir Azmal Huda, Assistant Professor, Department of Member Agricultural Economics, Bangladesh Agricultural University

7. Ms. Fatema Wadud, Deputy Director, Shoshaya Gudam Rin Prokalpa, Member DAM

8. Mr. Ershadullah Khan, Deputy General Manager (Research), Member Bangladesh Bank

9. Mr. Md. Abdullah, Deputy General Manager (Statistics), Bangladesh Member Bank

9 Chapter 2

10. Dr. Md. Akteruzzaman, Professor, Department of Agricultural Member Economics, Bangladesh Agricultural University, Mymensingh

11. Mr Mohammad Ismail Khan, Assistant Professor, Department of Co-opted Agricultural Economics, Bangabandhu Sheikh Mujibur Rahman Agricultural University

12. Mr. Nazmul Islam Bhuiyan, M. S. in Agricultural Economics Co-opted (Marketing), Bangladesh Agricultural University, Mymensingh

The study team met from time to time to discuss academic issues and provide necessary inputs for the study. Some of the members were specially chosen by the national expert to assist him with data collection and processing. All members willingly co-operated to help and advise the national expert until completion of the study. However, the author was solely responsible for the interpretation of study results and presentation of this report.

2.4 Concluding summary

This study generated data on horizontal and vertical diversification of CGPRT crop based cropping systems. Both primary and secondary data were collected on the production, processing, consumption and marketing of CGPRT crops to fulfil the objectives of the study. Seven crops namely maize, kaon, cheena (coarse grains), lentil, mungbean (pulses), potato and sweet potato (roots and tubers) were chosen for in-depth investigation. The areas covered by the farm survey include Islampur upazila of Jamalpur district, Pirgonj upazila of Rangpur district, Mirzapur upazila of Bogra district, Sadarpur upazila of Faridpur district, Iswardi upazila of Pabna district and Sadar upazila of Munshigonj district. In addition, Dhaka, Mymensingh, Narsingdi, Brahmanbaria, Comilla and Chittagong districts were selected to gather information on the processing and marketing of CGPRT crop products. A total of 100 CGPRT crop growing farmers and 70 processors and market intermediaries were interviewed from 12 districts. Data was collected and analysed from June 2004 to May 2005 using appropriate techniques.

10 3. Profile of the Study Site, the Respondents and Their Household

3.1 Profile of the study site

Bangladesh is situated in the north part of South Asia between 20034' and 26038' north latitude and 88001' and 92041' east longitude. The country is surrounded by India on the west, the north, and the northeast and Myanmar (Burma) in the southeast and the Bay of Bengal on the south. Bangladesh has an area of 56,977 sq mi or 147,570 sq km with 64 administrative units (called districts). Each of the districts has some special features in terms of agricultural production. The overall profiles of the selected study areas are discussed below.

3.1.1 Geographic and administrative settings CGPRT crops are normally grown in disadvantaged areas. The selected study areas covering CGPRT crops have some special geographic characteristics. Most of the selected areas are located near the mighty rivers such as the Meghna, the Padma, the Jamuna and their tributaries. For example, sweet potato, lentil, mungbean, kaon and cheena are grown well in the sandy soil of char areas. For that reason, Islampur upazila of Jamalpur district, Pirgonj upazila of Rangpur district, Sadarpur upazila of Faridpur district, Mazira upazila of Bogra district, Iswardi upazila of Pabna district and Sadar upazila of Munshigonj district were selected. In most cases, more than 80 per cent of the total cultivated area is under rice but there are some specific areas within the selected districts where CGPRT crops appear significantly in the cropping pattern. The administrative settings of the selected areas are presented in Table 3.1.

3.1.2 Demographic profile According to the district population census report 2001, the total area of the districts under the field survey, namely Jamalpur, Rangpur, Faridpur, Bogra, Pabna and Munshigonj were estimated to be 2,032, 2,308, 2,073, 2,920, 2,371 and 955 sq km, with an estimated population of 1.70, 2.04, 1.41, 2.43, 1.75 and 1.04 per cent of total population of Bangladesh respectively. Except in Faridpur, the population density per square kilometre was above the national average in all the surveyed districts. The population distribution of the selected areas is presented in Table 3.1. The male population outnumbered the female population and the percentage of the urban population was lower than the national average. Most of the people of the selected areas are engaged in agricultural activities. The other occupations are wage labour, petty business, professional work and service in different government and autonomous institutions.

11 Chapter 3

Table 3.1 Administrative settings of the selected areas Percentage of Urban Population Area Population No. of No. of rural No. of District total percentage of density (sq km) Male Female Total upazila unions villages population the population (per sq km) Jamalpur 2 032 1 056 733 1 032 633 2 089 366 1.70 17.10 7 68 1 532 1 028 Rangpur 2 308 1 290 430 1 243 935 2 534 365 2.06 15.90 8 84 1 519 1 098 Faridpur 2 073 866 692 852 304 1 714 496 1.39 12.60 8 79 1 859 827 Bogra 2 920 1 519 333 1 469 234 2 988 567 2.43 13.00 11 109 2 709 1 023 Pabna 2 371 1 102 248 1 051 673 2 153 921 1.75 21.90 9 72 1 540 908 Munshigonj 955 647 947 645 589 1 293 536 1.05 13.00 6 67 906 1 354 Bangladesh 147 570 62 735 988 60 415 258 123 151 246 100.00 23.10 507 4 484 87 319 835 Source: BBS, 2002.

12 Profile of the Study Site, the Respondents and Their Household

3.1.3 Economic profile The average per capita GDP of the country in 1999-2000 was 6,214 taka at constant 1984-1985 prices. Dhaka (Munshigonj) district had higher per capita GDP than the national average while the other five districts had lower per capita GDP (Table 3.2). The contribution of the surveyed districts to GDP was about 19 per cent. The average daily wage rate of agricultural labourers was 53.75 taka in Munshigonj and 50.50 taka in Jamalpur districts, higher than the national average. Other districts namely, Rangpur, Faridpur, Bogra and Pabna had a lower average wage rate. The daily wage rate of non-agricultural labour was much higher than that of agricultural labour in all the districts. Among the selected districts, Rangpur had the lowest average wage rate indicating that the incidence of poverty and unemployment is higher in that district than the other districts of the country.

Table 3.2 Economic profile of the study areas (1999-2000) Per capita GDP at Contribution of the Average daily wage Average daily Area constant surveyed districts to of agricultural wage of non- (1984-1985) GDP labour (Tk) agricultural labour market price (%) (Tk) Jamalpur 5 051 2.29 50.50 80 a Rangpur 4 981 6.01 32.50 65 a Faridpur 5 718 4.60 43.75 70 a Bogra 5 681 2.92 40.00 90 a Pabna 4 633 2.97 39.00 85 a Dhaka b 7 147 14.20 53.75 100 a National average 6 214 - 46.20 89 Source: BBS, 2002. a Data obtained from field observation. b The information of former (greater) Dhaka district is used here as an indication for present Munshigonj district. The contribution of Munshigonj district to the country’s GDP is assumed to be 3.13 per cent. The greater Dhaka district was divided into six districts, namely Dhaka, Gazipur, Manikgonj, Munshigonj, Narayangonj and Narsingdi in the mid-1980s.

3.1.4 Agricultural profile Agriculture in Bangladesh is dominated by crops. Important crops normally grown by the farmers include rice, wheat, coarse grains, jute, tea, pulses, oilseeds, vegetables, sugarcane and tubers. Some of these crops are grown intensively in the study areas. Table 3.3 shows the area, production and yield of rice, wheat and some selected CGPRT crops in different districts under reference. It reveals that CGPRT crops perform well in the selected districts and their average yield does not surprisingly differ from that of the national average. In the case of potato and sweet potato, Munshigonj and Jamalpur are the key producing districts and their yield rates are substantially higher than the national average. The long-term trends of production, yield rate and area under cultivation of major food grain crops and CGPRT crops for the whole country can be seen from Tables A.1 and A.2. It appears that rice, wheat, maize and potato have experienced a large increase in yield over time. The intensity of cropping was high in surveyed districts. Low cropping intensity is generally observed in coastal, haor (very low land) and hilly areas (particularly in Noakhali, Patuakhali, Khulna, Sylhet, Rajshahi and Bandarban districts). The area of land left fallow was very low in the study areas indicating that there is very little scope of extensive cultivation.

13 Chapter 3

Table 3.3 Area, yield and production of major cereals and CGPRT crops in the study areas (1999-2000) Crop, area and production Jamalpur Rangpur Faridpur Bogra Pabna Munshigonj a Bangladesh Rice Area (ha) 342 486 924 117 498 389 481 672 316 656 454 927 10 712 846 Production (mt) 743 390 2 218 540 854 850 1 167 510 719 290 1 019 280 23 066 900 Yield (mt/ha) 2.17 2.40 1.72 2.42 2.27 2.24 2.15 Wheat Area (ha) 34 077 97 518 61 308 23 279 97 271 41 579 832 773 Production (mt) 66 960 229 260 118 930 56 490 219 350 82 530 1 839 980 Yield (mt/ha) 1.96 2.35 1.94 2.43 2.26 1.98 2.21 Maize Area (ha) 18 215 123 18 18 71 3 162 Production (mt) 15 250 300 30 55 185 4 075 Yield (mt/ha) 0.82 1.17 2.43 1.65 3.02 2.61 1.29 b Kaon and Area (ha) 957 1 239 2 989 336 1 538 3 632 14 700 Cheena Production (mt) 860 1 090 1 840 190 1 125 3 910 12 085 Yield (mt/ha) 0.90 0.88 0.62 0.57 0.73 1.08 0.82 Lentil Area (ha) 1 010 3 792 48 628 563 14 093 6 117 166 781 Production (mt) 660 2 765 39 035 410 9 815 4 005 127 775 Yield (mt/ha) 0.65 0.73 0.80 0.73 0.70 0.65 0.77 Mungbean Area (ha) 101 255 4 577 28 119 1 123 55 239 Production (mt) 85 180 2 850 20 70 590 36 065 Yield (mt/ha) 0.84 0.71 0.62 0.71 0.59 0.53 0.65 Potato Area (ha) 5 113 35 299 3 299 31 779 3 904 32 933 243 123 Production (mt) 50 730 350 200 29 805 246 950 28 770 694 810 2 933 320 Yield (mt/ha) 9.92 9.92 9.03 7.77 7.37 21.10 12.07 Sweet Area (ha) 2 479 2 526 392 1 206 804 2 330 40 783 potato Production (mt) 29 430 19 870 3 540 10 790 5 865 28 050 378 405 Yield (mt/ha) 11.87 7.87 9.01 8.94 7.30 12.04 9.28 Net cropped area (’000 ha) 237.65 631.17 458.30 276.52 280.57 395.55 8138.06 Fallow land (’000 ha) 4.45 33.60 38.06 1.62 7.29 12.15 348.99 Intensity of land use (%) 69.96 68.07 60.20 70.10 56.79 47.33 53.84 Cropping intensity (%) 197.91 201.99 182.42 209.52 191.63 173.90 175.45 Source: BBS, 2003. a Dhaka as a proxy for Munshigonj. Total cropped area in Munshigonj district was 642 thousand hectares and the intensity of cropping was 188 per cent. b This yield rate is much lower than the rate reported in Table A.1. This difference is mainly due to the difference in methodology applied in calculating per hectare yield.

3.1.5 Extent of unemployment and poverty

The magnitude of unemployment and poverty is very high in Bangladesh (Table 3.4). These incidences are even higher in the study areas because of the remoteness and backwardness of the selected areas. Farmers in the study areas were mainly dependent on agriculture for their livelihood and the rural non-farm sector was least developed there. Many people in Rangpur, Jamalpur and Faridpur reported to have no work during lean periods and faced acute shortages of food and clothing at different times of the year. The incidence of poverty and unemployment has, however, declined over time due to higher agricultural production and target-oriented programmes undertaken by different governmental and non- governmental organizations in rural Bangladesh.

14 Profile of the Study Site, the Respondents and Their Household

Table 3.4 Extent of unemployment and poverty at the study sites Area Economically active Unemployment Poverty level a persons aged 10+ rate (%) (%) Rural Urban Average Jamalpur 45.68 n.a. 52.9 28.2 44.8 Rangpur 48.12 n.a. 62.8 48.1 61.0 Faridpur 36.67 n.a. 52.9 28.2 44.8 Bogra 45.17 n.a. 62.8 48.1 61.0 Pabna 43.56 n.a. 62.8 48.1 61.0 Munshigonj 29.48 n.a. 52.9 28.2 44.8 Bangladesh 48.68 3.7 (35.3) b 53.1 36.6 49.8 Source: Household Income and Expenditure Survey, 2000. Notes: n.a. indicates not available. a divisional average. b (Figure within bracket indicates under employment).

3.1.6 Extent of environmental problems Floods occur randomly in Bangladesh. During the last two decades floods have greatly affected the country at least six times. The nature and extent of the floods vary with the intensity of the flood. However, there is a general consensus that the extent of damage caused by floods has increased over time. Table 3.5 lists the extent of damage caused by the floods of 1988 and 1998. Other than damaging households, roads and standing crops, floods have severe negative affects on fisheries, livestock, forestry, physical assets, savings and employment opportunities. In addition to floods, cyclones, river erosion and soil degradation also affect livelihoods and cause environmental problems in Bangladesh. The production of CGPRT crops sometimes works as a means of risk mitigation and fills the income and food gap of the farmers.

Table 3.5 Affect of floods in Bangladesh agriculture Sl. No. Items 1987 1988 1998 1 Total flood affected area (sq km) 57 000 82,000 100 000 2 Number of districts affected n.a. n.a. 52 3 Number of upazila affected n.a. n.a. 366 4 Number of unions affected n.a. n.a. 3 323 5 Number of affected people n.a. n.a. 30 916,351 6 Affected standing crop 1.33 (million ton) 2.00 (million ton) 1.42 (million ha) 7 Number of affected household 2 500 000 72 00 000 980 571 Source: Jaim et al., 2000.

3.1.7 Condition of public infrastructure relevant to CGPRT farming and industry Roads and communication Roads and communication are preconditions for development. CGPRT crop farming and CGPRT crop based marketing and industrialization require good communication and transportation facilities. Table 3.6 shows the status of roads in the study areas. It appears that Jamalpur, Rangpur, Bogra and Pabna have the least access to good infrastructure.

Table 3.6 Length of roads in the study areas Area Length of roads (km) Road (km) per sq km area Jamalpur 451.42 0.222 Rangpur 498.93 0.216 Faridpur 713.71 0.344 Bogra 618.66 0.212 Pabna 557.64 0.235 Munshigonj a 1 286.09 1.347 Bangladesh 15 669.62 0.106 Source: BBS, 2001. Note: Position as of 30.06.94. a Dhaka as a proxy for Munshigonj.

15 Chapter 3

Cold storage There are adequate storage facilities for potato in Bangladesh. The number of cold storage facilities has increased very rapidly in recent years. The number stands at 320 with a capacity to store about 2 million tons of potato every year. However, this capacity is not fully utilized due to high storage charges, disruptive communication, underdeveloped transportation and poor management of storage plants. Currently, about 10 per cent of the cold storage facilities are used for crops other than potato. Other crops being stored include tomatoes, oranges, apples, cabbage, carrots, onions and red chilies. The average storage charge ranges between 1.25 taka to 2.0 per kg per year. There are 71 cold storage facilities in Munshigonj district (with a storage capacity of 447,700 mt) of which 61 were active in 2003-2004.

Processing Processing facilities for CGPRT crops are poor. There are about 500 pulse processing mills in the country spread over different districts. Most of the mills report low capacity utilization due to inadequate supply of pulses, disruption of electricity, lack of funds and improper operation of mills. Other than these mills, there are a limited number of enterprises to produce processed fruits, vegetables and snacks. The Bangladesh Agro-processing Association (BAPA) has eighteen members and according to their own figures (Agrico et al., 2004), 40 companies in Bangladesh produce fruit products (jams, jellies, juice and pulses) and some of them also produce chips and snacks from CGPRT crops.

3.2 Profiles of the respondents and their household

3.2.1 The respondents’ profile Age distribution The age distribution of different stakeholders is important to identify the character of their farm business operations. For that reason the ages of different stakeholders were analysed. This was done by classifying all stakeholders into three age groups such as below 18 years, 18 to 57 years (most active and productive age) and above 57 years. The distribution of respondents according to age are presented in Table 3.7.

Table 3.7 Age distribution of stakeholders in the survey Age distribution (%) Stakeholder Below 18 years 18-57 years Above 57 years Total CGPRT crop growers 0 87.50 12.50 100.00 Small-scale processors 0 100.00 0 100.00 Large-scale processors 0 80.00 20.00 100.00 Pulse processors 0 100.00 0 100.00 Processed product 0 90.00 10.00 100.00 market intermediaries Source: Field survey, 2004.

From Table 3.7, one can notice that none of the CGPRT crop growers were below 18 years of age. The highest number of CGPRT crop growers were found to be between 18 to 57 years of age i.e. 87.5 per cent of growers are in the age group of 18 to 57 years and 12.5 per cent are above 57 years. One hundred per cent of small-scale processors and pulse processors were in the age group of 18 to 57 years. All large-scale processors also belonged to that group. Market intermediaries of CGPRT crop based processed products were 90 per cent in the 18 to 57 years age group and 10 per cent in the above 57 years age group.

16 Profile of the Study Site, the Respondents and Their Household

Education level Education has an impact on the thinking, outlook, attitude and tendency of the farmers towards modernization of traditional agriculture. It plays a crucial role in understanding modern technologies together with technological changes in various production processes. The education level of the different stakeholders has been classified into six categories namely Illiterate, Primary (up to five years of schooling), Secondary (six to ten years of schooling), SSC (ten years of schooling and Secondary School Certificate examination passed), HSC (twelve years of schooling and Higher Secondary Certificate examination passed) and Bachelor/Masters. Table 3.8 shows the educational distribution of the different stakeholders. It reveals that the CGPRT crop growing farmers have a lower level of education while the processors and market intermediaries have a higher level.

Table 3.8 Educational distribution of stakeholders under study Education level (%) Stakeholder Bachelor Illiterate Primary Secondary SSC HSC Total and above CGPRT crop growers 27.78 43.06 22.22 4.17 2.78 0 100 Small-scale processors 20.00 55.00 20.00 5.00 0 0 100 Large-scale processors 0 0 0 20.00 20.00 60.00 100 Pulse processors 0 0 40.00 10.00 0 50.00 100 Processed product market 0 10.00 50.00 20.00 10.00 10.00 100 intermediaries Source: Field survey, 2004.

Occupational status The occupational status of different stakeholders was classified as major or minor. The observed occupations of different stakeholders include agriculture, service, business, wage labour, petty business etc. In this study we found that agriculture is the major occupation of the CGPRT crop growers, which accounted for 95 per cent (Table 3.9). The highest percentage of the small-scale processors, large-scale processors, pulse processors and market intermediaries quoted business as their major occupation.

Table 3.9 Occupational status of the CGPRT crop based stakeholders Major occupation Minor occupation Stakeholder Agriculture Service Business Others Agriculture Service Business Others CGPRT crop 95.00 0 5.00 0 5.00 0 40.00 5.00 growers Small-scale 30.00 10.0 60.00 0 30.00 0 40.00 30.00 processors Large-scale 0 0 100.0 0 20.00 0 0 10.00 processors Pulse processors 0 0 70.00 30.00 20.00 0 30.00 0 Processed product 0 0 100.00 0 40.00 0 0 40.00 market intermediaries Source: Field survey, 2004.

3.2.2 The household profile The average family size of the respondents was found to be 5.3, 7 and 6 for CGPRT crop growing farmers, small-scale processors and market intermediaries respectively (Table 3.10). Adult males outnumbered adult females in the CGPRT crop growing households. The size of the labour force available was higher in the case of farm households than the other responding households.

17 Chapter 3

Table 3.10 Household profile of the surveyed samples Average family size (No.) Active labour Stakeholder Adult male Adult female Children Total force* CGPRT crop growers 2.07 1.39 1.85 5.31 2.74 Small-scale processors 2.0 2.0 3.0 7.00 2.28 Large-scale processors n.a n.a. n.a. n.a. n.a. Pulse processors n.a n.a. n.a. n.a. n.a. Processed product 2 2 2 6.00 1.85 market intermediaries Source: Field survey, 2004. Note: Active labour force means the number of members engaged in economic activities.

The annual household income of stakeholders ranged from 58,478 taka for CGPRT farmers to 5,305,500 taka for large-scale processors (Table 3.11). Agricultural income was the main source of household income for CGPRT farmers, while business income dominated the composition of income for other stakeholders. Per capita income was the highest for large-scale processors followed by pulse processors, market intermediaries, small-scale processors and CGPRT farmers.

