Agricultural Value Chains (Avc) Project Bangladesh: Value Chain Selection Report, End Market and Value Chain Analysis

AGRICULTURAL VALUE
CHAINS (AVC) PROJECT

BANGLADESH
VALUE CHAIN SELECTION REPORT, END MARKET AND VALUE CHAIN
ANALYSIS
DATE: 30 SEPTEMBER 2014
This publication was produced for review by the United States Agency for International
Development. It was prepared by Development Alternatives, Inc. (DAI).
AGRICULTURAL VALUE
CHAINS (AVC) PROJECT
BANGLADESH
VALUE CHAIN SELECTION REPORT, END MARKET AND VALUE CHAIN
ANALYSIS
Program Title: USAID Agricultural Value Chain (AVC) Project
Sponsoring USAID Office: Economic Growth Office
Contract Number: AID-388-C-13-00003
Contractor: DAI
Date of Publication: 30 September, 2014
Author: DAI
The authors’ views expressed in this publication do not necessarily reflect the views of the United
States Agency for International Development or the United States Government.
CONTENTS
ACRONYMS .................................................................................................................................... 7
CHAPTER 1: ASSESSMENT DESIGN AND FINDINGS ............................................................... 1
INTRODUCTION ............................................................................................................................. 2
FEED THE FUTURE INITIATIVE AND THE USAID AGRICULTURAL VALUE CHAINS
PROJECT .................................................................................................................................. 2
METHODOLOGY ............................................................................................................................ 3
SUMMARY OF FINDINGS ............................................................................................................ 11
CHAPTER 2: PULSES .................................................................................................................. 19
INTRODUCTION ..................................................................................................................... 20
END MARKET ANALYSIS....................................................................................................... 23
MARKET SEGMENTS ............................................................................................................. 25
PRODUCTION AND POST-HARVEST HANDLING ............................................................... 27
PRODUCTION IN THE FTF ZONE ......................................................................................... 31
LENTIL PRODUCTION............................................................................................................ 31
MUNGBEAN PRODUCTION ................................................................................................... 31
POST-HARVEST HANDLING AND PROCESSING OF PULSES IN THE FTF ZONE .......... 33
MARKET CHANNELS ............................................................................................................. 37
MARGIN ANALYSIS ................................................................................................................ 38
DYNAMIC TRENDS................................................................................................................. 39
OPPORTUNITIES AND CONSTRAINTS IN PULSES ............................................................ 39
CHAPTER 3: POTATO ................................................................................................................. 41
INTRODUCTION ..................................................................................................................... 42
SCORING MATRIX.................................................................................................................. 43
PORTER’S FIVE FORCES ANALYSIS FOR POTATO .......................................................... 44
PRODUCTION AND POST-HARVEST HANDLING ............................................................... 52
PRODUCTION COSTS AND PROFITABILITY....................................................................... 54
POST-HARVEST HANDLING ................................................................................................. 55
PROCESSING ......................................................................................................................... 55
POTATO CHANNEL MAP AND VALUE CHAIN ACTORS ..................................................... 56
MARKET CHANNELS ............................................................................................................. 59
MARGIN ANALYSIS ................................................................................................................ 60
DYNAMIC TRENDS................................................................................................................. 60
OPPORTUNITIES AND CONSTRAINTS ................................................................................ 60
CHAPTER 4: SUMMER VEGETABLE BASKET ......................................................................... 62
INTRODUCTION ..................................................................................................................... 63
SCORING MATRIX.................................................................................................................. 64
PORTER’S FIVE FORCES ANALYSIS FOR SUMMER VEGETABLE BASKET ................... 65
END MARKET ANALYSIS....................................................................................................... 66
PRODUCTION ......................................................................................................................... 72
PRODUCTION PRACTICES ................................................................................................... 73
PRODUCTION SCHEDULE AND COSTS .............................................................................. 74
MARKET CHANNELS ............................................................................................................. 78
MARGIN ANALYSIS ................................................................................................................ 78
DYNAMIC TREND ................................................................................................................... 79
OPPORTUNITIES AND CONSTRAINTS ................................................................................ 80
CHAPTER 5: MANGOES.............................................................................................................. 82
INTRODUCTION ..................................................................................................................... 83
SCORING MATRIX.................................................................................................................. 83
MARKET CHANNELS ............................................................................................................. 98
CHAPTER 6: TOMATOES .......................................................................................................... 101
INTRODUCTION ................................................................................................................... 102
PORTER’S FIVE FORCES ANALYSIS FOR TOMATO ....................................................... 105
END MARKET ANALYSIS..................................................................................................... 106
PRODUCTION AND POST-HARVEST HANDLING ............................................................. 111
POST-HARVEST HANDLING ............................................................................................... 114
DYNAMIC TREND ................................................................................................................. 119
OPPORTUNITIES AND CONSTRAINTS .............................................................................. 121
CHAPTER 7: GROUNDNUTS .................................................................................................... 124
INTRODUCTION ................................................................................................................... 125
PORTER’S FIVE FORCES ANALYSIS FOR GROUNDNUTS ............................................. 128
PRODUCTION AND POST-HARVEST HANDLING ............................................................. 135
POST-HARVEST HANDLING ............................................................................................... 141
PROCESSING ....................................................................................................................... 141
MARKET CHANNELS ........................................................................................................... 145
MARGIN ANALYSIS .............................................................................................................. 145
OPPORTUNITIES AND CONSTRAINTS .............................................................................. 148
CHAPTER 8: NATURAL FIBERS .............................................................................................. 150
INTRODUCTION ................................................................................................................... 151
JUTE ...................................................................................................................................... 151
COIR ...................................................................................................................................... 176
CHAPTER 9: FLORICULTURE .................................................................................................. 179
INTRODUCTION ................................................................................................................... 180
MARKET CHANNELS ........................................................................................................... 201
CROSS CUTTING ISSUES ................................................................................................... 203
ANNEX 1 ..................................................................................................................................... 208
ANNEX 2 ..................................................................................................................................... 214
ANNEX 3 ..................................................................................................................................... 217
ACRONYMS
AVC Agricultural Value Chain Project
ANSI American National Standard Institute
ASQC American Society of Quality Control
AQSC Academic Quality and Standard Committee
BARI Bangladesh Agricultural Research Institute
BADC Bangladesh Agricultural Development Corporation
BBS Bangladesh Bureau of Statistics
BDT Bangladesh Taka (Currency of Bangladesh)
BFS Bangladesh Flower Society
BJA Bangladesh Jute Association
BJDMEA Bangladesh Jute Diversified Product Manufacturer and Exporters Association
BJMA Bangladesh Jute Mills Association
BJMC Bangladesh Jute Mills Corporation
BJSA Bangladesh Jute Spinner Association
BS Breeder Seed
CARC Canadian Agri-Food Research Council
CBC Carpet Backing Cloth
CCI&E Chief Controller of Import and Export
CFC Common Fund for Commodities
CNG Compressed Natural Gas
DAE Department of Agricultural Extension
DAP Di-ammonium Phosphate
ERC Export Registration Certificate
EPB Export Promotion Bureau
FAO Food and Agricultural Organization of United Nations
FCB Full Cost Basis
FGD Focus Group Discussion
FOB Free on Board
FJF Fine Jute Fabric
FTF Feed the Future
FY Fiscal Year
GoB Government of Bangladesh
GDP Gross Domestic Product
GFFKS Gothkhali Full Chasi and Full Babosayee Kallyan Samity
Ha Hectare
HHs Households
HIES Household Income and Expenditure Survey
HS Code Harmonized System Code
HYV High Yielding Variety
ICT Information and Communication Technology
IGD Institute of Grocery Distribution
IJSG International Jute Study Group
ISO International Organization for Standards
ICCO International Cocoa Organization
IRR Internal Rate of Return
ITC International Trade Centre
JDP Jute Diversified Products
JDPC Jute Diversification Promotion Centre
KII Key Informant Interview
LBC Linoleum Backing Cloth
MFIs Micro Finance Institutes
MFN Most Favored Nation
MIL STD Military Standard
MP Murate of Potash
MPC Marginal Propensity to Consume
NFC Natural Fiber Composite
NBFIs Non-Banking Financial
NGO Institutions Non-Government
NPV Organization Net Present Value
PP Polypropylene
R&D Research and Development
RGDP Real Gross Domestic Product
RH Relative Humidity
RMG Ready Made Garments
SCA Seed Certification Agency
SME Small and Medium Enterprise
SA Social Accountability
SAFTA South Asia Free Trade Area
SAARC South Asian Association for Regional Cooperation
Tons Metric Ton
TSP Triple Super Phosphate
USD USA Dollar
USAID United States Agency for International Development
UV protected Ultraviolet protected
CHAPTER 1: ASSESSMENT
DESIGN AND FINDINGS
END MARKET ANALYSIS: METHODOLOGY 1