Table 3.11 Income of the CGPRT crop based stakeholders (taka) US$ 1 = Tk 59 (approximately)

Source of income Annual per Stakeholder capita Agriculture Service Business Others Total income 49 858 7 800 820 58 478 CGPRT crop growers 0 11 013 (85.26) (13.34) (1.40) (100) 12 000 2 823 56 856 71 679 Small-scale processors 0 10 240 (16.74) (3.94) (79.32) (100) 5 305 500 5 305 500 Large-scale processors a 0 0 0 884 250 (100.00) (100) 2 500 26 250 526 750 12 500 568 000 Pulse processors 84 024 (0.44) (4.62) (92.74) (2.20) (100)

Processed product 14 000 412 500 424 500 0 0 70 750 market intermediaries (3.30) (97.17) (100)

Source: Field survey, 2004. Note: Figures in the parentheses indicate percentage of total. a Own estimate.

The average size of cultivated land was 1.01 hectares for all farmers under investigation. The size of cultivated land was lower for cheena, kaon and sweet potato growing farmers and higher for maize, potato and pulse growing farmers (Table 3.12). The per capita availability of land ranged between 0.09 hectares and 0.22 hectares indicating that CGPRT farmers operate under severe scarcity of land.

18 Profile of the Study Site, the Respondents and Their Household

Table 3.12 Landholdings of the surveyed households by tenure status Land area by tenure status (ha) Availability of CGPRT crop Rented Rented Shared Shared Total land per capita Own in out in out cultivated area (ha) Potato 0.88 0.07 0.01 0.09 0.04 1.00 0.17 Sweet potato 0.83 0.00 0.04 0.08 0.02 0.84 0.12 Maize 1.10 0.08 0.00 0.14 0.01 1.30 0.22 Lentil 0.79 0.04 0.04 0.10 0.01 0.88 0.12 Mungbean 0.95 0.15 0.00 0.04 0.00 1.14 0.15 Kaon 0.77 0.00 0.04 0.10 0.02 0.80 0.11 Cheena 0.72 0.00 0.05 0.07 0.02 0.71 0.09 All 0.89 0.07 0.02 0.07 0.01 1.01 0.15 Source: Field survey, 2004.

3.3 Concluding summary

This study generated primary data from six districts on seven CGPRT crop based farming systems. The districts covered by the farm survey are predominantly rural contributing about 19 per cent to the country’s GDP. These districts are home to 10.38 per cent of the total population. Most of the people in these districts are engaged in agriculture. The intensity of cropping is high and CGPRT crops perform well in these districts. The average yield of different crops in the selected districts does not differ much from that of the national average. The per capita availability of land is 0.15 hectares indicating that CGPRT crop farmers in the selected areas operate under severe scarcity of land. The main occupation of processors and market intermediaries of CGPRT crops is business. They have a higher level of education and higher per capita income than the CGPRT crop growing farmers. However, the extent of unemployment and poverty is endemic in the study areas. Also, there are indications of environmental problems. Roads and communication, cold storage and processing facilities have been developing in recent years in these areas.

4. Analysis of CGPRT Farming Systems

4.1 Average size of farm

In this study, seven CGPRT crops were selected and the total number of growers for each crop is shown in Table 4.1. It revealed that the total number of growers for the seven CGPRT crops were 158 while the total number of growers of mungbean and maize were found to be less than 20. The average farm size was found to be 1.01 hectares and the lowest (0.71 ha) was observed in the case of cheena growers. The share of CGPRT crops on average sized farm was 26.76 per cent. The highest share of land was allocated for maize (42.40 per cent) followed by potato (40 per cent) with only 14.71 per cent of land devoted to cheena cultivation. The average farm size was larger (1.30 ha) for maize farmers indicating that large farmers were more interested in producing the cash crop. The study reveals that there is a positive relationship between the use of more inputs and farm size and that relatively large farmers produce CGPRT crops, which enable them to earn more cash income. Most CGPRT crops are grown on low to medium-low land on sandy, loamy and alluvium soils. It was observed that the land type as well as soil type also favours farmers to select CGPRT crops, which enable farmers to earn more income.

4.2 Patterns of cultivation

The cropping pattern depends largely on the type of land and soil. CGPRT crops are mostly grown in the unfavourable areas of the country. In our study, it was found that sweet potato, lentil, mungbean, kaon and cheena are mostly grown in the char (raised land mass in a river formed by silt) areas of the selected districts where flooding occurs during the monsoon and there is a significant amount of alluvium in the soils of those areas, which need low cost inputs for CGPRT crop production. The major cropping patterns as well as the crop calendar of each CGPRT crop were examined and results are shown in Table 4.2 and Table 4.3. It was found that a potato-maize-T.Aman (Transplanted Aman Rice, see Table A.5) cropping pattern constitutes 70 per cent of the total cultivated area of surveyed farms of Bogra district while the dominant cropping pattern at Munshigonj for CGPRT farmers was potato-dhaincha-fallow which occupied 40 per cent of the total cultivated land of that area (Table 4.2). Maize based cropping patterns were found in Jamalpur, Bogra and Rangpur districts. Maize-T.Aman-potato dominated Bogra and Rangpur, which occupied 35 per cent of the total cultivated land of those study areas. Sweet potato is mostly grown in the char areas of Jamalpur and Rangpur districts where sandy soils are predominant and occupy less than 20 per cent of the total cultivated land.

21 Chapter 4

Table 4.1 Average farm size of the CGPRT farmers and the share of CGPRT crops in the study areas Size of Average farm size Percentage of total CGPRT crop Area of CGPRT crops Land type Soil type sample (ha) cultivated area Potato 24 1.00 0.40 40.00 Medium low to high Loamy to Alluvium Sweet potato 29 0.84 0.09 10.71 Medium low Sandy and sandy-loam Maize 15 1.30 0.55 42.31 Medium low Clay to loamy Lentil 24 0.88 0.21 23.86 Medium low Alluvium Mungbean 14 1.14 0.24 21.05 Medium low Alluvium Kaon 26 0.80 0.28 35.00 Low Sandy Cheena 26 0.71 0.10 14.08 Low Sandy All 158 1.01 0.27 26.76 - - Source: Field Survey, 2004

22 Analysis of CGPRT Farming Systems

Table 4.2 CGPRT based cropping patterns in the study areas CGPRT crop Cropping pattern of surveyed farmers Percentage of Area covered cultivated area Potato 1. Potato - Maize - T. Aman 70 Bogra 2. Potato - Dhaincha - Fallow 40 Munshigonj 3. Potato - Jute - Vegetables 30 Munshigonj 4. Potato - Kaon - Fallow 8 Jamalpur Sweet potato 1. Sweet potato - Fallow - Black gram 18 Jamalpur 2. Sweet potato - Fallow - T. Aman 17 Jamalpur, Rangpur Maize 1. Maize - T. Aman - Potato 35 Bogra, Rangpur, 2. Maize - Kaon - T. Aman 28 Jamalpur Lentil 1. Lentil - Fallow - T. Aman 20 Jamalpur 2. Lentil - Mungbean - Vegetables 19 Pabna Mungbean 1. Mungbean - Vegetables - Lentil 19 Pabna 2. Mungbean - Fallow - Groundnut 16 Faridpur 3. Mungbean - Fallow - Fallow 12 Faridpur Kaon 1. Kaon - T. Aman - Maize 25 Jamalpur 2. Kaon - Fallow - Onion 11 Jamalpur 3. Kaon - T. Aman - Black gram 9 Jamalpur 4. Kaon - Fallow - Potato 8 Rangpur Cheena 1. Cheena - Fallow - Black gram 15 Jamalpur 2. Cheena – T. Aman - Black gram 13 Jamalpur Source: Field Survey, 2004.

Lentil and mungbean based cropping patterns were found in Jamalpur, Pabna and Faridpur districts and about 20 per cent of total cultivated land were covered by each of the cropping pattern (Table 4.2). Kaon and cheena are usually treated as inferior crops in Bangladesh and the farmers of the char areas of Jamalpur and Rangpur districts and other areas of Bangladesh cultivate land for these crops.

Table 4.3 Crop calendar for the CGPRT crops in the study areas Crops Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Potato gggg gggh hhhh ------sss gggg Sweet potato gggg gggg hhhh ------ss ssgg Maize gggg gggg gghh hh hh - - - - - s sssg Lentil gggg gggg ghhh ------ssgg gggg Mungbean - s sssg gggg gggh gghh ------Kaon - ssgg gggg gggg gghh ------Cheena gggg gggg hhh ------sssg Notes: s = Sowing period. g = Growing period. h = Harvesting period. - = Off season for CGPRT crops.

Table 4.3 shows that most of the CGPRT crops were grown during the winter season (November to March) while mungbean and kaon are grown pre-monsoon (March to June). It indicates that most CGPRT crops are free from natural calamities.

23 Chapter 4 4.3 Labour use

Labour cost is an essential part of the total cost of production. Labour was mainly used for land preparation, seed sowing or planting, inter culture operations and harvesting. Both family and hired labourers are used for the production of CGPRT crops.

Table 4.4 Labour use for CGPRT based cropping patterns in the study areas Cropping Crops Family labour Hired labour Total Wage rate pattern (CP) (man-days/ha) (man-days/ha) (man-days/ha) (Tk/m-d) (CP-1) Potato 32 184 216 81 Maize 34 122 156 62 T. Aman 74 113 187 75a Total 140 419 559 71.5 (CP-2) Sweet potato 77 106 183 52 Fallow 0 0 0 0 Black gram 134 0 134 55 a Total 211 106 317 53.5 (CP-3) Maize 34 122 156 62 Kaon 46 39 85 51 T. Aman 74 113 187 75 a Total 154 274 428 62.66 (CP-4) Lentil 48 33 81 58 T. Aman 74 113 187 75 a Fallow 0 0 0 0 Total 122 146 268 66.5 (CP-5) Mungbean 52 75 127 69 Fallow 0 0 0 0 Groundnut 155 65 220 60 a Total 207 140 347 64.5 (CP-6) Kaon 46 39 85 51 Fallow 0 0 0 0 Potato 32 184 216 81 Total 78 223 301 66 (CP-7) Cheena 58 6 64 50 Fallow 0 0 0 0 Black gram 134 0 134 55 a Total 192 6 198 52.5 Note: a Data for black gram was obtained from Hossain A.T.M.S. (1998), for groundnut from Hoque M.F. (1993) and for T. Aman from Hossain M.D. (1996). The prices were inflated by Consumer Price Index (CPI) base 1984- 1985 =100.

Family labour includes the farm operator and other members of his family for which no cash payment is made and hired labour is casual labour employed on a daily contract basis for which the owner has to pay wages in cash. Table 4.4 shows the amount of labour used for different CGPRT based cropping patterns in the study areas. It appears from the table that cropping pattern (CP-1) required the most human labour; 559 man-days per hectare, and the lowest was for CP-7; 198 man-days per hectare. For lentil and millet based cropping patterns, more family labourers are used per hectare of land. In other cases, the number of hired labourers used were more than that of family labour. It reveals that the potato based cropping pattern would absorb more labour than rice or wheat based cropping patterns in Bangladesh.

4.4 Farm productivity

Farm productivity is measured by the total quantity of output produced multiplied by its market price plus the value of the by-product. The value of output per hectare was calculated and is shown in Table 4.5. It can be noticed that the highest gross return was 160,758 taka for

24 Analysis of CGPRT Farming Systems potato and the lowest was for cheena that accounted for 13,536 taka. The cost of producing the crops is discussed in the following section.

Table 4.5 Per hectare production and value of CGPRT crops in the study areas Main product By-product Total Quantity Price/unit Total CGPRT crop (Tk) (Tk) (Quintal/ha) (Tk) (Tk) Potato 302.60 531.25 160 758.70 0.00 160 758.70 Sweet potato 143.04 308.62 44 145.77 1 193.98 45 339.75 Maize 75.23 748.33 56 302.88 1 572.82 57 875.69 Lentil 8.69 2 395.83 20 829.21 612.66 21 441.87 Mungbean 12.29 2 392.85 29 404.08 444.01 29 848.09 Kaon 21.85 594.23 12 986.56 1 781.51 14 768.06 Cheena 18.83 617.31 11 625.64 1 910.10 13 535.74 Source: Field Survey, 2004.

Farmers usually prefer to produce a crop that gives higher returns but it depends on the soil quality and financial capability of the farmers. An attempt was made to find out the most profitable CGPRT based cropping pattern by which farmers could expect the maximum benefit for his farm business. It was found that potato based cropping patterns (CP-1 and CP-6) gave the highest return followed by (CP-3) maize based cropping patterns (Table 4.6). Nowadays, potato and maize are treated as cash crops among the CGPRT crops. Demand for maize is increasing due to the establishment of poultry industries in recent years. On the other hand, potato has emerged as an exportable crop in recent years. Different types of snacks made from potato are also exported to different countries of the world from Bangladesh.

Table 4.6 Production of CGPRT based cropping patterns in the study areas (Per hectare) Main product Return from Return from Cropping Crops Gross return pattern (CP) Quantity Price/unit main product by product (Tk) (Quintal) (Tk) (Tk) (Tk) (CP-1) Potato 302.60 531.25 160 758.70 0.00 160 758.70 Maize 75.23 748.33 56 302.88 1 572.82 57 875.69 T. Aman a 41.05 740.00 30 377.00 2 430.00 32 807.00 Total 247 438.58 4 002.82 251 441.00 (CP-2) Sweet potato 143.4 308.62 44 145.77 1 193.98 45 339.75 Fallow 0 0 0 0 0 Black gram a 9.39 2 240.00 21 034.00 1 683.00 22 717.00 Total 65 179.77 2 876.98 68 056.80 (CP-3) Maize 75.23 748.33 56 302.88 1 572.82 57 875.69 Kaon 21.85 594.23 12 986.56 1 781.51 14 768.06 T. Aman a 41.05 740.00 30 377.00 2 430.00 32 807.00 Total 99 666.40 5 784.30 105 451.00 (CP-4) Lentil 8.69 2 395.83 20 829.21 612.66 21 441.87 T. Aman a 41.05 740.00 30 377.00 2 430.00 32 807.00 Fallow 0 0 0.00 0.00 0.00 Total 51 206.21 3 042.66 54 248.90 (CP-5) Mungbean 12.29 2 392.85 29 404.08 444.01 29 848.09 Fallow 0 0 0 0 0 Groundnut a 16.33 1 680.00 27 435.00 0.00 27 435.00 Total 56 839.08 444.01 5 283.1 (CP-6) Kaon 21.85 594.23 12 986.56 1 781.51 14 768.06 Fallow 0 0 0 0 0 Potato 302.60 531.25 160 758.70 0.00 160 758.70 Total 173 745.26 1 781.51 175 527 (CP-7) Cheena 18.83 617.31 11 625.64 1 910.10 13 535.74 Fallow 0 0 0 0 0 Black gram a 9.39 2 240.00 21 034.00 1 683.00 22 717.00 Total 32 659.64 3 593.10 36 252.70 Note: a Data for black gram was obtained from Hossain A.T.M.S. (1998), for groundnut from Hoque M.F. (1993) and for T. Aman from Hossain M.D. (1996). The prices were inflated by Consumer Price Index (CPI) base 1984-1985=100.

25 Chapter 4 4.5 Cost-revenue structures and farm profitability

In the analysis of farm business, the enterprise costing technique was used. The use of inputs in the production system and the structure of the costs are shown in Table 4.7 and Table 4.8. It was observed that potato, followed by sweet potato requires the most human labour. The use of hired labour was greater for these crops, but in the case of lower value CGPRT crops such as kaon and cheena, more family labour was used (Table 4.7). Thus, the production of low value CGPRT crops shows a positive impact on the absorption of family labour. Lower value crops require a lower quantity of inputs. It was found that the use of chemical fertilizers was minimal in the case of kaon and cheena, while potato and maize required eight to ten times higher doses of chemical fertilizers. The farmers who produced kaon and cheena used traditional plowing methods, while potato and maize growers used power tillers for plowing. Some of the farmers reported to have used higher doses of fertilizers for potato cultivation while others used a higher quantity of seeds for lentil and cheena. Per hectare costs of CGPRT crops were calculated and are shown in Table 4.8. The highest cost of production was found for potato, which was 71,282 taka, and for maize it was 36,037 taka. The cost of growing other crops was much lower than potato and maize with the lowest costs found for kaon and cheena (Table 4.8). Of the total cost, variable costs accounted for about 90 per cent for potato, and 85 per cent for maize while for kaon and cheena, the cost was as low as about 50 per cent. This is reflected in the profitability of CGPRT crops.

Table 4.7 Use of inputs in CGPRT crop production (Quantity/hectare) Crop Input Unit Potato Sweet Maize Lentil Mungbean Kaon Cheena potato Human labour Man-day 216 183 156 81 127 85 64 - Family 32 77 34 48 52 46 58 - Hired 184 106 122 33 75 39 6 Animal labour Pair-day 12.08 28.01 4.19 13.65 0 19.40 19.84 - Family 7.40 20.17 0.39 10.77 0 16.27 17.60 - Hired 4.68 7.84 3.74 2.88 0 3.13 2.24 Cost of power Tk 2 052.78 0 2 069.31 1 321.24 2 150.25 0 0 tiller Seed/seedling Kg 1 723.49 61 000 a 39.75 45.08 23.72 8.75 16.03 - Own 1 167.88 45 000 a 1.00 26.70 7.61 7.35 14.48 - Purchased 555.61 16 000 a 38.75 18.38 16.11 1.40 1.55 Manure Quintal 53.29 4.03 28.53 1.72 5.32 0 1.38 Fertilizer Kg 453 86 456 66 10 46 78 - Urea 375 75 239 18 30 0 3 - TSP 368 6 170 18 21 0 0 - MP Insecticides Tk 3 170.81 25.55 839.05 31.19 0 6.20 109.73 Irrigation Tk 4 166.16 373.22 2,305.33 0 154.90 5.78 237.28 Source: Field Survey, 2004. a Cutting of vine (number).

26 Analysis of CGPRT Farming Systems

Table 4.8 Per hectare cost of production of selected CGPRT crops (taka) Crop Cost component Sweet Potato Maize Lentil Mungbean Kaon Cheena Potato 17 530.82 9 484.25 9 693.14 4 710.13 8 785.78 4 332.37 3 184.65 Human labour (24.59) (35.30) (26.90) (33.47) (51.67) (44.10) (30.46) 2 616.71 3 992.04 2 138.24 2 775.37 3 582.59 2 354.25 2,889.76 Family (3.67) (14.86) (5.93) (19.72) (21.07) (23.96) (27.64) 14 914.11 5 492.21 7 554.90 1 934.76 5 203.19 1 978.12 294.89 Hired (20.92) (20.44) (20.96) (13.75) (30.60) (20.13) (2.82) 1 208.20 4 119.58 419.15 2 047.50 0.00 2 988.23 3,148.06 Animal labour (1.69) (15.33) (1.16) (14.55) (0.00) (30.41) (30.11) 740.40 2 966.69 39.92 1 614.78 0.00 2 505.27 2,792.34 Family (1.04) (11.04) (0.11) (11.47) (0.00) (25.50) (26.71) 467.80 1 152.89 379.23 432.72 0.00 482.96 355.71 Hired (0.66) (4.29) (1.05) (3.07) (0.00) (4.92) (3.40) 2 052.78 0.00 2 069.31 1 321.24 2 150.25 0.00 0.00 Cost of power tiller (2.88) (0.00) (5.74) (9.39) (12.64) (0.00) (0.00) 20 714.40 6 944.45 5 578.75 1 784.43 846.88 154.26 273.74 Seed/Seedling (29.06) (25.84) (15.48) (12.68) (4.98) (1.57) (2.62) 14 037.92 6 558.65 140.05 1 056.76 271.58 129.66 247.31 Own (19.69) (24.41) (0.39) (7.51) (1.60) (1.32) (2.37) 6 678.48 385.79 5 438.71 727.67 575.30 24.60 26.43 Purchased (9.37) (1.44) (15.09) (5.17) (3.38) (0.25) (0.25) 4 857.62 200.15 2 272.15 86.36 266.42 0.00 69.35 Manure (6.81) (0.74) (6.31) (0.61) (1.57) (0.00) (0.66) Fertilizer 2 716.62 516.81 2 738.71 394.83 58.27 278.49 468.49 Urea (3.81) (1.92) (7.60) (2.81) (0.34) (2.83) (4.48) 5 999.14 1 163.33 3 820.47 289.85 473.96 0.00 43.18 TSP (8.42) (4.33) (10.60) (2.06) (2.79) (0.00) (0.41) 4 788.37 78.35 2 213.64 253.15 99.98 0.00 0.00 MP (6.72) (0.29) (6.14) (1.80) (0.59) (0.00) (0.00) 3 170.81 25.55 839.05 31.19 0.00 6.20 109.73 Insecticides (4.45) (0.10) (2.33) (0.22) (0.00) (0.06) (1.05) 4 166.16 373.22 2 305.33 0.00 154.90 5.78 237.28 Irrigation (5.84) (1.39) (6.40) (0.00) (0.91) (0.06) (2.27) 4 077.24 3 965.33 4 087.57 3 154.67 4 168.64 2 059.56 2 919.23 Rental value of land (5.72) (14.76) (11.34) (22.42) (24.51) (20.96) (27.93) 44 954.27 9 188.15 27 359.35 5 385.41 8 715.85 2 776.15 1 535.71 Cash cost (63.07) (34.19) (75.92) (38.27) (51.25) (28.26) (14.69) 64 588.21 18 913.65 29 811.46 8 143.31 9 253.85 5 411.08 4 644.72 Variable cost (90.61) (70.39) (82.72) (57.86) (54.42) (55.08) (44.43) 6 693.95 7 957.37 6 225.81 5 930.04 7 751.23 4 413.81 5 808.99 Fixed cost (9.39) (29.61) (17.28) (42.14) (45.58) (44.92) (55.57) Total cost 71 282.16 26 871.02 36 037.27 14 073.35 17 005.08 9 824.89 10 453.71 Source: Field Survey, 2004. Note: Figures in the parentheses indicate percentage of total cost.

27 Chapter 4

The profitability of individual crops was calculated directly from the gross return minus the total cost. The return over cash costs were also calculated. Undiscounted benefit cost ratios (BCR) were measured for different crops. Net return was found to be the highest for potato followed by sweet potato and maize and the lowest was observed for cheena (Table 4.9). The undiscounted BCRs were 2.26, 1.69, 1.61, 1.52, 1.76, 1.50 and 1.29 respectively for potato, sweet potato, maize, lentil, mungbean, kaon and cheena. Lower net returns were observed for kaon and cheena, and their BCRs did not significantly differ. The profitability of growing CGPRT crops is comparable with that of the major grains, rice and wheat (Table A.3 and Table A.4), which are usually grown under favourable agro-ecological conditions in Bangladesh. The observed benefit cost ratios are higher for potato, mungbean, sweet potato and maize than for some varieties of rice grown in the country.

Table 4.9 Profitability of CGPRT crop production (Tk/hectare) Crop Parameter Sweet Potato Maize Lentil Mungbean Kaon Cheena potato Total return 160 758.70 453 39.75 57 875.69 21 441.87 29 848.09 14 768.06 13 535.74 Cash cost 44 954.27 91 88.15 27 359.35 5 385.41 8 715.85 2 776.15 1 535.71 Variable cost 64 588.21 189 13.65 29 811.46 8 143.31 9 253.85 5 411.08 4 644.72 Total cost 71 282.16 268 71.02 36 037.27 14 073.35 17 005.08 9 824.89 10 453.71 Gross margin 96 170.49 26 426.1 28 064.23 13 298.56 20 594.24 9 356.98 8 891.02 Net return 89 476.54 184 68.73 21 838.42 7 368.52 12 843.01 4 943.17 3 082.03 Return over 115 804.43 36 151.6 30 516.34 16 056.46 21 132.24 11 991.91 12 000.03 cash cost Benefit cost ratio 2.26 1.69 1.61 1.52 1.76 1.50 1.29 (undiscounted) Source: Field Survey, 2004.

The profitability of CGPRT based cropping patterns is presented in Table 4.10. From the table one can notice that the highest returns are found for potato based cropping patterns CP-1 and CP-6 (251,441 taka and 175,527 taka) followed by a maize based cropping pattern (105,451 taka). Net return was also found to be highest for potato based cropping patterns. On the other hand, the variable cost of potato based cropping patterns was the highest followed by maize: 118,274 taka and 69,999 taka respectively. The lowest net return was found for the cheena based cropping pattern CP-7 (Table 4.10). Benefit cost ratios were found to be 1.87, 1.57, 1.44, 1.31, 1.37, 2.16 and 1.34 for CP-1, CP-2, CP-3, CP-4, CP-5, CP-6 and CP-7, respectively.

28 Analysis of CGPRT Farming Systems

Table 4.10 Profitability of CGPRT crop based cropping patterns (Tk/hectare) Cropping Crop Total return Cash cost Variable cost Total cost Return over Return over Net return BCR pattern (CP) cash cost variable cost (undisc.) (CP-1) Potato 160 758.70 44 954.27 64 588.21 71 282.16 115 804.43 96 170.49 89 476.54 2.26 Maize 57 875.69 27 359.35 29 811.46 36 037.27 30 516.34 28 064.23 21 838.42 1.61 T. Aman a 32 807.00 11 496.00 23 874.20 27 196.00 21 311.00 8 932.80 5 611.00 1.21 Total 251 441.39 83 809.62 118 273.87 134 515.43 167 631.77 133 167.52 116 925.96 1.87 (CP-2) Sweet potato 45 339.75 9 188.15 18 913.65 26 871.02 36 151.60 26 426.10 18 468.73 1.69 Fallow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Black gram a 22 717.00 5 704.06 12 300.72 16 610.66 17 012.94 10 416.28 6 106.34 1.37 Total 68 056.75 14 892.21 31 214.37 43 481.68 53 164.54 36 842.38 24 575.07 1.57 (CP-3) Maize 57 875.69 27 359.35 29 811.46 36 037.27 30 516.34 28 064.23 21 838.42 1.61 Kaon 14 768.06 2 776.15 5 411.08 9 824.89 11 991.91 9 356.98 4 943.17 1.50 T. Aman a 32 807.00 11 496.00 23 874.20 27 196.00 21 311.00 8 932.80 5 611.00 1.21 Total 105 450.75 41 631.50 59 096.74 73 058.16 63 819.25 46 354.01 32 392.59 1.44 (CP-4) Lentil 21 441.87 5 385.41 8 143.31 14 073.35 16 056.46 13 298.56 7 368.52 1.52 T. Aman a 32 807.00 11 496.00 23 874.20 27 196.00 21 311.00 8 932.80 5 611.00 1.21 Fallow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 54 248.87 16 881.41 32 017.51 41 269.35 37 367.46 22 231.36 12 979.52 1.31 (CP-5) Mungbean 29 848.09 8 715.85 9 253.85 17 005.08 21 132.24 20 594.24 12 843.01 1.76 Fallow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Groundnut a 27 435.00 7 401.80 10 674.00 24 814.00 20 033.20 16 761.00 2 621.00 1.11 Total 57 283.09 16 117.65 19 927.85 41 819.08 41 165.44 37 355.24 15 464.01 1.37 (CP-6) Kaon 14 768.06 2 776.15 5 411.08 9 824.89 11 991.91 9 356.98 4 943.17 1.50 Fallow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Potato 160 758.70 44 954.27 64 588.21 71 282.16 115 804.43 96 170.49 89 476.54 2.26 Total 175 526.76 47 730.42 69 999.29 81 107.05 127 796.34 105 527.47 94 419.71 2.16 (CP-7) Cheena 13 535.74 1 535.71 4 644.72 10 453.71 12 000.03 8 891.02 3 082.03 1.29 Fallow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Black gram a 22 717.00 5 704.06 12 300.72 16 610.66 17 012.94 10 416.28 6 106.34 1.37 Total 36 252.74 7 239.77 16 945.44 27 064.37 29 012.97 19 307.30 9 188.37 1.34 Source: Field Survey, 2004. Note: a Data for black gram was obtained from Hossain A.T.M.S. (1998), for groundnut from Hoque M.F. (1993) and for T. Aman from Hossain M.D. (1996). The prices were inflated by Consumer Price Index (CPI) base 1984-1985=100.

29 Chapter 4 4.6 Profile of household consumption of CGPRT crops

Consumption patterns of different CGPRT crops vary by locality, caste and human culture. Table 4.11 presents information on food items prepared from CGPRT crops in Bangladesh. Potato and sweet potato are mainly used in the form of vegetables and also as ingredients of different casual food items. Maize is used mainly for making commercial poultry feed. Cheena and kaon are used as a substitute for rice. These grains are also used for making frumenty. Pulses are traditionally used to prepare soup. In addition, different forms of cake, fried and boiled food items, paste food, vinegar and hotchpotch are prepared from CGPRT crops in Bangladesh.

Table 4.11 Household level consumption patterns of CGPRT crops Sweet Form of consumption Potato potato Maize Lentil Mungbean Kaon Cheena Rice 9 9 Payes (frumenty) 9 9 Cake 9 Moa (ball-shaped snack) 9 Chitoi pitha (a sort of cake) 9 Muthi pitha (a sort of cake) 9 9 Dal (soup) 9 9 Boiled food item 9 9 9 Fried food item 9 9 9 9 9 Vegetable 9 9 Bhorta (Paste) 9 9 Chuka (vinegar) 9 9 Khichuri (hotchpotch) 9 9 9 9 9 Poultry feed 9 Source: Field Survey, 2004.

4.7 Profile of household level processing of CGPRT crops

Processing of CGPRT crops is by both traditional and mechanical means. Kaon and cheena are processed mostly using traditional methods at a household level (Table 4.12). A small portion of lentils and mungbean are processed at home for self-consumption such as dal (soup). Maize is almost all sold to wholesalers at the market while an insignificant portion is processed at the household level to be consumed as maize powder (sato) and dairy feed. The char people usually eat cheena and kaon after parboiling to supplement their main food; rice. The processing of selected CGPRT crops at the household level was closely observed in the study areas. Three traditional appliances are used to process these crops. A short description of the appliances is given below: i) Dhenki or Dheki: A wooden implement of the type of a pestle and mortar operated by foot pressure. This device is used for husking rice, wheat, pulses and making rice and spice powder. ii) Gail-chia: This device is made of wood with a big hole on the upper side. Pulses are placed in the hole and hand pressed using a wooden pestle with two hands. This device is also used to make rice, and spice and pulse powder. iii) Janta: The janta is made of two pieces of wheel-shaped stones placed one upon the other. The lower stone remains fixed and the upper stone is rotated clockwise. There is a hole on the upper stone through which whole pulses are inserted. The appliance is

30 Analysis of CGPRT Farming Systems

then operated manually with the help of a vertical handle fixed to the upper stone. The bran is separated from the pulse grain by rubbing and constant pressure of the two wheel-shaped stones.

The amount of time required for processing CGPRT crops using traditional methods is high. It was observed that the traditional appliances, on average, husked 1.5 to 2.5 kg of pulses per hour depending on the type of pulse. On the other hand, a 30-horse power motor operated machine husked 200 to 250 kg of whole pulse per hour and an automatic husking mill processed 500 to 600 kg of whole pulse per hour (Elias et al., 1986). There has been a decline in manual CGPRT crop processing in the study areas. The main reasons cited by the respondents include the long time taken for processing, scarcity of labour, high prices of traditional appliances, and the availability of machines close to the farmers. CDP (1984) reported that higher broken and milling losses accompanied by lower prices for manually processed products compared to machine milled products are also responsible for the decline in manual processing of CGPRT crops in rural areas.

Table 4.12 Percentage of CGPRT crops processed by different devices and the means of processing % processed by Means of traditional processing Crop Mechanical Traditional Dheki Gail-chia Janta device device Maize 91.92 8.08 0 8.08 0 Lentil 86.00 14.00 1.80 6.20 6.00 Mungbean 87.50 12.50 4.60 3.90 4.00 Kaon 30.52 69.48 48.21 21.27 0 Cheena 22.12 77.88 47.80 30.08 0 Source: Field Survey, 2004.

The cost of processing different CGPRT crops and their products were calculated at the household level. It was found that the cost of processing per quintal of mungbean and lentil were 40.50 taka and 42.00 taka respectively (Table 4.13) while the cost for maize, kaon and cheena were 35.25 taka, 36.75 taka and 37.71 taka respectively. The processing costs were minimal due to the use of lower-waged female labour and the use of traditional technologies. The cost of processing is almost double when using a mechanical device (95 to 120 taka per quintal of pulses depending on the total quantity processed). The cost of mechanical processing is high mainly due to the high installation and operating costs of machines.

Table 4.13 Cost of processing CGPRT crops and their products at the household level in the study areas (Using traditional methods) (Tk/quintal) Crop Cost component Maize Lentil Mungbean Kaon Cheena Family labour 15.00 19.00 18.00 18.50 20.50 Male 0 0 0 0 0 Female 15.00 19.00 18.00 18.50 20.50 Paid labour 14.00 16.75 16.25 12.00 10.96 Male 14.00 0 0 0 0 Female 0 16.75 16.25 12.00 10.96 Total labour cost 29.00 35.75 14.25 30.50 31.46 Cost of using machine 6.25 6.25 6.25 6.25 6.25 Total cost of processing 35.25 42.00 40.50 36.75 37.71 Source: Field Survey, 2004.

31 Chapter 4 4.8 The role of diversified farming systems in risk mitigation

CGPRT crops promote diversification of the farming system in the unfavourable low- lying areas where floods randomly occur. Farmers are unaware of the timing of floods; it happens sometimes earlier and sometimes later in the rainy season. This dictates farmers to select short duration CGPRT crops to grow mainly during the Rabi season (Table A.5) to reduce the risk to their farm business. Many farmers pointed out that the high costs required by major crops, which are often damaged by floods and draughts, put them at huge economic loss. CGPRT crops play a vital role in the diversification of the farming system to reduce risk of crop losses and stabilize the income of the farmers in the study areas.

4.9 Impacts on employment, income and environment

Some of the CGPRT crops utilize more hired labour while others employ family labour. These crops also ensure employment throughout the year. Thus, these crops contribute positively to rural employment. Moreover, farmers produce some of the common CGPRT crops that protect soil health and the physical environment. In our study areas, the average gross cropped area was found to be 1.37 hectares per farm of which 0.75 hectares (45.03 per cent) were under CGPRT crops, which contributed 39.13 per cent to total agricultural income (Table 4.14). This share of CGPRT crops to total household income was 33.36 per cent. The evidence indicates that CGPRT crops contribute significantly to annual household income.

Table 4.14 Share of CGPRT crop income to agricultural and total household income in the study areas Crops Net return Average income Percentage of total Percentage of total (Tk/ha) (Tk/farm) agric. income income Potato 89 476.50 14 316.24 28.71 24.48 Sweet potato 18 468.70 738.74 1.48 1.26 Maize 21 838.40 2 402.22 4.82 4.11 Lentil 7 368.52 663.16 1.33 1.13 Mungbean 12 843.00 642.15 1.29 1.10 Kaon 4 943.17 593.18 1.19 1.01 Cheena 3 082.03 154.10 0.31 0.26 All CGPRT crops n.a. 19 509.80 39.13 33.36 Others n.a. 30 348.20 60.87 66.64 Total agric. income (Tk) n.a. 49 858 100.00 n.a. Total income (Tk) n.a. 58 478 n.a. 100.00 Source: Field Survey, 2004.

In this study, an attempt was made to analyse the role of CGPRT crops in the annual household income of the surveyed areas. It was found that the area under CGPRT crops, area under other crops and off-farm income significantly contributed to annual household income. Results of a regression analysis (Table 4.15) show that if the area under CGPRT crops were increased by 1 per cent, annual household income would increase by 0.30 per cent. The value of adjusted R squared was 0.89 which implies the goodness of fit of the regression analysis from the collected data.

Table 4.15 Regression results for household income Level of Parameters Variables Coefficient t-values significance Family size X1 0.09 0.98 Insignificant Area under CGPRT crops X2 0.30 2.92 1% level Area under other crops X3 0.38 3.45 1% level Income from off-farm sources D 0.22 4.20 1% level Constant a 6.03 22.66 - Adjusted R squared R2 0.89 Source: Own calculation.

32 Analysis of CGPRT Farming Systems

4.10 Potential and constraints to farming operations

4.10.1 Potential of farming operations The rural economy is characterized by an abundant supply of labour engaged in agriculture. This labour force could be profitably utilized through crop-sector diversification. There is a lot of potential for diversifying the crop sector by adopting CGPRT crops in the farming system. The potential is listed in Table 4.16, and includes employment generation, promotion of the agro-processing industry, contribution to family income, contribution to poverty alleviation and nutrition, improvement of the environment and utilization of family labour. However, many people are not aware of this potential. The profitability of rice and wheat based cropping patterns were not covered by this study. Further research on the comparable profitability of different cropping patterns would be useful in future for policy guidance.

4.10.2 Constraints to farming operations There are also several constraints to the production of CGPRT crops in Bangladesh. It is apparent that better land is allocated to more important staple crops such as rice and wheat, while coarse grains, tubers and pulses are often grown on marginal and less fertile land. Farmers are used to cultivating these crops under rainfed conditions within harsh environments using minimum tillage, less inputs and little care. Therefore, per unit production of these crops is very low. The constraints to farming CGPRT crops are listed in Table 4.17. They include a lack of quality seeds, lack of improved production technology, high input costs, lack of cash capital, lack of appropriate storage facilities, lack of processing facilities, insect and pest attacks, risk of early floods, small size of market and low output price. Research and development programmes to overcome these constraints are insufficient in the country for these crops.

4.11 Concluding summary

CGPRT based cropping systems were investigated. The average size of the selected farms was 1.01 hectares. The share of CGPRT crops to total cropped area of the selected farms was 26.76 per cent. Most of the CGPRT crops were grown on low to medium-low land and the soil types were sandy, loamy and alluvium. CGPRT crops were grown mainly in the winter season. The study revealed that potato based cropping patterns generated higher net returns followed by maize, sweet potato, mungbean, lentil, kaon and cheena based cropping patterns. The undiscounted BCRs for individual CGPRT crops were 2.26, 1.69, 1.61, 1.76, 1.52, 1.50 and 1.29 for potato, sweet potato, maize, mungbean, lentil, kaon and cheena, respectively. The use of hired labour was more for high income generating CGPRT crops, while the lower value CGPRT crops, such as kaon and cheena used more family labour. Results of the study show that if the area under CGPRT crops increases by 1 per cent, annual household income would increase by 0.3 per cent indicating that horizontal diversification of the crop sector with CGPRT crops would lead to a significant increase in family income.

33 Chapter 4

Table 4.16 Potential of CGPRT crops in the farming system Potential Potato Sweet potato Maize Lentil Mungbean Kaon Cheena 1. Employment generation 9 9 9 2. Promote agro-processing industry 9 9 9 9 3. Contributes to family income 9 9 9 9 9 9 9 4. Reduces poverty 9 9 9 9 9 9 9 5. Increases nutrition intake 9 9 9 9 9 9 9 6. Environmentally friendly 9 9 9 9 9 7. More use of family labour 9 9 9 9 Source: Field survey, 2004.

Table 4.17 Constraints to CGPRT based cropping systems Constraints Potato Sweet potato Maize Lentil Mungbean Kaon Cheena 1. Lack of quality seeds 9 9 9 9 9 2. Lack of improved technologies 9 9 9 9 3. High input costs 9 9 9 4. Lack of cash capital 9 9 5. Lack of appropriate storage facilities 9 9 9 6. Lack of processing facilities 9 7. Insect and pests attacks 9 9 9 8. Risk of early floods 9 9 9 9. Small market size 9 9 9 10. Low price of output 9 9 9 9 Source: Field survey, 2004.

34 5. Analysis of the Marketing System of CGPRT Products

5.1 Forms of CGPRT crop based products traded and the distribution channel

Food processing is an important component of agribusiness in Bangladesh. Food processing involves the application of scientific principles to the preservation or modification of primary food products to make safe, appealing, uniform and standard foods. Food processing activities are increasingly gaining importance in contemporary Bangladesh. There is a trend towards diversification of production and people seem to be increasingly showing preference for processed foods. A large number of CGPRT crops are processed in different ways by the different types of processors. This section discusses the types of CGPRT crops processed, their forms and the distribution channels in Bangladesh.

5.1.1 Type of products processed from CGPRT crops by large-scale processors The large-scale processors selected for study produce a wide variety of CGPRT crop based processed food with varying specifications and product characteristics. A detailed list of items along with selected specifications and product characteristics are presented in Table 5.1.

Table 5.1 Type of product processed from CGPRT crops by large-scale processors Product Name of CGPRT crop Packing content (gram) Packing Ring chips Potato 35 90 pack = 1 Bag Ball chips Potato 35 90 pack = 1 Bag Curl chips Potato 35 90 pack = 1 Bag Potato crackers Potato 35 90 pack = 1 Bag Chanachur Lentil, chickpea 400,200,100,50 40 pack = 1 Bag Dal Mungbean/chickpea 35 300 pack = 1 Bag Machmacha Lentil, chickpea 35 300 pack = 1 Bag Alubhujia Gram flour 40 ------Source: Field Survey, 2004.

Large-scale processors distribute their products through a developed organized marketing network. In addition, products are distributed across the country to appointed dealers/commission agents by transport companies from the plant gate. The dealers sell products to both wholesalers and retailers. The channel can be depicted as follows:

Processor Æ Commission agent Æ Wholesaler ÆBapari/Retailer Æ Consumer

Large-scale processor Large-scale CGPRT crop processors are those who process relatively large volumes of hygienic foods on the one hand and create employment and generate income on a large-scale, on the other. In this study, large-scale food-manufacturing firms such as Bombay sweets, Pran (ANICL), Dipjal, Dolly Biscuits, Ruma Confectionaries etc. were investigated as CGPRT food processors who create a large number of jobs through their networks of backward and forward linkage activities.

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Dealer/Commission agent /Aratder Dealers or commission agents are large merchants. They deal at a fixed commission for a target sale; they are also stockists of different merchandise products. The dealers, on the sales side, distribute the product directly to wholesalers or retailers by rickshaw van.

Wholesaler Wholesalers receive products from dealers. Wholesalers are medium and large merchants in the marketing system. They sell products to retailers at the lowest profit. Along with other merchandise, wholesalers sell CGPRT crop based products like chanachur, chips, etc. to the retailers.

Bapari Bapari is a trader who purchases products from commission agent/wholesalers/ processors and sells them on to retailers or directly to consumers. Small baparies may operate within a particular area but large baparies may operate at district and regional levels. Small ones have no business premises, no storage facility and no employees but large baparies have permanent business premises and some employees. However, their role is not very significant in the marketing of CGPRT based finished products.

Retailer Retailers of CGPRT crop based products are relatively small-scale traders. They retail CGPRT crop based processed foodstuffs with other grocery and confectionary items. They receive snacks from wholesalers/baparies and sell them with other food products directly to consumers.

5.1.2 Products processed from CGPRT crops by small-scale processors Rapid urbanization and the improvement of roads and communication have created demand for processed food products. Moreover, with the establishment of new hat and bazar (markets) in rural and peri-urban areas, as well as parks in district towns, the demand for processed food of CGPRT origin has been increasing rapidly. People spend their leisure time in parks, students assemble in front of their schools, collages and university campus’ always demanding snack foods. These types of food are mainly snacks, spicy fast foods, fried nuts and chickpea. Interestingly, most of the snacks are made from CGPRT crops. So, different types of small-scale food processing shops have been established in urban, peri-urban and rural areas to cater to the demand for processed food from different types of consumers.

Table 5.2 Profile of processed CGPRT products distributed by small-scale producers in different locations Item produced CGPRT crop Location Channel Chanachur (pulses and Chickpea, mungbean Bogra, Chittagong, Dhaka, ProcessorÆConsumer groundnut mix) and lentil BAU campus Fuska (boiled potato and Potato and chickpea Mymensingh (MMA) and ProcessorÆConsumer chickpea within crispy ball) Chittagong (CCCA) Fried/puffed corn Maize Shahbag, Dhaka ProcessorÆConsumer Chatpati (cooked potato and Potato and pulses Zia uddan ProcessorÆConsumer pulses) Cake made of kaon/cheena Cheena, kaon Gutail, Jamalpur ProcessorÆConsumer Boiled sweet potato Sweet potato Islampur ProcessorÆConsumer French fries Potato MMA ProcessorÆConsumer Halim (spicy soup of pulses Mungbean, black gram Mymensingh ProcessorÆConsumer with mutton) Zilapi (coil shaped sweet) Black gram Mymensingh ProcessorÆConsumer Fried potato slice Potato DU campus ProcessorÆConsumer Source: Field Survey, 2004. Note: MMA means Mymensingh Municipal Area; CCCA means Chittagong City Corporation Area.

36 Analysis of the Marketing System of CGPRT Products

An attempt was made in the study to profile small-scale food processing activities based on CGPRT crops. A summary of the profile and marketing channel of processed CGPRT products is given in Table 5.2. The marketing channel for CGPRT crop based products processed by small-scale producers is simple. In most of the cases, the owners of the small-scale processing plants sell their produce directly to the end users. They purchase raw materials from different shops and after preparing/processing the light food item, they sell their product directly to the consumer.

5.1.3 De-husking pulses and the distribution channel After harvesting, pulse grains remain covered by pods. Even after opening the pods, each grain is covered by bran. Some pulses like chickpea, mungbean, black gram are directly marketed at the household level but most of the time they (for example lentil) are marketed after de-husking. De-husking pods is termed as pulse processing and is mainly performed by millers. A marketing channel exists from millers to end consumers through which de-husked pulses are distributed (Figure 5.1). In this channel, the market participants are millers, wholesalers, retailers and consumers. Millers have husking mills by which whole pulse seeds are husked and cleaned. In most of the cases, millers purchase whole pulse grains from the local or international markets, process them in their mill and then sell to traders like wholesalers. Moreover, they sometimes provide de-husking services to traders. Wholesalers are those traders who usually have their own godown and transit large volumes of de-husked pulses. They are specialized as pulse traders in a district town. Wholesalers purchase de-husked pulses from millers. Retailers are grocery shop owners who sell pulses along with other merchandise to consumers.

Figure 5.1 Marketing channel of pulses

Grower

Bepari

Aratder/Wholesaler

Miller/Stockist/Importer

Wholesaler

Retailer

Consumer

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5.1.4 Feed miller Maize is used all around the world as an animal feed ingredient; as a good source of energy. In Bangladesh, maize is mainly used as an ingredient of poultry feed and industrial material. In the early eighties, feed mills were established in the private sector (Haque, 1996). Most poultry rearers use hand mixed feed including maize. Nowadays, large commercial hatcheries and poultry farms have their own feed mills to produce ready feed for poultry. In the poultry feed market, both crushed maize and ready feed are marketed. Their marketing channels are shown in Table 5.3.

Table 5.3 Marketing channel of feed meal Item Marketing channel Crushed maize Trader cum processor Æ Poultry farm Trader cum processor Æ Retailer Æ Poultry farm Ready feed Feed mill Æ Poultry farm Feed mill Æ Dealer Æ Trader Æ Poultry farm Source: Field Survey, 2004.

5.2 Factory gate price and margin of CGPRT products

The marketing margin, at a particular stage of product flow, may be defined as the difference between the purchase and sale prices of a commodity. According to Khols and Uhls (1980), marketing margin may be defined as the difference between what is paid by the consumers and what is received by the producers. In this study, the marketing margin of each market participant was estimated by deducting the purchase price of the CGPRT crop based product from its sales price.

5.2.1 Marketing margins of the traders of large-scale processed products Participants of the marketing channel of large-scale processed products are processors, commission agents, wholesalers and retailers. Marketing margins of different traders of the large-scale processing units for CGPRT products are shown in Table 5.4. It reveals that the marketing margins of the processors (ranging from 23.54 per cent to 43.83 per cent of the consumer price) were greater than all other participants in the marketing channel for the large- scale processed products. Processors receive a higher margin because of the larger amount of investment over a long term, coupled with the risk and uncertainties as well as distributing the products to different regions. It was also found that wholesalers received the lowest marketing margin among the participants (ranging from 1.14 per cent to 8.44 per cent of the consumer price) because the wholesaler’s investment period is short and he deals with a large volume of products. Retailers receive better margins than wholesalers but still lower than commission agents (ranging from 3.29 per cent to 20.86 per cent of the consumer’s price).

38 Analysis of the Marketing System of CGPRT Products

Table 5.4 Marketing margin of the CGPRT crop based products of large-scale processors (taka) Product Market Participant Processor Commission agent/Dealer Wholesaler b Retailer Purchase Sales Marketing Purchase Sales Marketing Purchase Sales Marketing Purchase Sales Marketing price a price margin price price margin price price margin price price margin Chanachur (50 g) 707.55 990.00 282.50 990.00 1 089.00 99.00 1 089.00 1 157.00 68.00 1 157.00 1 200.00 43.00 300 pc/cdn (carton) (23.54) (8.25) (5.67) (3.58)

Chanachur (100 g) 421.00 600.00 179.00 600.00 660.00 60.00 660.00 677.00 17.00 677.00 700.00 23.00 100 pc/cdn (25.57) (8.57) (2.43) (3.29)

Chanachur (200 g) 554.72 920.00 365.28 920.00 1 012.00 92.00 1 012.00 1,043.00 31.00 1 043.00 1 120.00 77.00 80 pc/cdn (32.61) (8.21) (2.77) (6.88)

Chanachur (400 g) 514.00 1 040.00 526.00 1 040.00 1 144.00 104.00 1 144.00 1,160.00 16.00 1 160.00 1 200.00 40.00 40 pc/bag (43.83) (8.67) (1.33) (3.33)

Chanachu (1 kg) 466.24 784.00 317.76 784.00 866.00 79.00 866.00 953.00 87.00 953.00 1 120.00 167.00 16 kg/bag (28.37) (7.05) (7.77) (14.91)

Dal (40 g) 890.00 1 474.56 584.00 1 474.56 1 621.40 147.00 1 621.40 1,783.50 162.00 1 783.50 1 920.00 136.50 32 dozen/bag (30.42) (7.66) (8.44) (7.11)

Potato crackers (35 g) 261.60 442.40 181.40 442.40 491.40 49.00 491.40 498.60 7.20 498.60 630.00 131.40 90 pc/bag (28.79) (7.78) (1.14) (20.86) Source: Field Survey, 2004. Note: Figures in parentheses indicate percentage of consumer price. Purchase price of processor indicates purchase price of raw materials. a Price in taka per cdn/bag. b Large baparies are considered as wholesalers and small baparies are considered as retailers. Marketing margin includes marketing cost and trader’s profit.

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Table 5.5 Marketing margin of different types of pulse processors (taka/quintal) Market participant Miller Wholesaler Retailer Pulses Purchase Sales Marketing Purchase Sales Marketing Purchase Sales Marketing price price margin price price margin price price margin 1 500 450 350 Lentil 2 200 3 700 3 700 4 150 4 150 4 500 (33.33) (10.00) (7.78) 800 600 400 Mungbean 2 600 2 800 2 800 3 400 3 400 4 000 (20.00) (15.00) (10.00) 300 160 240 Chickpea 1 300 1 600 1 600 1 760 1 760 2 000 (15.00) (8.00) (12.00) Source: Field Survey, 2004. Note: Figures in the parentheses indicate percentage of consumer’s price.

Table 5.6 Marketing margin of feed millers (taka/quintal) Market Participant Miller Dealer Trader cum processor Trader Product Purchase Sales Marketing Purchase Sales Marketing Purchase Sales Marketing Purchase Sales Marketing price price margin price price margin price price margin price price margin 55 150 Crushed Maize ------845 900 900 1 050 (5.24) (14.29) 400 40 40 70 Ready feed 1 050 1 450 1 450 1 490 1 490 1 530 1 530 1 600 (25.00) (2.50) (2.50) (4.38) Source: Field Survey, 2004. Note: Figures in the parentheses indicate percentage of consumer’s price.

40 Analysis of the Marketing System of CGPRT Products

5.2.2 Marketing margins of the traders of processed pulses Marketing margins of pulse millers, wholesalers and retailers are shown in Table 5.5. In this table, one can notice that millers receive the highest marketing margin. They are at the same time stockists of pulses and for that they create a time utility by storing the pulses. Wholesalers gain higher margins than retailers in all cases, except for chickpea.

5.2.3 Marketing margins of the traders of feed meal Table 5.6 presents the marketing margins of feed millers, dealers, traders cum processors and traders. From this table it appears that traders of crushed maize receive higher margins than traders cum processors. On the other hand, millers gain the highest margin for ready feed and traders obtain a higher margin than dealers and traders cum processors. Traders play the main marketing role by stocking, distributing and selling crushed maize. In the marketing activities of ready feed, millers as well as traders are stockists and distributors, and for that they gain better margins.

5.3 Nature of market structure and competition

The market structure of competition between CGPRT crop based processed products varies according to the category of processor. The large-scale snacks, de-husked pulses and feed meal markets are spread nationwide but small-scale processors’ markets are not organized; they are local. We can categorize the large-scale, industrial, CGPRT crop based processed products market according to the nature of the competition; as monopolistic. The main features of this market are that the number of dealers is not large enough and the products are not homogeneous. The snacks processed by the large-scale processors are different in taste, brand and have varying consumer preferences. In addition, prices charged by different producers do not follow any one rule throughout the market. Different producers charge different prices for products, which are really similar, but are made to appear different through advertisements, well performed salesmanship, labelling and branding. In the case of the pulses market, Bangladesh faces pure competition where a large number of buyers and sellers exist. At the same time, the pulses processed by the millers are standardized or made identical. Therefore, homogeneous types of pulses and large numbers of buyers and sellers are found in the pulses market. Domestic millers and sellers of pulses also face competition from a liberal international trade regime through a large volume of imports every year. The market for ready feed is different and the number of firms is few. In this study the market for ready feed was found to be an imperfect oligopoly in nature. Since products are not similar, a lead producer can raise or lower prices without any fear of losing customers or immediate reactions from his rivals. However, keen rivalry among them creates conditions of perfect oligopoly or even monopolistic competition. On the other hand, crushed maize markets are purely competitive in nature. This study revealed that prices of small-scale, CGPRT crop based processed products were almost stable and fixed for different types of processors. Prices of these products depend on their quality, volume and location. Prices were fixed after adding some margin over the cost of a unit of produce. The number of small-scale processors is large but there is an unwritten, tacit agreement among the processors. They all deal with a sort of homogeneous (but sub- standardized in many cases) product and each is producing a considerable portion of the total output. The product and price policies of each processor are likely to affect the others, but none can foretell precisely how. So we can say that the small-scale processed products market is a perfect oligopoly in nature (Dewett and Chand, 1977).

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Our observations suggest that the marketing system of processed products for some CGPRT crops is not efficient. The establishment of a number of processing plants that produce high quality CGPRT crop based products has to be encouraged through government support. Furthermore, credit with easy terms must be provided to small and medium-scale enterprises (SMEs) that use CGPRT crops as raw materials and supply processed food and feed items to the market.

5.4 Potential and constraints in the marketing system

CGPRT crop based snacks of different varieties, tastes and colours, packaged in nice printed covers, are gaining popularity. It has been observed that the demand for potato chips, chanachur and fried pulses are increasing day by day. Currently, imported potato chips, mainly Indian lays, kurkuri, cheetos, uncle chips etc. have been taking a share of the domestic market. Potato crisps (Pringles) made in USA are also found in the market in attractive containers of different sizes. These snacks are mostly used for entertaining guests. Children are also fond of these imported chips. However, Bangladeshi chips, chanachur and dal fry are much cheaper food items and consumed by most children and common people. Sometimes elderly people consume these food items. These items are now universally accepted as food in Bangladesh, and quality snacks made from CGPRT crops are even exported at competitive prices. There are a few of recognized CGPRT crop based snack manufacturers in the country. Branded products like Pran, Bombay sweets etc. are very popular in the nationwide marketing system. At the same time thousands of local manufacturers processing and preparing snacks in an indigenous manner are marketing their products in rural areas. These snack producing industries, if supported with capital and technical skills, can increase the diversified uses of CGPRT crops and promote their production at the farm level. There is wide scope for market expansion of CGPRT crop based food products at home and abroad provided emphasis is given to the improvement of quality and the reduction of production costs.

5.5 Concluding summary

Marketing channels of large and small-scale processors of CGPRT crop products were analysed. The large-scale processors distribute their products through a developed marketing network. There are a number of actors in the marketing chain including traders, wholesalers and retailers who deliver the processed food to the consumers. In the case of small-scale processors, the marketing channel is short and simple. The processors take the processed food originating from CGPRT crops directly to the consumers. The share of large-scale processors in the total marketing margin is higher than other participants in the marketing channel because they make long-term investments and take the risk of uncertainties. In the case of de-husking pulses and preparing ready feed, the miller receives the highest margin. Snacks like potato chips, chanachur and fried pulses have been gaining popularity in this country over the years. The demand for these products has also been increasing rapidly recent years. Sustainable market expansion for CGPRT crop based products at home and abroad will require a reduction in production costs and improvements in quality in future.

42 6. Analysis of Industrial CGPRT Product Processing

6.1 Types of processed products and annual production

The demand for processed food has been increasing in Bangladesh in recent years. The rapidly changing pace of industrialization, development and culture has lead to increases in demand for processed food. Different varieties of snacks with different colours, tastes and aromas are manufactured by different types of industry. Attractive advertising for food items can also be observed through different medias in the country. In addition to these snacks, many other semi-processed food items are now reaching consumers from rural households. For example, de-husked pulses and pulse powder. These are de-husked at a household level for home consumption as well as for customers in the market. In addition to human food, animal feed items are also manufactured in different industries. Most of the semi-scavenging poultry farms and organized commercial poultry farms use mixed feed for their poultry in which CGPRT products are important ingredients. An attempt was made to study the industrial processing aspect of CGPRT crops in Bangladesh. The study investigated different types of processed products, the cost and revenue structure of processing firms and their constraints to processing. This chapter provides an analysis of that investigation.

6.1.1 Types of processed product by large-scale processors This study has categorized CGPRT crop based products as snacks, ready feed and de- husked pulses. These products are commonly marketed in the country. Different varieties of snacks are made from CGPRT crops by large-scale processors. Table 6.1 shows a profile of snack processors in Bangladesh. Significant products they process include chanachur, potato crackers, fried pulses etc. The large-scale snack processors are of two types. One has a nationwide marketing network and the other is only locally known as a snack processor. In this case, all except Dolly Biscuits, Tripti and Kiron Chanachur, have a nationwide marketing network. Some of them have an international reputation. In the case of ready feed, a case study was conducted to analyse the individual processing capacity of feed by Aftab Feed Mill. It was found that the Aftab firm processed 60,000 tons of feed per year, the value of which was 840 million taka.

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Table 6.1 Types of processed products and annual production by large-scale processors Name of product and processor/ Volume of product per year Value of product per year Brand name (kg) (Tk) Chanachur (pulses mix) 1) Dipjol 480 000 23 520 000 2) Bombay Sweets 15 000 000 900 000 000 3) Ruma 163 000 8 966 350 4) Pran 1 128 000 62 040 000 5) Dolly Biscuits 96 000 4 032 000 6) Dhaka Liton 168 000 9 240 000 7) Tripti (Kishoreganj) 83 000 4 150 000 8) Kiron Chanachur 125 000 4 375 000 Potato crackers 1) Bombay Sweets 3 000 000 399 000 000 2) Pran 631 600 107 385 600 3) Bengal Biscuits 216 000 36 720 000 Dal (fried pulse) 1) Pran 63 000 6 048 000 2) Dipjol 42 000 4 032 000 Ready Feed (Aftab) 60 000 000 840 000 000 De-husked pulse Lentil 365 250 13 514 250 Mungbean 59 125 1 674 420 Chickpea 50 625 810 000 Source: Field Survey, 2004.

In the case of de-husked pulses, it was observed that the sample processors, on average, processed 365,250 kg, 59,125 kg and 50,625 kg of lentil, mungbean and chickpea respectively. The value of these products was calculated as Tk 13,514,250, Tk 167,4420 and Tk 810,000 for lentil, mungbean and chickpea respectively.

6.1.2 Types of product processed by small-scale processors Table 6.2 shows a profile of food items made from CGPRT crops. Small-scale food processors prepare them in different areas of Bangladesh. The information gathered represents the average of 40 sample firms. The products investigated include fuchka, chatpoti, chanachur mix, potato flakes, fried maize, puffed maize, French fries, steamed cake made from millet and boiled sweet potato.

Fuchka/chatpoti Fuchka is a small puffed, oval shaped crispy ball made from flour. The processor adds some spicy boiled chickpea into the crispy ball before serving. The sample fuchka-making firm produces, on average, 15,000 plates of fuchka/chatpati per year. The total value of the item was 150,000 taka in 2003-2004.

Chanachur mix The vendor of snacks mixing fried pulses (chanachur) and rice flack together with nuts, sliced onion and mustard oil sells to people. It is a popular item to visitors of parks and students of schools. A vendor, on average, sold 900 kg of chanachur mix in 2003-2004. Total value of sales was 60,000 taka.

Potato flakes It is a simple potato slice. To make the flakes the potatoes are sliced into a round shape and dried in the sun. After drying, the flakes are fried in vegetable oil, and are enriched with salt and spices. A potato flake vendor’s annual sales were recorded at 400 kg (figure for three months) in 2003-2004. The total value of sales was 80,000 taka.

44 Analysis of Industrial CGPRT Product Processing

Fried maize The cobs of maize are roasted on a coal fire and served with sauce. The sample vendor sold around 10,000 pieces per annum. The value of sales was recorded 50,000 taka in 2003- 2004.

Table 6.2 Types of processed products and annual production by small-scale processors Name of product Volume of produce Value of product per year per year (taka) Fuchka 15 000 plate 150,000 Chotpoti 21 000 plate 210,000 Chanachur mix 900 kg 60,000 Potato flakes 400 80,000 Fried maize 10 000 pc 50,000 Puffed corn 3 000 kg 166,000 French fries 3 000 kg 160,000 Steamed cake made from millets 10 000 no 10,000 Boiled sweet potato 2 000 kg 2,000 Jilapi 12 000 kg 480,000 Source: Field Survey, 2004.

Puffed corn A specialized natural gas oven is used to transform raw corn into puffed corn. The sample processor, on average, processed 3,000 kg of corn per annum and its value is 166,000 taka. This item is very popular at market places, parks and schools.

French fries French fries are a supplementary food item served with other fast food like fried chicken, burgers, pizza, etc. In this study some mobile fast food vendors were investigated. This food only needs simple cooking and is easy to prepare. A fast food vendor produces, on average, 300 kg of French fries per year. The value being 160,000 taka in 2003-2004.

Steamed cake made from millet It is a common scene in rural and peri-urban areas of Bangladesh to make steamed cake with rice flour, which is sold at the roadside, especially in winter. In millet growing areas, small shopkeepers use millet flour (instead of rice flour) mixed with hot water and prepare the oval shaped cake after steam boiling in pots. A sample vendor sold 10,000 cakes in 2003-2004 and their value was 10,000 taka.

Boiled sweet potato In rural areas, boiled sweet potato is used as a breakfast item. It is also sold in urban areas. It was found in Savar and Brahmanbaria that a sample shop keeper sold 2,000 kg sweet potato after boiling in 2003-2004. Its value was 2,000 taka.

Jilapi It is a juicy coil-like sweet meat, very popular in Bangladesh. Most of the time it is made from wheat flour. Special jilapi makers use pulse flour. In most cases wheat and pulse flour are mixed with water in certain proportions. After the paste of flour is given the shape of a coil and is fried in hot oil. They are then kept in sugar syrup for some time before serving. A shopkeeper, on average, made 2,000 kg of Jilapi and earned Tk 480,000 in 2003-2004.

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6.2 Production capacity and its utilization by different industrial processors

The installed and utilized capacities of the selected industrial processors are given in Table 6.3. The production capacity of chanachur was utilized 60 to 80 per cent by different industries except the Dipjol Food Industry (32 per cent). Aftab poultry feed used 75 per cent of their installed capacity in the production of ready feed. In the case of pulses, only 30 to 40 per cent of installed capacity was utilized due to the seasonality of pulse production and the shortage of raw pulses, lack of funds, disruptions to electricity and improper operation of meals. Low working capacity of processing plants is a major constraint to increase the business profitability of industries using secondary crops as raw materials. To overcome this constraint, financial problems have to be resolved through providing credit on simple terms and the supply of quality products has to be assured through the increased production of secondary crops. Moreover, alternative arrangements for supplying electricity have to be made and processing mills have to be operated properly with trained manpower.

Table 6.3 Production capacity and its utilization by different industrial processors Name of product Installed capacity Quantity actually Utilization of installed (kg) processed capacity (%) Chanachur Dipjol 1 500 000 480 000 32 Bombay Sweets 17 647 059 15 000 000 85 Ruma 232 857 163 000 70 Pran 1 880 000 1 128 000 60 Dolly Biscuits 128 000 96 000 75 Dhaka Liton 224 000 168 000 75 Tripti (Kishoreganj) 103 750 83 000 80 Kiron Chanachur 208 333 125 000 60 Potato crackers Bombay Sweets 3 750 000 3 000 000 80 Pran 105 266 631 600 60 Bengal Biscuits 432 000 216 000 50 Dal (fried pulse) Pran 140 000 63 000 45 Dipjol 120 000 42 000 35 Ready Feed (Aftab) 80 000 000 60 000 000 75 De-husked pulse Lentil 913 125 365 250 40 Mungbean 197 083 59 125 30 Chickpea 144 642 50 625 35 Source: Field Survey, 2004.

6.3 Cost-revenue structure and business profitability

6.3.1 Business profitability of large-scale processors Bombay Sweets Bombay Sweets and Company Limited (BSCL) is one of the largest processors of CGPRT products in Bangladesh. This company was established in 1948 and gradually became popular for snack food items at home and abroad. Its current range of snacks consists of more than 20 items including potato, corn and pulse products. The namkeens (or chanachur), Potato Sticks and Ring Chips are the most popular snack items made from CGPRT crops available in different shops of the country. BSCL’s snack products are exported to many countries of the world including Nepal, Bhutan, India, Pakistan, Korea, the Middle East, the Far East, Spain and Australia. Its products are registered with the US Food and Drug Administration (USFDA). They are 100 per cent vegetarian products.

46 Analysis of Industrial CGPRT Product Processing

This company produces about 50 tons of chanachur (60 taka per kg) and 10 tons of potato chips (120 taka per kg) per day. Nearly 10 per cent of the consumer price is assumed to be profit. The company generates employment for about 650 people on a regular basis and another 1,000 people on a casual basis. The demand for snack products produced by BSCL has been increasing by about 15 per cent per year.

Pran Pran, as a big processing company, processes three CGPRT based products namely, chanachur, fried pulses and potato crackers. Its trade name is Agricultural Marketing Co. Ltd. (AMCL). Table 6.4 shows the business profitability of making chanachur, potato crackers and fried pulses. The total volume of production of chanachur, potato crackers and pulses, on average, was 1,128 tons, 631.6 tons and 63 tons, respectively per annum. Total profit for one year for three products, namely chanachur, potato crackers and fried pulses was Tk 5,360,660, Tk 39,885,460 and Tk 1,484,540 respectively.

Dipjol Food Industries Ltd. Dipjol is also a limited company processing and preparing snacks. This industry processes two CGPRT based products; chanachur and fried pulses. Annual production of chanachur and fried pulses were estimated to be 480 tons and 63 tons respectively. The net profit from chanachur and fried pulse processing was estimated at Tk 1,709,380 and Tk 2,390,620 respectively.

Bengal Biscuit It is a joint stock company of Tk 100 million authorized capital. The main CGPRT crop processed is potato to make potato crackers. Annual production of potato crackers was 216 tons and net profit was estimated to be Tk 5,596,140 in 2003-2004. Ruma, Dolly Biscuit, Dhaka Liton, Tripti and Kiron are large-scale CGPRT crop processors but they operate on a limited scale. They mainly produce chanachur associated with other confectionary items. Their annual net profit is depicted in Table 6.4, which indicates that the chanachur making industries Ruma, Dolly Biscuit, Dhaka Liton, Tripti and Kiron earned a net profit of Tk 1,920,810, Tk 1,184,050, Tk 3,930,780, Tk 1,444,960 and Tk 712,160, respectively in 2003-2004.

Aftab ready feed The Aftab Feed Mill mainly produces poultry and fish feed. It is the commercial poultry owners who largely use this ready feed. It is a big company of ISLAM group. As a company, Aftab employs more than 500 employees both in executive and wage earning positions. Annual production is estimated to be 60,000 tons. The net profit was estimated to be Tk 59,370,000 in 2003-2004.

De-husked pulses The net profit of pulse processors was estimated according to the type of pulses. For the processing of lentil, mungbean and chickpea annual net profit was estimated to be Tk 1,690,150, Tk 263,400 and Tk 241,450 respectively.

47 Chapter 6

Table 6.4 Cost-revenue structure and business profitability of large-scale processors Cost (thousand Tk/annum) Total sales Profit Wages Interest on Depreciation Product Raw Marketing Rent of Depreciation Depreciation Total cost of (thousand (thousand and Utilities operating on plant and materials cost premises on building on vehicles production Tk/annum) Tk/annum) salaries capital machinery Chanachur Dipjol 13 041.60 804.00 360.00 6 195.00 680.02 240.00 240.00 50.00 200.00 21 810.62 23 520.00 1 709.38 Ruma 6 249.10 214.00 155.69 40.87 227.28 55.00 63.00 18.60 22.00 7 045.54 8 966.35 1 920.81 Pran 30 647.76 3 248.00 1 234.00 18 566.70 1 789.88 50.00 340.00 150.00 653.00 56 679.34 62 040.00 5 360.66 Dolly Biscuits 2 357.50 162.00 86.40 35.50 88.05 60.00 35.00 11.50 12.00 2 847.95 4 032.00 1 184.05 Dhaka Liton 4 620.00 228.00 123.56 48.72 167.34 45.00 38.70 22.50 15.40 5 309.22 9 240.00 3 930.78 Tripti 2 282.50 125.00 96.30 42.32 84.87 27.85 17.50 18.20 10.50 2 705.04 4 150.00 1 444.96 (Kishoreganj) Kiron 3 125.00 185.00 105.00 56.23 115.71 24.50 20.00 15.20 16.20 3 662.84 4 375.00 712.16 Chanachur Potato

crackers Pran 34 422.20 3 248.00 1 234.00 25 264.00 2 138.94 50.00 340.00 150.00 653.00 67 500.14 107 385.60 39 885.46 Bengal 11 772.00 1 150.00 478.00 12 960.00 1 004.00 24.50 115.00 55.36 280.00 27 838.08 36 720.00 8 881.92 Biscuits Dal (fried

pulses) Pran 1 417.50 78.00 60.00 795.00 100.56 2.40 24.00 50.00 20.00 2 547.46 4 032.00 1 484.54 Dipjol 2 083.73 108.00 84.00 1 066.70 41.96 50.00 40.00 150.00 33.00 3 657.38 6 048.00 2 390.62 Ready Feed 630 000.00 7 200.00 4 800.00 118 500.00 7 950.00 180.00 3 000.00 7 000.00 2 000.00 780 630.00 840 000.00 59 370.00 (Aftab) De-husked

pulses Lentil 9 057.84 39.14 24.72 333.75 300.43 18.54 13.86 25.71 - 9 443.79 11 133.94 1 690.15 Mungbean 1 252.00 6.10 3.85 52.01 46.82 2.89 2.16 4.01 - 1 471.76 1 735.16 263.40 Chickpea 972.80 5.59 3.53 47.68 42.92 2.65 1.98 3.67 - 1 349.11 1 590.56 241.45 Source: Field Survey, 2004.

48 Analysis of Industrial CGPRT Product Processing

Table 6.5 Cost-revenue structure and business profitability of small-scale processors

Cost/Return Food item (taka) Item Sweet Cake Fuchka/ Chana- Jilapi French Puffed Fried Potato potato Chatpoti chur mix fries corn maize flakes Material cost 1 200 3 000 120 600 39 640 242 720 54 500 120 000 30 000 18 000 Water charge 0 0 6 000 0 6 000 1 200 0 0 0 Electricity 0 0 0 0 6 000 1 500 300 0 0 charge Fuel charge 100 500 15 000 0 15 000 2 500 16 200 2 700 1 500 Labour cost 2 000 2 250 57 600 20 000 53 600 36 000 5 500 2 000 2 500 (40) (45) (576) (300) (536) (360) (55) (40) (50) Rent 0 0 0 0 12 000 0 0 0 0 Inventory 0 0 3 892 0 3 892 360 0 250 0 depreciation Interest on 0 0 3 500 150 3 500 250 0 0 0 operating capital Total cost 14 100 5 750 206 592 59 790 342 712 96 310 142 000 34 950 22 000 Total return 22 000 10 000 360 000 96 000 480 000 160 000 166 000 50 000 80 000 Profit 7 900 4 250 153 408 36 210 137 288 63 690 24 000 15 050 58 000 Source: Field Survey, 2004. Note: Bracketed figures indicate man-days. Business profitability was determined on an annual basis for an average small-scale processor.

6.3.2 Business profitability of small-scale processors Table 6.5 shows the cost and revenue structure associated with the business of small- scale processors. It was observed from the samples that their net profit was Tk 7,900, Tk 4,500, Tk 153,408, Tk 21,170, Tk 133,288, Tk 63,690, Tk 27,500, Tk 15,050 and Tk 58,050 for sweet potato, cake, fuchka/chotpoti, chanachur mix, jilapi, French fries, puffed corn, fried maize and potato flakes respectively. Table A.6 and A.7 show per unit cost revenue structure and business profitability of large and small-scale processors respectively. It appears that fried pulses provide a higher rate of profit margin for large-scale processors, while potato and sweet potato generate higher profits for small-scale processors.

6.4 Potential and constraints to industrial processing businesses

The agro-climatic condition of Bangladesh is suitable for the production of CGPRT crops. There are also opportunities for processing different food items than just CGPRT crops. Nowadays people are habituated with diverse ways of food consumption. There are certain food items, which are important not only from a processing point of view but also from the viewpoint of import substitution and/or export promotion. Currently, agro-based industries contribute more than 50 per cent of the total industrial output of the country and provide 60 percent of the employment of the industrial sector (Khan, 2004). Considering the market and trade environment, CGPRT crop based processing has substantial prospects. Maize as a poultry feed is flourishing very rapidly in the country. Besides, flour can be processed from maize for the preparation of different kinds of food items. Another promising CGPRT crop is potato, which is regarded as the third staple food in the world. Some varieties of Bangladeshi potatoes receive international demand and demand for other varieties can be created in future. Bangladeshi potatoes are cheaper and their related processing is simple. Bangladesh can easily enter into the international market with potato products in the near future. Sweet potato can be used for making quality cake. Millet flour can be used to produce the cheapest biscuits as the cost of the raw materials of millet are much cheaper than other raw materials.

49 Chapter 6

An important constraint to large-scale industries is the scarcity of quality raw materials. Also, there are storage and marketing problems. Sometimes industry imports raw materials from neighbouring countries for preparing snacks and maintaining their quality.

6.5 Potential and constraints to small-scale processors

Small-scale processors generate higher net profit than large-scale processors. They also create self-employment and thus help alleviate poverty. The number of small-scale processors has been increasing in the country and the demand for raw materials has been rising by 15 to 20 per cent per year. This will have a positive impact on the production of CGPRT crops and will promote crop diversification. An important constraint to small-scale processors is the lack of capital. They do not have any registration and they are disorganized. They need to make unofficial payments to many people, lack any standardization of materials and have hardly any initiatives for market promotion.

6.6 Concluding summary

Different types of snacks are made from CGPRT crops; ready feed and de-husked pulses were investigated. Moreover, the cost and revenue structure of various processing industries were studied. Different food and feed products processed by large-scale processors include chanachur, potato crackers, fried pulses, ready feed and de-husked pulses. Small-scale food processors prepare and sell a large number of food items including fuchka, chatpati, chanachur mix, jilapi, potato flakes, fried maize, puffed maize, French fries, steamed cake and boiled sweet potato. The study revealed that the processing of CGPRT crop products was economically profitable. Many large and small-scale industries have been set up in the country to process CGPRT crops and a large amount of employment and self-employment has been created by those industries, which contribute significantly to the alleviation of poverty. There is, however, a scarcity of quality raw materials for large-scale industries. Also there are storage and marketing problems. Small-scale processors, on the other hand, suffer from a lack of capital. They are also unregistered and disorganized. Efforts to solve these problems will help promote the processing of CGPRT crops and diversification of production.

50 7. Analysis of Institutional Support

7.1 Economic policies

7.1.1 Price support In Bangladesh, government policy related to the Department of Agriculture was always to subsidize inputs and occasionally offer price support mechanisms on outputs to achieve self- sufficiency in food production. In recent years, however, the support to agriculture such as subsidized fertilizer, irrigation and price support has been slashed. Agricultural prices generally started to decline from the 1990s. The long-term decline in real prices became prominent during 1991-2002 (Alam, 2005). International prices of agricultural commodities indicate that domestic prices of CGPRT crops are much lower than world prices. The country report for Bangladesh (Phase I) showed that NPC and EPC are lower than one in most of the cases. The evidence indicates that Bangladeshi crop-price policy has experienced negative price support on agriculture, specifically on CGPRT crops.

7.1.2 Credit support to farming, processing and marketing The credit market for agribusiness consists of both informal and formal transactions. The government initiated a venture capital fund through the Bangladesh Bank for Agro-processing. Various NGOs also offer micro credit facilities to their members under different terms and conditions for agribusiness and agro-processing. Crop loans are provided to farmers on simple terms from nationalized commercial banks. Recently, the government also reduced the interest rate for agricultural credit. As a result, the amount of credit disbursed for agricultural activities and agribusiness has increased significantly in recent years. The institutional credit market is, however, still inadequate. The recent denationalization of commercial banks has further accentuated the problem. Commercial banks are reluctant to extend credit to the agricultural sector because of the high cost of supervision/monitoring, and a lower rate of repayment and risky disbursement. Small and marginal farmers make a major contribution to agricultural production in Bangladesh but their access to commercial and specialized agricultural banks is very limited. NGOs have started to play an increasingly more important role in the field of farm credit but unfortunately the large majority of small farmers are excluded from their coverage. The CGPRT crop-growing farmers do not have any special access to institutional or NGO credit. The government has taken some steps towards liberalizing the financial market. The interest rate has been reduced to 8 per cent from about 10 per cent and the Bangladesh Bank has provided a refinancing facility to relevant banks at 5 per cent rate of interest. As a result the value of agricultural credit increased from 29.60 billion taka in 2001-2002 to 48.94 billion taka in 2004-2005. At the same time, disbursement of micro credit has also increased significantly to around 95.00 billion taka per year. The disbursement of such credit is not specially targeted to CGPRT crops. However, CGPRT farmers are likely to benefit from an increased disbursement of institutional credit.

7.1.3 Food diversification policy The historical growth of agriculture in Bangladesh mainly concentrated on food grain production, especially on rice that covered 90 per cent of agricultural production (Mahmud et al., 1993). Introduction of the HYV Boro (Boro rice, see Table A.5) production package has led to a decline in the cultivated area of pulses, oilseeds and different types of Rabi (Rabi season,

51 Chapter 7 see Table A.5) crops. Realizing the importance of minor crops, particularly coarse grains, tubers, pulses and oilseeds for improving the nutritional status of the people, the Government of Bangladesh with assistance from donor agencies undertook a Crop Diversification Project (CDP) in 1989. The aim of the CDP was to improve the diversity of food production including self-sufficiency in Bangladesh through production and consumption of pulses, tubers and oilseeds (Alam, 2004). Currently, the donors are not supporting the project but GOB has continued its activities towards crop diversification on a limited scale. In the new national budget for 2005-2006, interest on agricultural loans provided for the production of pulses, mustard seeds, spices and maize has been reduced to 2 per cent from the existing 8 per cent. This will encourage the production of some secondary crops, but the coverage has to be extended for other secondary crops in future.

7.1.4 International trade policies Bangladesh, as a member of WTO is committed to liberalize trade policy. This effort started during the 1980s as an important component of the structural adjustment programme sponsored by the Bretton Woods Institution, the World Bank and the International Monetary Fund (Ahmed, 2001). Initial policy changes focused on the removal of quantitative import restrictions but in the 1990s, extensive trade policy reform programmes were undertaken, against the highly restrictive and inward oriented policies of the 1970s and 1980s. Nowadays, the country has a less restrictive and more outward oriented trade policy environment. This is a result of the commendable progress made in eliminating a sizable portion of both import tariffs and non-tariff barriers and adopting a flexible exchange rate policy. The Fifth Five Year Plan 1997-2002 (Government of Bangladesh, 1998) explained the need for achieving a neutral trade policy environment for attaining the goal of export led growth. The major elements of the Plan’s external sector strategy include (i) import liberalization in terms of reduction of tariff structure and removal of quantitative restriction; (ii) direct export promotion measures; and (iii) flexible (currently floating) exchange rate policy. The major policy reforms in Bangladesh aim at providing (i) duty free access to imported inputs; (ii) easy access to credit; (iii) rebates on income taxes; and (iv) an institutional framework for export promotion. Thus, the policy reforms agenda including trade, exchange rate, monetary and fiscal policy aims at improving access to imported commodities and increasing effective assistance for exports. A recent study (Alam, 2005) reveals that the liberalization of the trade region has resulted in a steady increase in imports of pulses and maize to the country.

7.1.5 Investment policy In the early eighties, new industrial policy was formulated and was then revised in 1986. These policies relaxed the investment environment. In August 1991, policy changes allowed individuals to invest up to Tk 300 million without seeking permission from the government. The subsequent policies on investment paved the way to further relax private, joint venture and all foreign investments. Currently no permission is required from the government (except for a few restricted industries) to set up new industries. Moreover, there are incentives for export oriented foreign investment. Foreign investment in Bangladesh has been encouraged through new investment policies. There are different forms of subsidies, infrastructure support, tax exemption, financial support, repatriation facilities, etc. for foreign investment. The government started to establish export-processing zones (EPZ) with an aim to encourage export oriented firms. An Export Processing Zone has been setup at Ishwardi with special facilities for agro-based export oriented industries. This Agro-Export Processing Zone will create an excellent environment for national and international investors for processing CGPRT products in the country.

52 Analysis of Institutional Support

7.2 Infrastructure provision

7.2.1 Irrigation The process of agricultural modernization in Bangladesh has encouraged the adoption of HYV with fertilizer and irrigation technologies through public intervention. In this package, irrigation played a vital role in modernization. Irrigation is mainly used in this country for the production of Boro paddy. Use of irrigation for other crops is very limited. It was estimated that 85.7 per cent of the irrigated area of all minor irrigation systems was under rice production, 7.4 per cent under wheat and only 6.9 per cent was under other crops (Kazal and Jaim, 1995). During the last one and a half decades, the percentage of cultivated area covered by irrigation increased rapidly. From 1983 to 1996, the irrigation coverage of net cultivated area increased from 20 to 49 per cent (BIDS, 2000). In 2003-2004, the coverage of irrigation increased to 58 per cent of the net cultivated area. This has encouraged the cultivation of Boro paddy in the country and has reduced the cultivation of millet.

7.2.2 Transportation During the last two decades of the twentieth century, Bangladesh developed its transportation and communication system. Urban communication development was associated with improved automobiles and speedy travel. Van, wagon and cargo facilities were also introduced. In rural areas, mechanical devices were introduced for rural transportation. Every upazila headquarters is linked with district headquarters by metal roads. Wagons for carrying goods are available both in public and private sectors throughout the country. At present, the road network is adequate to serve the needs of the economy. This network increased from about 4,000 kilometres in 1972 to 240,208 kilometres in 2003. The Bangladesh Integrated Transport System Study (Planning Commission, 1998) shows that 73 per cent of the traffic for the movement of people and 63 per cent for the movement of goods use road. River and rail transportation networks rank second and third positions respectively in the movement of people and goods. This indicates the importance of roads in the transportation network. There have been substantial improvements in the transportation system for the movement of agricultural goods from one place to another but the country still requires much improvement in this sector in future. It may be mentioned here that rural road transportation has become expensive these days due to increases in fuel prices. This has an adverse impact on the movement of CGPRT products from one place to another and has raised marketing costs.

7.3 Development of farm, processing and marketing technology

7.3.1 Marketing The marketing costs of agricultural products vary widely across the commodities and geographical regions. Even for the same commodity in the same region, it can vary depending upon the range of features. Generally speaking, marketing is one of the most serious constraints to increased agricultural production. The number of agricultural markets in Bangladesh increased significantly after independence in 1971. There are currently some 16,476 markets in Bangladesh, 2,050 are designated as growth centers and some 392 are notified markets. The markets are generally of the following categories: • Rural Primary Markets: Small, few shops (also known as village hats). • Rural Assembly Markets or Secondary Markets: Larger, with traders from distant places, permanent shops, extended facilities and easy access. Also, in secondary markets there are commission agents, wholesalers, processors, exporters, etc. • Urban Terminal Markets: Include wholesale, semi-wholesale and retail markets.

53 Chapter 7

The Department of Agricultural Marketing (DAM), from a survey in 1994-95, has identified around 5,000 rural primary markets, 3,000 assembly markets, 55 urban wholesale markets, 182 urban retail markets and 40 urban combined wholesale/retail markets (Rahman, 2003). Very few agricultural products bypass this marketing network. However, a large quantity of maize and soybean produced in the country is directly marketed under contract growing arrangements (Tracy–White, 2000). Market establishments are funded through either public or private sources. Public markets remain under the control of the Department of Land Administration, the Railway, the Inland Water Transport Authority, the Municipality or the City Corporation. Land for private markets is sold or donated by individuals or organizations. Most of the markets come under local authority control and are auctioned on an annual basis. Only 392 markets are regulated under the Agricultural Marketing Regulation Act of 1964 (amended in 1985). The DAM is responsible for regulation, inspection, registration of traders and fixation of market charges of the notified markets. Rural markets are not well developed, well managed or well organized. Often market fees are overpriced and few markets are regulated. Marketing is characterized by a high degree of market risks borne by the small traders and consumers. Agricultural marketing chains are long and highly fragmented. Most of the poor farmers sell their products immediately after harvest when prices are low and prices are subject to wide seasonal variations. Access to market information is insufficient. Transportation to markets is expensive due to poor access roads and storage facilities are likewise very poor. The above clearly illustrates the multitude of problems facing the small-scale producers in terms of access to proper markets for their products. These constraints are clearly not easy to overcome. However, networking among association members of seed producers has successfully overcome some of the marketing constraints and ensured that seeds from areas with low prices are moved to areas with better prices. Such networking among associations is likely to be promising and could be initiated by group marketing of agricultural produce through Community Based Organizations (CBOs). Other initiatives have successfully implemented a cooperative marketing system providing loans against stored crops and helping farmers to sell their products at times of better prices. This may be a useful marketing arrangement for CGPRT crops. Supporting rural roads is the most obvious way of supporting marketing, but this alone does not solve the many constraints in marketing. Improved market infrastructure and storage facilities are needed. Involvement of local producers and the private sector is very important in that regard.

7.3.2 Agro-processing Rapid growth of agriculture would require agro-processing and agri-business development to facilitate access of the farmers to modern inputs and ensure increased demand for value added agricultural products. For sustaining growth and diversification of the rural economy, such activities will be used to (i) provide better farm investment for raising production and productivity; (ii) generate a value added price for the farmers; (iii) support crop diversification and develop the logistics of efficient marketing at the grass roots level; (iv) help evolve better marketing practices and linkages to expand the benefits of public policy. Bangladesh has a large number of household, cottage and micro-industries concerned with processing agricultural products. These have been traditionally organized to cater to the needs of domestic markets. Small farmers’ share in this sector is very significant. These activities can be of great importance for those poorer sections that cannot maintain their livelihoods with crop production alone. There are a large number of small enterprises managed by commercial entrepreneurs. These are not typically processing plants and include small poultry, dairy, fishery, input traders

54 Analysis of Institutional Support

and transporters. Small agro-processing enterprises available in the form of fruit jelly, jam and snack food preparation are worth mentioning. A market for a new middle class in Dhaka and other urban centres is being developed by importers and foreign firms promoting branded products including fruit juices, tomato paste and ketchup, potato chips, French fries, blended and pre-packed spices, homogenized, pasteurized and reconstituted milk in tetra packs, yogurt and ice cream. A number of local and foreign companies have started to compete in this market. Processing and storage facilities of fruits and vegetables in Bangladesh are limited. There are 320 cold storage plants in the country for potato. At the rural level, a number of small production plants have been established by NGOs mainly to assist families to process a local surplus of raw materials and to generate income by selling this at the local market. Dehydrated products are also produced at the rural level. Fried pulses and sliced potatoes are prepared in different locations and their demand has been increasing rapidly over the years. Potato chips, puffed corn and chanachur are by far the most important processed products within the CGPRT crop sector. However, the private sector’s processing units are facing problems of low capacity utilization, which is caused by the non-availability and irregular supply of the required raw materials and a shortage in the supply of electricity. High production, marketing and handling costs, expensive packaging materials and lack of credit facilities are also influential.

7.3.3 Development of the extension service network The Department of Agricultural Extension (DAE) was created in its present form in 1982. Before that a number of reorganizations took place. The East Pakistan Directorate of Agriculture was created in 1950 for field level extension services. In 1970, the directorate was divided into two wings, viz., Directorate of Agriculture (Extension and Management) and Directorate of Agriculture (Education and Research). After independence in 1971, several semi- autonomous agricultural research institutes were established (for example, BJRI, BRRI, BARC, BARI etc.) and as many as six monocrop and multicrop extension agencies were created out of DAEM. These directorates (Directorate of Agriculture (Extension and Management), Directorate of Agriculture (Jute Production), Directorate of Plant Protection, Horticulture Development Board, Cotton Development Board and Tobacco Development Board) approached the same farmers separately with different extension messages. Consequently, the overhead costs of extension work increased and the farmers became confused with the differing extension messages. As a result, a reorganization in 1982 merged them into the present form of the DAE. The agricultural extension system has undergone a number of structural changes. The conventional top down approach in extension based on motivation, training and demonstration, which was developed in the British colonial period and the rigid Training and Visit system, which was introduced in late 1970s failed to serve the interests of the small and marginal farmers. The Training and Visit system was triggered by the Green Revolution and led to overexploitation of the resource bases (soil, water and energy resources). The approach also relegated the farmers to passive receivers of messages that had been developed by central authorities and proved to discourage farmers’ innovative spirit. Recent development led to the introduction of the participatory approach where farmers work with research and extension workers as partners and play a decision-making role in the process from planning to technological adoption. Along with this development, ecological sustainability of natural resources, improvement of the living standards of the farming families and equity all became integrated issues to receive attention. Ecological sustainability in the Bangladesh context means to put the focus on the village as a whole. Similarly, equity cannot be ensured without taking an entire community into consideration. These facts suggest that the national extension system needs to take a holistic village approach, taking into consideration not only technological aspects but also human, physical and biological endowments of a village. This leads to a targeted “Group Approach” in

55 Chapter 7 technological development and dissemination, where the needs of the different categories of farmers are attended to. Since the withdrawal of the T&V approach in the early 90s, the Department of Agricultural Extension (DAE) has been looking for an appropriate extension approach. Two donor-supported projects tried to find an answer, the Agricultural Support Services Project (ASSP) and the Agricultural Services Innovation and Reform Project (ASIRP), both funded by World Bank/DFID. Agricultural Support Services Project: The World Bank/DFID supported Agricultural Support Service Project (ASSP) that replaced the T & V system in 1992 developed five principles for extension/technology dissemination: • Responsiveness to farmers needs: This requires a comprehensive Farmers’ Information Needs Assessment (FINA). The assessment records would be used to develop extension planning at the upazila and district levels. • Working with groups: This would increase contacts with a greater number of farmers (than was the case with individual contact farmers). • Decentralized extension planning: Upazila and district offices would develop their own extension plans while DAE headquarters would concentrate on monitoring and supervision functions. • Targeting all categories of farmers: Extension plans would be carefully targeted to all categories of farmers (big, small, marginal, landless and also young and female farmers). • Using a range of extension methods: Methods would include not only training, visits and demonstrations but also group meetings, motivational tours to research institutes and other locations, agricultural fairs, printed materials (leaflets, posters, etc.), newspapers, radio, television, folk media (songs, drama, etc.).

There were some significant achievements that opened up avenues for participatory and situation-based technological development and extension that mobilized local creativity, energy and experience. The project ended in June 1999. Agricultural Services Innovation and Reform Project (ASIRP) was a follow-up project of ASSP from July 1999 to 2003. The project focused, among other things, on the following: • Improving the quality of Farmers’ Information Needs Assessment (FINA) and translating the findings into locally relevant extension messages. • Improving group approaches to establish linkages between farmers’ groups and their parent bodies (NGOs, Cooperatives, etc.) and to ensure tangible benefits to the groups. • Strengthening research-extension linkages to ensure that identified problems at the field level are placed on the research agenda, and identified solutions are placed within the mainstream extension messages. • Improving upazila extension planning and implementation through involvement of all relevant extension service providers to develop collaborative projects integrating various extension services (crops, livestock, fisheries, forestry, water, infrastructure, etc.) through a multidisciplinary extension team.

7.3.4 Institutional settings GOB, through the agencies of different ministries, provides services to the rural population. The Ministry of Agriculture (dealing with crops) has seven wings and around 14 organizations through which all the research and development for the crop sector is performed (Figure 7.1). DAE has extension agents (SAAOs) throughout the country beyond upazilas (at the block level). Extension messages coming out of research and educational institutions are transferred to the farmers through the extension system that has roots at the village level. However, the research-extension linkage needs to be strengthened for effective dissemination of technical knowledge to the farmers.

56 Analysis of Institutional Support

7.3.5 Potential and constraints to the development of technology in the extension service network When research institutes develop a new variety, regional yield trials are conducted in different parts of the country through their on-farm research division. Once a new variety is proved to be of superior quality, the breeder seed is given to BADC to produce the foundation seed on their own farms. The foundation seed is multiplied with the assistance of contract seed growers to produce the certified seed. The DAE is responsible for conducting demonstration trials and extension activities to promote the demand for the new variety. The seed traders are not usually involved in the promotion of new varieties, particularly for CGPRT crops. There is potential for the private sector and NGOs to share with the DAE in the promotional activities of CGPRT crops so that the extension messages are quickly disseminated to the end users. An important constraint to development of new technology is the limitation of research funds. Table A.8 shows that public expenditure in agricultural research increased overtime but this was much below the average of other regions of the world. ARIs in Bangladesh received only 0.2 per cent of the agricultural GDP as their annual expenditure in 2002-2003 (Table A.9). The share of research expenditure in the budget has declined in most recent years due to the withdrawal of support by major donors. Normally 1 per cent of agricultural GDP is regarded as the rule of thumb for investment in agricultural research (Gill, 2003), but Bangladesh invests only a fraction of this. Currently about 20.6 per cent of the total budget allocated to ARIs in the crop sector is spent for research experiments. In contrast, a minimum of 40 per cent of the total budget is required to be allocated to research experiments (ASR, 2004). The share of CGPRT crops in the total crop sector’s research budget was only 1.62 per cent in 2001-2002 and 2.16 per cent in 2002-2003 against their share in total cultivated land of about 6 per cent. During the last few years, a number of new high-yielding varieties of CGPRT crops have been developed for tubers and pulses by BARI. This is not quite the case for millet and maize (Table A.10). Compared to some major crops (42 new varieties of rice, 32 varieties of wheat and 36 of jute), CGPRT crops have experienced less technological development. Moreover, on-farm participatory research and the training of farmers were neglected due to inadequate budget provision. As a result, new varieties and improved management practices remain largely unadopted in the field.

7.4 Concluding summary

Bangladesh has conducive economic policies for agro-processing and export promotion. Recently, an agro-processing zone was established in Iswardi with facilities for agro-based export oriented industries. However, special effort to promote the processing and export of CGPRT crops is yet to be made in the country. There are several research organizations and extension agencies to generate and transfer technologies in the crop sector but they do not have enough focus on CGPRT crops. The allocation of funds to agricultural research is much lower in Bangladesh compared to other developing countries of the world. Such allocation is quite insignificant for CGPRT crops. As a result, research and development activities have stagnated in this area. In order to promote crop sector diversification, special programmes for research and development should be undertaken to encourage the production of CGPRT crops in Bangladesh. Higher budgetary allocation would be required to serve this purpose.

57 Chapter 7

Figure 7.1 Organizational structure of the Ministry of Agriculture Secretary, Ministry of Agriculture Administration and Policy Planning and Input Wing Coordination Wing Extension Wing Planning Wing

Research Wing Education Wing

Seed Wing

Department of Agricultural Bangladesh Agricultural Extension (DAE) Research Council (BARC) Seed Certification Agency Bangladesh Agricultural Research Institute Cotton Development Bangladesh Rice Research Institute Board Agriculture Information Bangladesh Jute Research Institute Service Department of agricultural Bangladesh Institute of Nuclear Marketing Agriculture Bangladesh Agricultural Soil Resources Development Institute Development Corporation Barind Multipurpose Bangladesh Sugarcane Research Development Authority Institute

Department of Agri. Extension (Director General)

Director Director Director Director Director Food Crop Cash Crop Field Service Plant Protection Training Wing Wing Wing Wing Wing

Regional level (Addl. Director) Principal ATI(13)

District level (Deputy Director)

Upazila level (Upazila Agril. Officer)

Union/Block level (SAAO)

8. Prospect for Enhancing the Sustainable Development of Diverse Agriculture

This study was conducted in selected areas of Bangladesh to examine the possibilities of promoting diverse agriculture through the use of secondary crops. The crops under study include coarse grains (CG), namely maize, kaon (foxtail millet; citeria italica) and cheena (proso millet; penicum miliceum L.); pulses (P), namely lentil and mungbean; and roots and tubers (RT), namely potato and sweet potato. Thus, seven CGPRT crops were considered for in- depth investigation. The study generated data on horizontal and vertical diversification of those crops and their products. Both primary and secondary data was collected on the production, processing, consumption and marketing of these crops to fulfil the objectives of the study. The main findings concerning the potential and constraints of CGPRT crops are summarized below.

8.1 Overall assessment of potential

Results of the study show that there is enough scope for horizontal diversification of the cropping system with CGPRT crops. The main reason is that the cultivation of these crops is profitable in the farming system. Most of these crops are grown in less favoured areas and require less inputs and intercultural operations than the major cereals but still generate positive net returns. It was observed that potato based cropping patterns generate higher net returns than other CGPRT crops but the cultivation of maize, sweet potato, lentil, mungbean, kaon and cheena are also substantially profitable in the cropping system. The undiscounted B/C ratios for all individual CGPRT crops were quite favourable in the study areas. CGPRT crops compete with rice and wheat under favourable conditions but not under a harsh environment. In char areas, for example, CGPRT crops have a major role to play in employment creation and income generation. These crops provide family employment, particularly to women. They also provide cheap food and nutrition to poor people. Some CGPRT crops, especially pulses, enrich soil health by fixing nitrogen in the soil and reducing the possibility of environmental degradation by using less irrigation water and chemicals. Thus, these crops are most suitable for crop rotation even in favourable conditions. If a programme for organic agriculture is to be encouraged in future, CGPRT crops will help. The animal and poultry industry in Bangladesh has been expanding quite rapidly in recent years. This has created more demand for maize as poultry feed and pulses as fodder. Farmers are willing to produce more coarse grains and pulses to have more meat, milk and eggs in the country. The demand for CGPRT crops in large and small-scale processing and snack making industries has been increasing very rapidly in the country. The large-scale processors reported an annual increase in demand for potato chips, chanachur and fried pulses by about 15 per cent in recent years. The small-scale processors and vendors selling fuchka, chatpati, chanachur mix, fried maize etc, have also reported an increase in demand by about 15 to 20 per cent. The demand has increased mainly due to urbanization and product diversification. The study revealed that the processing of CGPRT crops is highly profitable. As a result, many large and small-scale industries have been set up in the country to process CGPRT crops and a large amount of employment and self-employment has been created by these industries, which have contributed significantly to the alleviation of poverty. The surge in demand for processed products is likely to encourage the production of CGPRT crops in the field. The market for different Bangladeshi products originated from CGPRT crops has been expanding outside the country. Some of the large-scale processors are very enthusiastic about it.

59 Chapter 8

This will promote backward and forward linkages in future and benefit farmers and processors in the country.

8.2 Overall assessment of constraints

This study showed that production of CGPRT crops in the farming system is profitable. Even though the farmers in large part have shown reluctance to diversify and produce more of these crops. The main reason is that rice is the main food of the Bangladeshi people and that the farmers want to grow more rice to satisfy their consumption requirement. With the expansion of irrigation facilities farmers found it more profitable to cultivate rice. At the same time they also increased cultivation of wheat. Thus, the cultivation of minor cereals and pulses received low attention from the farmers. These crops are grown only on marginal and less fertile land with minimum inputs and less care under rainfed conditions. Per unit production of these crops is low. The low yield of CGPRT crops is attributed to the lack of improved seeds and poor management practices. Research and breeding programmes on millet, pulses and sweet potato are far behind what has been done for major crops. The share of research expenditure for CGPRT crops was only about 2 per cent of the total crop sector’s research expenditure. As a result, research on these crops was conducted only on a limited scale and improved production technologies were less available to the farmers for intensive production. There has been significant expansion of CGPRT crop processing in the country over the last few years but most of the processing plants are not able to procure quality raw materials for preparing the snacks. Some of the processing plants have reported significant underutilization of their production capacity due to a shortage of raw materials. These problems continue to persist due to the low level of production of some CGPRT crops and their poor quality (high moisture content, and low starch content in potato). The market for potato, maize and pulses has expanded but for millet and sweet potato is still limited. New techniques of processing and value addition are insufficient to boost market demand. The linkage between research institutes and private sector processing farms is poor. Also, international collaboration is very weak in this sector. Farmers have hardly any idea of marketing CGPRT crops in remote areas, where these crops are grown. Absence of appropriate marketing agents, collectors of products and financiers discourage farmers to diversify their cropping system. The large-scale processing industries are not sufficiently efficient in marketing their products. The quality and taste of their products are not of a very high standard. As a result, a number of foreign snacks and processed food items have become popular in Bangladesh. This has a discouraging affect on the production and processing of CGPRT crops at home. Small-scale processors have a shortage of capital and improved processing instruments. They do not maintain sanitary standards for most of their products. They are disorganized and efforts to organize them have not been made so far. These firms do not have any registration. Processing CGPRT crops is undertaken in the private sector. There is no ideal home for promoting the processing and agri-business activities of CGPRT crops. This is an important constraint to the diversification of production and consumption of CGPRT crops in Bangladesh.

8.3 Search for strategies and policies to enhance sustainable development of diverse agriculture

Crop sector diversification in Bangladesh has been promoted very slowly over the last three decades (Alam, 2005). Due to the expansion of irrigation facilities farmers paid more attention to grow rice and wheat. Minor cereals, pulses and tuber crops received less attention although these crops are also profitable. It is also easy and less costly to diversify the cropping

60 Prospects for Enhancing the Sustainable Development of Diverse Agriculture system through these (CGPRT) crops. The agricultural extension system of the country needs to work with the farmers to popularize and promote these crops. An important reason for the reluctance of the farmers to grow more CGPRT crops is the low yield rate. This has to be overcome through concerted research and development efforts in the country. This will require higher budgetary allocation to agricultural research, particularly to research on CGPRT crops. Agricultural credit in Bangladesh has been liberalized in recent years. A total of about 50 billion taka was disbursed as agricultural credit in 2004-2005 and around 95 billion taka was disbursed as micro credit. A portion of this credit (say 5 per cent) should be earmarked for the production and processing of CGPRT crops so that the real CGPRT farmers can receive preferential access to such credit. Demand for the production of secondary crops can be increased through processing, value addition and product diversification. For this reason the agro-processing sector has to be supported and protected from external competition. There should be sufficient incentives for export and disincentives for imports of snacks prepared from CGPRT crops. The large-scale industries in Bangladesh need to process CGPRT crops at low cost. They also need to improve the quality of their products. This will enhance their competitiveness in the domestic as well as in the world market. Currently, a number of snacks are entering the domestic market from different countries and they are becoming popular to consumers. This can be checked through making Bangladeshi products more tasteful and safe. CGPRT crops are mainly grown in specific areas under harsh environments. Suitable soil and topography also dictate the production of CGPRT crops. Therefore, area-based farmer groups should be developed to enhance production, marketing and utilization of CGPRT crops. The government may undertake a special development project to promote CGPRT crops in specific areas. Research of new techniques of processing, preservation and product diversification is important for the sustainable development of the agro-processing sector. Establishment of a new institute for research on agro-processing within the National Agricultural Research System may be required in the near future. A separate division for agro-processing may be created within the Ministry of Agriculture to facilitate and promote agro-processing activities in the country. Small-scale processing firms are disorganized. They should be registered and organized into co-operatives. They also need to improve the standard of their products and keep food items in a hygienic manner. Regular inspections of snack food are necessary to ensure sanitary standards of snacks and certify their quality. The marketing system of products originating from CGPRT crops is not perfectly competitive. This necessitates intervention when and where necessary. The profit margin of the processing firms has to be reduced to make them cheaper to the consumers. Some of the neighbouring countries of Bangladesh have long experience of processing CGPRT crops and preparing snack food. They may be invited to come forward and establish joint-venture industries in the country. An incentive package should be announced to attract them to invest in Bangladesh.

9. Conclusion and Recommendations

This study was conducted in Bangladesh on CGPRT crop based farming systems and their integration into private sector processing. Empirical evidence shows that coarse grains, pulses, and roots and tubers (CGPRT or secondary crops) have enough potential for diversification. The agro-climatic condition of Bangladesh is suitable for the production of these crops and they fit well in the cropping pattern. Production of these crops in the cropping system is profitable. An increase in area under CGPRT crops is likely to increase farm income significantly. These crops absorb family labour and create employment for women. There are enough opportunities to process different food items from these crops. The large and small-scale industries preparing snacks from these crops are generating substantial profit. The domestic market for these food items has been expanding quickly over time. The demand for chips, chanachur and fried pulses has also been increasing in the overseas’ markets. However, domestic production of these crops has been experiencing very slow growth over time. Some of these crops have even been showing a declining trend. There are problems associated with processing and marketing products originating from CGPRT crops. Under the above circumstances, the following recommendations are made for the sustainable development of selected secondary crop based farming systems and vertical diversification of products in Bangladesh. 1. Research for the generation of new yield increasing technology packages for secondary (CGPRT) crops should be encouraged. Cropping system research to fit CGPRT crops into the annual crop calendar in a profitable manner should receive high priority. Budgetary allocation for research, particularly for CGPRT crops should be substantially increased. 2. Research-extension-farmer linkages for CGPRT crops should be strengthened. A separate window should be opened in the Directorate of Agricultural Extension for the promotion of CGPRT crops and carrying new extension messages to the farmers. 3. Training and demonstrations on improved production packages of CGPRT crops should be arranged regularly at the field level for farmers. Also extension agents should be properly trained for effective dissemination of new technology to the farmers. 4. Quality seeds and other necessary inputs should be supplied by BADC and other related agencies to the farmers at affordable prices. Special subsidies should be introduced for the production of CGPRT crops. Area based farmer groups should be developed and a special development project should be initiated to enhance production, processing and marketing of CGPRT crops. 5. Storage facilities should be improved and cold storage facilities should be extended to save products from post-harvest losses. Farmers should be encouraged to cold-store perishable products through the supply of electricity to cold storages at a highly subsidized rate. Cold storage owners may be provided with bank loans to buy gas-run generators to mitigate power outages. At the same time, gas connections are needed to cold storages to run the generators. 6. The number of processing mills and factories for CGPRT crops should be increased through a declaration of incentive packages. This will enhance competition and weaken certain traders’ monopoly in the market. Moreover, a special credit programme should be introduced for production, processing and marketing of CGPRT crops. 7. A contract growing system of CGPRT crops should be introduced by processing mills and factories to ensure the sufficient supply of quality raw materials. This will help minimize the low capacity utilization of processing mills and factories and ensure production of quality food items. 63 Chapter 9

8. The cost of processing CGPRT crops should be reduced and marketing channels for processed products should be simplified. This will ensure low prices of snacks and increase their competitiveness in the domestic and international markets. 9. Duty on imported raw materials used for producing snacks at home should be reduced. On the other hand, supplementary duty should be imposed on imports of finished products. This will make Bangladeshi products more competitive in the market. 10. Fast food items made from CGPRT crops should be made tasteful and safe. These items should be made popular through attractive advertisements. 11. Cash incentives should be introduced for exports of products made from CGPRT crops (currently, a 30 per cent cash incentive is given for vegetable exports). 12. Small-scale processing firms should maintain the sanitary standards of their products. They should be registered and organized into co-operatives. They should be provided loans with simple terms with a low rate of interest. 13. Research should be carried out on improved processing techniques and diversification of products of CGPRT crops. A separate institute may be established within the National Agricultural Research System (NARS) for agro-processing. Private processing firms and industries should be integrated to the relevant research organization/departments. 14. The Ministry of Agriculture should have a separate division to facilitate and monitor agro-processing activities in the country. It should co-ordinate such activities with other departments and ministries. 15. The Department of Agricultural Marketing (DAM) should provide weekly price information on CGPRT crops. A market research and intelligence division should be created in the DAM to guide policy makers, processors and traders on CGPRT crops. 16. Research on the appropriate moisture level of seeds, and the moisture content of table potato for making chips should be carried out at BARI with a view to improve their quality. Also, socio-economic research on the future demand for CGPRT crops and their cost revenue structure should receive priority. 17. Research on the nutritional value of CGPRT crops needs to be conducted on a regular basis. Attention should be given to the preparation of products in such a way that the maximum nutritional benefits are derived by the consumers. 18. Some farmers are using more units of fertilizer and seed for producing potato. Some of them are using more seeds for coarse grains and pulses. They should be made aware of using balanced doses of fertilizers and the right quantity of seeds to reduce the cost of production and increase net returns. 19. Many people in Bangladesh do not know the high calorie and protein content of CGPRT crops. They need to be made aware of it through extension agents, radio, television and newspapers. 20. Regional co-operation on the research and development of CGPRT crops and versatile uses of their products is required to promote diversification and enhance the sustainable development of agriculture in the region.

64 10. References

Agrico et al., 2004. Agribusiness Marketing and Post-Harvest Systems in Bangladesh. Ministry of Agriculture, Dhaka. Agriculture Sector Review (ASR), 2004. Actionable Policy Brief and Resource Implications. Ministry of Agriculture, Government of Bangladesh, Dhaka. Ahmed, Nasiruddin, 2001. Trade Liberalization in Bangladesh: an Introduction into Trends, Dhaka: The University Press Limited. Alam, Jahangir, 2004. Economic Reforms in Bangladesh and New Zealand, and Their Impact on Agriculture, Dhaka: Globe Library Limited. Alam, Jahangir, 2005. Enhanching Sustainable Development of Diverse Agriculture in Bangladesh. CAPSA Working Paper No. 80, Bogor, Indonesia: UNESCAP-CAPSA. Bangladesh Bureau of Statistics (BBS), 2000. Year Book of Agricultural Statistics. Statistics Division, Ministry of Planning, Dhaka. Bangladesh Bureau of Statistics (BBS), 2001. Statistical Year Book of Bangladesh. Statistics Division, Ministry of Planning, Dhaka. Bangladesh Bureau of Statistics (BBS), 2003. Result of Household Income and Expenditure Survey 2000. Statistics Division, Ministry of Planning, Dhaka. Bangladesh Bureau of Statistics (BBS), 2001. Bangladesh Population Census, 2001. Statistics Division, Ministry of Planning, Dhaka. Crop Diversification Programme (CDP), 1994. Production, Storage, Processing and Marketing of Pulses in Bangladesh. Department of Agricultural Marketing, Khamarbari, Dhaka. Dewett, K.K. and Chand, A., 1977. Modern Economic Theory: Micro and Macro Analysis. Shyam Lal Charitable Trust, Ram Nagar, New Delhi. Elias, S.M., Hossain, M.I., Ahmed, J. and Alam, K.M., 1984. A Study on Potato Marketing System in Some Selected Areas of Bangladesh. Agricultural Economics Division, Bangladesh Agricultural Research Institute, Joydebpur, Gazipur. Elias, S.M., Hussain, M.S., Sikder, F.S. and Ahmed, J., 1986. Marketing and Storage of Pulses in Bangladesh. Agricultural Economics Division, Bangladesh Agricultural Research Institute, Joydebpur, Gazipur. Gill, G.J., 2003. Developments in the Financing of Agricultural Research and Knowledge Transfer in Developing Countries, Paper Presented at the Workshop on the New Agricultural Research Initiative, 25th January 2003, IDB Building, Dhaka. Government of Bangladesh (GOB), 1998. The Fifth Five Year Plan. Planning Commission, Ministry of Planning, Dhaka. Government of Bangladesh (GOB), 2004. Bangladesh Economics Review 2003. Finance Division, Ministry of Finance, Dhaka. Haque, A.B.M.M., 1996. An Agribusiness Study of Winter Maize Marketing System in Some Selected Areas of Bangladesh. M.S. Thesis, Department of Agricultural Marketing, Bangladesh Agricultural University, Mymensingh. Haque, M.F., 1993. A Comparative Economic Analysis of Sweet Potato and Ground nut Cultivation in a Selected Areas of Kishoregonj District with Particular Reference to Small Farmers. M.S. Thesis, Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh. Hossain, A.T.M.S., 1998. An Economic Analysis of Pulses Production in Some Selected Areas of Bangladesh. M.S. Thesis, Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh. Hossain, M.D., 1996. Relative Profitability from Alternative Cropping Patterns Under Irrigated Condition in a Selected Area of Bogra District. M.S. Thesis, Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh. Jaim, W.M.H., Osanami, Fumio and Doi, Tokihisa, 2000. Flood and Stability of Bangladesh Economy. Journal of Policy Studies 2(1). Iwat Prefectural University.

65 Chapter 10

Kazal, M.M.H. and Jaim, W.M.H. 1995. Crop Diversification in Irrigated Agriculture Under Farmers Condition – An Empirical Evidence from a Micro-level Study. Farm Economy, The Journal of Bangladesh Agricultural Economists Association Vol. 10, Dhaka, Bangladesh: Asiatic Civil Military Press. Khan M.R., 2004. Value Added Agro-processing Opportunities in Bangladesh. The Journal of Political Economy 20(1). Bangladesh Economic Association, Dhaka. Kohls, R. L. and Uhl, J. N., 1980. Marketing of Agricultural Products, 5th edition, New York: Macmillan Publishing Co. Inc. Mahmud, Wahiduddin et al., 1993. Agricultural Growth Through Crop Diversification in Bangladesh. International Food Policy Research Institute and Bangladesh Institute of Development Studies, Dhaka. Ministry of Agriculture (MOA), 2004. Handbook of Agricultural Statistics. Sector Monitoring Unit, MOA, Dhaka. Muzuri, M.K., 2001. Rural Development Priorities for Poverty Reduction in Bangladesh. Bangladesh Residence Mission, Dhaka, Bangladesh: Asian Development Bank. Pardey, P.G. and Beintema, N.M., 2001. Slow Majic: Agricultural R & D a Century After Mendel, Washington, D.C.: International Food Policy Research Institute. Planning Commission, 1998. Bangladesh Integrated Transport System Study. Ministry of Planning, Dhaka. Rahman, M.F. 2003. Agricultural Marketing Information System in Bangladesh. Agricultural Marketing 45(4):29-32. Rahman, R.I., 2001. Tractor Use, Irrigation and Agricultural Productivity in Bangladesh, Bangladesh Economy 2000: Selected Issues. Bangladesh Institute of Development Studies, Dhaka. Tracey-White, 2000. Bangladesh Northwest Agriculture Development Project, Dhaka, Bangladesh: Asian Development Bank.

66 Appendices

Table A.1 Area, production and yield of major cereals in Bangladesh Area=Thousand hectares; Production=Thousand metric tons; Yield= Metric ton per hectare Year Rice area Rice Rice Wheat Wheat Wheat production yield area production yield 1971-1972 9 278.70 9 774.00 1.05 127.10 113.00 0.89 1972-1973 9 646.40 9 901.00 1.03 120.20 90.00 0.75 1973-1974 10 049.30 11 720.00 1.17 123.40 109.00 0.88 1974-1975 9 790.20 11 109.00 1.13 125.80 115.00 0.91 1975-1976 10 327.70 12 560.00 1.22 150.10 215.00 1.43 1976-1977 9 877.70 11 569.00 1.17 159.80 255.00 1.60 1977-1978 10 026.60 12 764.00 1.27 189.00 343.00 1.81 1978-1979 10 111.50 12 645.00 1.25 264.60 486.00 1.84 1979-1980 10 157.40 12 539.00 1.23 433.00 827.00 1.91 1980-1981 10 307.00 13 883.00 1.35 591.20 1 092.00 1.85 1981-1982 10 457.60 13 631.00 1.30 533.70 966.00 1.81 1982-1983 10 583.90 14 129.00 1.33 519.10 1 098.00 2.12 1983-1984 10 546.60 14 415.00 1.37 526.00 1 229.00 2.34 1984-1985 10 222.20 14 622.00 1.43 676.10 1 483.00 2.19 1985-1986 10 397.00 15 041.00 1.45 540.20 1 060.00 1.36 1986-1987 10 607.70 15 407.00 1.45 584.70 1 092.00 1.87 1987-1988 10 321.30 15 414.00 1.49 597.20 1 048.00 1.75 1988-1989 10 222.56 15 544.00 1.52 560.00 1 022.00 1.83 1989-1990 10 411.10 17 710.00 1.70 592.00 890.00 1.50 1990-1991 10 430.50 17 785.00 1.71 598.90 1 004.00 1.68 1991-1992 10 243.10 18 255.00 1.78 574.60 1 065.00 1.85 1992-1993 10 177.70 18 341.00 1.80 636.90 1 176.00 1.85 1993-1994 10 073.50 18 041.60 1.79 615.10 1 131.00 1.84 1994-1995 9 930.70 16 832.70 1.70 639.40 1 245.00 1.50 1995-1996 9 941.40 17 687.00 1.78 700.90 1 369.00 1.95 1996-1997 10 177.70 18 880.00 1.86 707.80 1 454.00 2.05 1997-1998 10 266.13 18 861.71 1.84 804.57 1 802.80 2.24 1998-1999 10 119.41 19 904.58 1.97 882.44 1 908.40 2.16 1999-2000 10 712.96 23 067.00 2.15 832.80 1 840.00 2.21 2000-2001 10 801.62 25 085.00 2.32 772.87 1 673.00 2.16 2001-2002 10 661.46 24 300.00 2.28 741.80 1 606.00 2.17 Source: MOA, 2004.

67 Appendices

Table A.2 Area, production and yield of selected CGPRT crops in Bangladesh Gram Mungbean Lentil Lathyrus Year Area Production Yield Area Production Yield Area Production Yield Area Production Yield ’000 ha ’000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha 1971-1972 71.60 58.50 0.82 19.00 13.00 0.68 71.60 52.50 0.73 96.90 6.70 0.79 1972-1973 60.30 40.00 0.66 14.20 9.00 0.63 62.70 42.90 0.68 86.60 3.90 0.74 1973-1974 55.80 40.00 0.72 10.50 6.60 0.63 60.30 42.50 0.70 74.50 7.30 0.77 1974-1975 55.80 38.70 0.69 13.40 8.40 0.63 70.00 46.60 0.67 79.30 61.30 0.77 1975-1976 54.20 38.20 0.70 13.80 9.00 0.65 65.50 44.30 0.68 81.70 62.10 0.76 1976-1977 55.80 40.20 0.72 15.40 9.50 0.62 74.50 48.10 0.65 99.10 9.70 0.70 1977-1978 57.10 43.90 0.77 16.60 9.90 0.60 79.30 50.60 0.64 98.70 70.40 0.71 1978-1979 55.80 42.30 0.76 16.60 9.10 0.55 84.60 49.50 0.59 99.10 68.10 0.69 1979-1980 57.90 39.00 0.67 16.60 9.00 0.54 85.00 49.00 0.58 93.10 64.00 0.69 1980-1981 57.90 38.00 0.66 15.00 7.00 0.47 83.80 50.00 0.60 92.30 63.00 0.68 1981-1982 53.40 37.00 0.69 15.40 7.00 0.45 74.90 49.00 0.65 91.00 63.00 0.69 1982-1983 54.20 41.00 0.76 15.00 9.00 0.60 73.20 45.00 0.61 93.10 70.00 0.75 1983-1984 113.23 87.00 0.77 59.90 34.00 0.57 240.30 161.00 0.67 203.00 170.00 0.84 1984-1985 108.80 81.00 0.74 60.30 35.00 0.58 233.50 164.00 0.70 247.60 184.00 0.74 1985-1986 103.60 78.00 0.75 59.50 33.00 0.55 222.50 160.00 0.72 232.30 164.00 0.71 1986-1987 103.60 82.00 0.79 57.50 35.00 0.61 212.80 149.00 0.70 221.70 163.00 0.74 1987-1988 103.20 75.00 0.73 57.90 33.00 0.57 216.50 159.00 0.73 231.00 182.00 0.79 1988-1989 102.80 66.00 0.64 58.70 29.00 0.49 215.30 156.00 0.72 232.70 157.00 0.67 1989-1990 102.80 70.00 0.68 60.30 31.00 0.51 209.20 156.00 0.75 242.40 170.00 0.70 1990-1991 96.70 71.00 0.73 57.90 32.00 0.55 210.00 157.00 0.75 243.80 177.00 0.73 1991-1992 92.30 65.00 0.70 55.40 32.00 0.58 208.80 153.00 0.73 248.00 185.00 0.75 1992-1993 68.00 53.00 0.73 53.40 31.00 0.58 207.80 163.00 0.78 244.80 172.00 0.70 1993-1994 85.60 61.50 0.72 53.70 30.30 0.56 207.50 167.00 0.80 246.80 188.00 0.76 1994-1995 85.00 62.00 0.73 53.80 32.00 0.59 207.20 166.00 0.80 246.20 189.00 0.77 1995-1996 85.00 61.00 0.72 55.00 32.00 0.58 205.60 170.00 0.83 238.40 181.00 0.76 1996-1997 84.60 61.00 0.72 55.00 34.00 0.62 206.40 171.00 0.83 229.50 179.00 0.78 1997-1998 84.00 59.90 0.71 55.00 34.40 0.63 205.70 162.70 0.79 226.00 182.70 0.81 1998-1999 86.60 61.80 0.71 55.50 33.90 0.61 205.60 165.80 0.81 210.50 166.20 0.79 1999-2000 16.60 12.00 0.72 55.10 36.00 0.65 166.80 128.00 0.77 202.00 166.00 0.82 2000-2001 16.20 12.00 0.74 52.60 34.00 0.65 164.40 128.00 0.78 187.00 155.00 0.83 2001-2002 16.40 11.00 0.72 45.30 31.00 0.68 157.00 115.00 0.73 181.70 147.00 0.81 Source: MOA, 2004 and BBS, 2000. Continued …..

68 Appendices

Table A.2 Area, production and yield of selected CGPRT crops in Bangladesh (continued) Black gram Total pulses Maize Cheena and kaon Year Area Production Yield Area Production Yield Area Production Yield Area Production Yield ’000 ha ’'000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha 1971-1972 52.60 43.70 0.83 358.70 259.40 0.72 2.80 2.20 0.79 ------1972-1973 48.60 37.60 0.77 312.40 205.50 0.66 2.80 2.20 0.79 23.60 14.01 0.59 1973-1974 47.30 36.70 0.78 282.90 193.40 0.68 2.80 2.30 0.82 22.37 16.21 0.72 1974-1975 53.00 41.70 0.79 307.80 213.90 0.69 2.60 2.30 0.88 22.01 15.81 0.72 1975-1976 53.40 40.90 0.77 303.50 210.80 0.69 2.40 2.00 0.83 21.63 15.85 0.73 1976-1977 52.20 38.40 0.74 330.80 227.70 0.69 2.40 2.00 0.83 21.09 16.19 0.77 1977-1978 51.80 37.80 0.73 337.90 227.90 0.67 2.40 2.00 0.83 20.44 15.03 0.74 1978-1979 50.60 34.90 0.69 339.00 218.10 0.64 2.00 2.00 1.00 18.64 13.47 0.72 1979-1980 47.30 33.00 0.70 331.30 215.10 0.65 2.00 1.00 0.50 18.83 14.47 0.77 1980-1981 47.30 33.00 0.70 325.70 216.70 0.67 2.02 1.00 0.50 14.04 17.39 1.24 1981-1982 42.90 29.00 0.68 304.70 202.30 0.66 2.03 1.00 0.49 20.25 17.02 0.84 1982-1983 40.10 28.00 0.70 300.50 208.50 0.69 2.00 1.00 0.50 19.46 18.28 0.94 1983-1984 84.20 60.00 0.71 729.40 527.40 0.72 4.05 3.00 0.74 31.89 19.49 0.61 1984-1985 74.90 54.00 0.72 781.70 534.10 0.68 3.64 3.00 0.82 28.98 23.37 0.81 1985-1986 69.20 45.00 0.65 743.70 497.20 0.67 3.24 3.00 0.93 24.32 26.90 1.11 1986-1987 65.50 43.00 0.66 716.50 509.00 0.71 3.24 3.00 0.93 22.78 18.09 0.79 1987-1988 70.40 52.00 0.74 737.30 539.30 0.73 3.24 2.90 0.90 20.35 16.32 0.80 1988-1989 69.20 49.00 0.71 736.90 495.10 0.67 3.37 3.20 0.95 20.11 15.03 0.75 1989-1990 70.00 52.00 0.74 738.10 512.00 0.69 3.46 3.30 0.95 19.13 14.72 0.77 1990-1991 68.40 52.00 0.76 727.80 523.40 0.72 3.11 3.00 0.96 19.26 15.47 0.80 1991-1992 68.00 50.00 0.74 723.10 519.00 0.72 3.60 3.00 0.83 18.87 15.41 0.82 1992-1993 67.60 52.00 0.77 691.10 503.00 0.73 5.06 7.00 1.38 18.75 13.41 0.72 1993-1994 67.10 52.10 0.78 710.60 530.10 0.75 6.40 15.00 2.34 18.19 11.61 0.64 1994-1995 68.00 53.00 0.78 710.20 535.00 0.75 9.94 29.10 2.93 17.76 14.90 0.84 1995-1996 65.20 50.00 0.77 698.20 524.00 0.75 10.13 32.00 3.16 17.45 14.64 0.84 1996-1997 64.30 50.00 0.78 689.20 525.00 0.76 12.67 40.70 3.21 17.03 15.02 0.88 1997-1998 64.20 48.40 0.75 665.50 518.40 0.78 14.93 65.80 4.41 16.74 13.10 0.78 1998-1999 63.80 42.60 0.67 653.60 499.00 0.76 18.49 84.50 4.57 16.21 12.57 0.78 1999-2000 28.70 21.00 0.73 498.40 394.00 0.79 22.55 120.70 5.35 14.70 12.09 0.82 2000-2001 27.10 20.00 0.74 468.40 377.00 0.80 25.98 149.20 5.74 19.66 17.00 0.86 2001-2002 26.30 19.00 0.72 447.80 355.00 0.79 30.05 172.40 5.74 ------Source: MOA, 2004 and BBS, 2000. Continued …..

69 Appendices

Table A.2 Area, production and yield of selected CGPRT crops in Bangladesh (continued) Potato Sweet potato Total tubers Year Area Production Yield Area Production Yield Area Production Yield ’000 ha ’000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha ’000 ha ’000 m. ton m.ton/ha Year 74.00 741.00 10.01 67.20 735.00 10.94 141.20 1 476.00 10.45 79.70 747.00 9.37 63.50 680.00 10.71 143.20 1 427.00 9.97 1971-1972 80.10 719.00 8.98 60.70 627.00 10.33 140.80 1 346.00 9.56 1972-1973 93.90 886.00 9.44 86.40 707.00 8.18 180.30 1 593.00 8.84 1973-1974 95.90 889.00 9.27 71.60 778.00 10.87 167.50 1 667.00 9.95 1974-1975 77.30 724.00 9.37 70.40 744.00 10.57 147.70 1 468.00 9.94 1975-1976 89.90 849.00 9.44 72.00 770.00 10.69 161.90 1 619.00 10.00 1976-1977 96.70 895.00 9.26 72.80 782.00 10.74 169.50 1 677.00 9.89 1977-1978 96.30 908.00 9.43 72.40 779.00 10.76 168.70 1 687.00 10.00 1978-1979 102.00 963.00 9.44 68.00 693.00 10.19 170.00 1 656.00 9.74 1979-1980 107.60 1 035.00 9.62 66.40 692.00 10.42 174.00 1 727.00 9.93 1980-1981 110.10 1 149.00 10.44 66.00 713.00 10.80 176.10 1 862.00 10.57 1981-1982 110.10 1 166.00 10.59 65.10 713.00 10.95 175.20 1 879.00 10.72 1982-1983 111.30 1 169.00 10.50 61.50 683.00 11.11 172.80 1 852.00 10.72 1983-1984 108.40 1 102.00 10.17 55.80 612.00 10.97 164.20 1 714.00 10.44 1984-1985 108.40 1 069.00 9.86 51.40 548.00 10.66 159.80 1 617.00 10.12 1985-1986 123.40 1 276.00 10.34 51.00 558.00 10.94 174.40 1 834.00 10.52 1986-1987 111.30 1 089.00 9.78 52.20 544.00 10.42 163.50 1 633.00 9.99 1987-1988 116.50 1 066.00 9.15 52.20 512.00 9.81 168.70 1 578.00 9.35 1988-1989 123.80 1 237.00 9.99 50.20 488.00 9.72 174.00 1 725.00 9.91 1989-1990 127.90 1 379.00 10.78 48.60 470.00 9.67 176.50 1 849.00 10.48 1990-1991 126.60 1 384.00 10.93 45.30 434.00 9.58 171.90 1 818.00 10.58 1991-1992 131.20 1 438.10 10.96 44.80 426.90 9.53 176.00 1 865.00 10.60 1992-1993 131.50 1 468.00 11.16 45.70 435.00 9.52 177.20 1 903.00 10.74 1993-1994 132.30 1 492.00 11.28 45.30 435.00 9.60 177.60 1 927.00 10.85 1994-1995 134.00 1 508.00 11.25 43.30 406.00 9.38 177.30 1 914.00 10.80 1995-1996 136.30 1 553.10 11.39 41.70 397.60 9.53 178.00 1 950.70 10.96 1996-1997 244.90 2 761.90 11.28 41.10 382.60 9.31 286.00 3 144.50 10.99 1997-1998 243.80 2 933.00 12.03 40.90 378.00 9.24 284.70 3 311.00 11.63 1998-1999 249.00 3 216.00 12.92 39.30 357.00 9.08 288.30 3 573.00 12.39 1999-2000 237.60 2 994.00 12.60 38.10 346.00 9.08 275.70 3 340.00 12.11 Source: MOA, 2004 and BBS, 2000.

70 Appendices

Table A.3 Per hectare cost and return of modern rice cultivation in Bangladesh Season a Particulars MV Aus MV Aman MV Boro Seed cost (Tk) 682 741 830 (4.19) (4.12) (2.99) Fertilizer cost (Tk) 1 634 2 156 2 632 (10.04) (11.98) (9.49) Urea 623 993 1 142 TSP 588 657 830 MP 272 321 371 Manure 151 185 289 Pesticide/insecticide cost (Tk) 294 524 462 Irrigation cost (Tk) 1 878 865 5 226 (11.54) (4.81) (18.84) Labour cost (Tk) 7 264 8 302 12 454 (44.64) (46.14) (44.90) Family labour 3 113 3 805 4 942 Hired labour 4 151 4 497 7 512 Land preparation cost (Tk) 2 782 3 398 3 657 Interest on operating capital (Tk) 173 215 378 Land rental (Tk) 1 569 1 791 2 100 Gross cost (Tk): Cash cost basis 10 234 10 805 18 872 Full cost basis 16 274 17 992 27 739 Output Yield of paddy (kg) 3 311 4 002 4 964 Price of paddy (Tk/kg) 7.20 7.15 6.75 Return from paddy (Tk) 23 839 28 614 33 509 Return from straw (Tk) 1 804 2 419 1 967 Gross return (Tk) 25 643 31 033 35 476 Net return (Tk) Cash cost basis 15 409 20 228 16 604 Full cost basis 9 369 13 041 7 737 Unit cost of production (Tk/kg) 4.92 4.50 5.59 Benefit cost ratio (cash cost basis) 2.51 2.87 1.88 Benefit cost ratio (full cost basis) 1.58 1.72 1.28 Source: Agricultural Economics Division, BRRI, 2002-2003. Note: Figures in the parentheses indicate the percentage of total full cost. a For an idea on different crop seasons in Bangladesh, see Table A.5.

71 Appendices

Table A.4 Per hectare cost and return of modern wheat cultivation in Bangladesh Particulars Research demonstration plot Farmers plot (conducted by WRC) Seed cost (Tk) 1 560 (13.27) 2 200 (15.74) Fertilizer cost (Tk) 3 861 (32.84) 3 852 (27.57) Urea 1 302 954 TSP 1 862 1 343 MP 297 477 Gypsum 400 90 Cowdung - 988 Pesticide/insecticide cost (Tk) 221 (6.83) 711 (5.09) Irrigation cost (Tk) 803 (6.83) 711 (5.09) Labour cost (Tk) 2 200 (18.72) 2 700 (19.32) Family labour 880 1 080 Hired labour 1 320 1 620 Land preparation cost (Tk) 1 360 1 760 Interest on operating capital (Tk) 250 250 Land rental (Tk) 1 500 1 500 Gross cost (Tk) Cash cost basis 10 875 10 145 Full cost basis 11 755 13 373 Output Yield of wheat (kg) 3.03 2.28 Price of wheat (Tk/kg) 12.00 12.00 Return from wheat (Tk) 36 360 18 538 Return from straw (Tk) 1 500 1 100 Gross return (Tk) 37 860 19 638 Net return Cash cost basis 26 985 9 493 Full cost basis 26 105 5 665 Unit cost of production (Tk/kg) 3.88 6.12 Benefit cost ratio (cash cost basis) 3.48 1.94 Benefit cost ratio (full cost basis) 3.21 1.70 Variety Shatabdi Kanchan Source: Annual report, 2003, Agril. Economics Division, BARI, Gazipur. Note: Figures in the parenthesis indicate the percentage of total full cost. WRC: Wheat Research Centre, Nashipur, Dinajpur. Survey conducted at Rangpur and Dinajpur area.

Table A.5 Duration of the cropping season and crops cultivated in each season Season Duration Crops cultivated Boro rice, potato, sweet potato, wheat, cauliflower, cabbage, tomato, bean, bottle gourd, carrot, soybean, gram, Rabi or Boro season (Mid October to mid maize, lentil, lathyrus (kheshary), cowpea, felon, (Winter season) March) mungbean, kaon, cheena, groundnut, onion, garlic, radish, tobacco, sugarcane etc.

Aus rice, sweet gourd, jute, ginger, turmeric, lady’s finger, bitter gourd (karala), indian spinach (pui sak), ash gourd Kharif I or Aus season (Mid March to mid June) (chal kumra), taro (mukhi kachu), amaranth (danta), ribbed gourd (jhinga), snake gourd (chchinga), mungbean, maize, soybean, pineapple etc.

Kharif II or Aman Aman rice, mungbean, yard long bean (borboti), radish, (Mid June to mid October) season pointed gourd (patal), black gram, egg-plant etc.

72 Appendices

Table A.6 Per unit cost and return of CGPRT crop based products of large-scale processors Cost items (Tk/kg) Interest Sale price Profit Name of Wages Depreciation Total cost Profit Raw Marketing on Rent of Depreciation Depreciation (SP) as a % products and Utilities on plant and of (Tk/kg) materials cost operating premises on building on vehicles (Tk/kg) of SP salaries machineries production capital Chanachur Dipjol 27.17 1.68 0.75 12.91 1.42 0.50 0.50 0.10 0.42 45.44 49.00 3.56 7.27 Ruma 38.34 1.31 0.96 0.25 1.39 0.34 0.39 0.11 0.13 43.22 55.01 11.78 21.41 Pran 27.17 2.88 1.09 16.46 1.59 0.04 0.30 0.13 0.58 50.25 55.00 4.75 8.64 Dolly Biscuits 24.56 1.69 0.90 0.37 0.92 0.63 0.36 0.12 0.13 29.67 42.00 12.33 29.36 Dhaka Liton 27.50 1.36 0.74 0.29 1.00 0.27 0.23 0.13 0.09 31.60 55.00 23.40 42.55 Tripti (Kishoreganj) 27.50 1.51 1.16 0.51 1.02 0.34 0.21 0.22 0.13 32.59 50.00 17.41 34.82 Kiron Chanachur 25.00 1.48 0.84 0.45 0.93 0.20 0.16 0.12 0.13 29.30 35.00 5.70 16.29 Potato crackers Pran 54.50 5.14 1.95 40.00 3.39 0.08 0.54 0.24 1.03 106.87 170.02 63.15 37.14 Bengal Biscuits 54.50 5.32 2.21 60.00 4.65 0.11 0.53 0.26 1.30 128.88 170.00 41.12 24.19 Dal (fried pulses) Pran 22.50 1.24 0.95 12.62 1.60 0.04 0.38 0.79 0.32 40.44 64.00 23.56 36.81 Dipjol 49.61 2.57 2.00 25.40 1.00 1.19 0.95 3.57 0.79 87.08 144.00 56.92 39.53 Ready Feed (Aftab) 10.50 0.12 0.08 1.98 0.13 0.00 0.05 0.12 0.03 13.01 14.00 0.99 7.07 De-husked pulses Lentil 24.80 0.11 0.07 0.91 0.82 0.05 0.04 0.07 0.00 25.86 30.48 4.63 15.19 Mungbean 21.18 0.10 0.07 0.88 0.79 0.05 0.04 0.07 0.00 24.89 29.35 4.45 15.16 Chickpea 19.22 0.11 0.07 0.94 0.85 0.05 0.04 0.07 0.00 26.65 31.42 4.77 15.18 Source: Field Survey, 2004.

73 Appendices

Table A.7 Per unit cost-revenue structure and business profitability of small-scale processors (Tk/unit) Sweet Fuchka/ Chanachur French Puffed Fried Potato Cake Jilapi Cost/Return Item potato Chatpoti mix fries corn maize flakes (piece) (kg) (kg) (plate) (kg) (kg) (kg) (packet) (kg) Material cost 0.60 0.30 3.35 44.04 20.23 18.17 40.00 3.00 45.00 Water charge 0 0 0.17 0 0.50 0.40 0 0 0 Electricity charge 0 0 0.00 0 0.50 0.50 0.10 0.00 0.00 Fuel charge 0.05 0.05 0.42 0 1.25 0.83 5.40 0.27 3.75 Labour cost 1.00 0.23 1.60 22.22 4.47 12.00 1.83 0.20 6.25 Rent 0 0.00 0.00 0 1.00 0 0.00 0 0.00 Inventory 0 0.00 0.11 0.00 0.32 0.12 0.00 0.03 0.00 depreciation Interest on 0 0.00 0.10 0.17 0.29 0.08 0.00 0 0.00 operating capital Total cost 7.05 0.58 5.74 66.43 28.56 32.10 47.33 3.50 55.00 Consumer’s price 11.00 1.00 10.00 106.67 40.00 53.33 55.33 5.00 200.00 (CP) Profit 3.95 0.43 4.26 40.24 11.44 21.23 8.00 1.51 145.00 Profit as a % of CP 35.91 43.00 42.60 37.72 28.60 39.81 14.46 30.20 72.50 Source: Field Survey, 2004.

Table A.8 Public research expenditure in Bangladesh compared to other regions of the world Expenditures as a share of Ag GDP Expenditure per capita (%) (US$) 1976 1985a 1995a 1976 1985a 1995a Bangladesh 0.013 0.20 0.25 0.015 0.14 0.18 Developing countries 0.44 0.53 0.62 1.5 2.0 2.5 Sub-Saharan Africa 0.91 0.95 0.85 3.5 3.0 2.4 China 0.41 0.42 0.43 0.7 1.3 1.7 Other Asia 0.31 0.44 0.63 1.1 1.7 2.6 Latin America 0.55 0.72 0.98 3.4 4.0 4.0 Developed countries 1.53 3.13 2.64 9.6 11.0 12.0 Average of all countries 0.83 0.95 1.04 3.3 3.8 4.2 Source: Pardey and Beintema, 2001 and author’s calculation. a Three years averages centered on 1985 and 1995.

74 Appendices

Table A.9 Public research expenditure in Bangladesh compared to other regions of the world (lakh taka) Organization 1997-1998 1998-1999 1999-2000 BARC 994.79 289.82 1 284.61 2 061.52 302.02 2 363.54 2 114.71 317.25 2 431.96 BARI 3 598.65 1 935.39 5 534.04 3 662.35 2 119.00 5 781.35 5 260.96 2 214.00 7 474.96 BRRI 967.05 500.00 1 467.05 1 848.14 572.00 2 420.14 1 896.10 580.00 2 476.10 BJRI 92.86 637.93 730.79 260.37 701.58 961.95 776.23 711.04 1 487.27 BSRI 245.38 265.81 511.19 295.96 264.42 560.38 302.22 291.93 594.15 BINA 626.42 234.06 860.48 300.00 260.22 560.22 270.00 297.92 567.92 SRDI 729.86 292.23 1 022.09 957.41 322.49 1 279.90 658.73 361.34 1 020.07 BTRI - 304.02 304.02 - 336.68 336.68 - 371.32 371.32 FRI 1 093.43 183.46 1 276.89 1 050.39 203.66 1 254.05 1 066.28 203.17 1 269.45 BFRI 439.00 438.59 877.59 644.62 468.55 1 113.17 1 583.82 513.12 2 096.94 BLRI 687.70 110.65 798.35 1 792.90 87.29 1 880.19 1 170.29 92.47 1 262.76 Total 1 4667.1 18 511.57 21 052.9 Agril. GDP 4 910 400 5 547 500 5 837 000 Percentage of Agril. GDP 0.299 0.334 0.361

Organization 2000-2001 2001-2002 2002-2003 ADP Revenue Total ADP Revenue Total ADP Revenue Total BARC 1 935.12 294.09 2 229.21 970.53 321.03 1 291.56 5.84 341.30 347.14 BARI 3 690.43 2 113.25 5 803.68 3 717.67 2 073.00 5 790.67 2 793.21 2 127.00 4 920.21 BRRI 1 664.28 625.00 2 289.28 1 347.40 640.00 1 987.40 816.50 741.36 1 557.86 BJRI 563.06 722.60 1 285.66 448.73 729.40 1 178.13 330.00 727.59 1 057.59 BSRI 361.54 310.51 672.05 277.81 314.36 592.17 308.87 311.20 620.07 BINA 210.13 311.21 521.34 283.99 324.79 608.78 335.49 339.45 674.94 SRDI 698.28 370.53 1 068.81 716.81 429.91 1 146.72 317.23 433.70 750.93 BTRI - 390.21 390.21 - 375.51 375.51 - 368.17 368.17 FRI 702.41 219.22 921.63 799.29 236.51 1 035.80 322.72 248.24 570.96 BFRI 1 497.00 529.33 2 026.33 559.50 551.72 1 111.22 25.00 586.05 611.05 BLRI 2 062.81 147.50 2 210.31 2 884.11 148.00 3 032.11 958.00 177.45 1 135.45 Total 19 418.51 18 150.07 12 614.37 Agril. GDP 5 903 700 5 990 000 6 305 700 Percentage of Agril. GDP 0.330 0.303 0.200 Note: ADP stands for Annual Development Programme.

75 Appendices

Table A.10 New varieties of CGPRT crops released by BARI Name of the crop Name of the variety Yield (t/ha) A. Pulses Lentil BARI Masur-3 1.90-2.00 BARI Masur-4 1.90-2.00 Mungbean BARI Mung-2 1.00-1.20 BARI Mung-5 1.20-1.40 BARI Mung-6 1.20-1.30 Mashkalai BARI Mash-2 1.30-1.50 BARI Mash-3 1.40-1.60 Chickpea BARI Chola-4 1.90-2.20 BARI Chola-5 1.70-2.00 BARI Chola-6 1.80-2.10 BARI Chola-7 1.50-1.60 BARI Chola-8 1.30-1.40 Khesari BARI Khesari-1 1.60-2.00 BARI Khesari-2 1.50-1.90 Cowpea (Felon) BARI Felon-1 1.20-1.50 BARI Felon-2 1.30-1.60 B. Tuber crops Potato BARI Alu-1 30-35 BARI Alu-4 25-30 BARI Alu-7 (Dimont) 25-30 BARI Alu-8 (Cardinal) 25-30 BARI Alu-11 25-30 BARI Alu-12 25-30 BARI Alu-13 25-30 BARI Alu-15 30-35 BARI Alu-16 25-35 BARI Alu-17 25-30 BARI Alu-18 20-25 BARI Alu-19 20-25 BARI Alu-20 25-35 Sweet potato Tripti 40-45 Kamala Sinduri 40-45 Daulatpuri 35-40 BARI Misti Alu-4 40-45 BARI Misti Alu-5 30-35 Aroids Latiraj (Panikachu) 25-30 Bilashi (Mukhikachu) 35-40 C. Coarse grains (millets and maize) Cheena Tusher 2.50-3.00 Kaon Titas 2.00-3.00 BARI Kaon-2 2.50-3.00 BARI Kaon-3 2.50-2.85 Barley BARI Barley-1 2.00-3.00 BARI Barley-2 2.50-3.00 Maize (composite) BARI Maize-5 6.00-6.50 BARI Maize-6 5.00-5.50 BARI Maize-7 5.00-6.00 Maize (Hybrid) BARI hybrid Bhutta-1 8.00-8.50 BARI hybrid Bhutta-2 7.00-7.50 BARI Top cross hybrid Bhutta-1 7.00-7.50 Sweet corn BARI Misti Bhutta-1 9.50-10.50 (Green cob without husks)

Working Paper No. 78 Status and Prospects of Feed Crops in the Philippines by Danilo C. Cardenas, Lara Marie M. De Villa and Fezoil Luz C. Decena

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