INTRODUCTION
FEED THE FUTURE INITIATIVE AND THE USAID AGRICULTURAL VALUE
CHAINS PROJECT
Feed the Future (FTF), the United States government’s global hunger and food security initiative, supports
country driven approaches to address the root causes of hunger and poverty. As part of its Feed the Future
portfolio of activities, USAID/Bangladesh awarded the five-year Agricultural Value Chains (AVC) project
to DAI to contribute to broad-based economic growth and long-term food security in Bangladesh’s
Southern Delta. AVC’s geographic focus is twenty districts in the Barisal Division (Barisal, Bhola,
Jhalokati, Pirojpur, Barguna, Patuakhali), the Dhaka Division (Faridpur, Gopalganj, Madaripur, Rajbari,
Shariatpur), and the Khulna Division (Jessore, Jhenaidah, Magura, Narail, Bagerhat, Khulna, Satkhira,
Chuadanga, Meherpur).
AVC will apply a market systems approach to a portfolio of food and non-food crops to facilitate growth
and upgrade the agricultural sector. The program will maximize value retained and accompanying income
for the rural poor who participate in the sector. The project also will increase key investments in value
chain innovation and build capacity of local organizations to ensure that value chain upgrading is private-
sector driven and sustainable, reflecting USAID’s emphasis on locally led and implemented development
efforts. By increasing availability of, access to, and use of diverse, nutritious foods in local, regional, and
national markets, AVC will contribute significantly to achieving improved food security in the Southern
Delta of Bangladesh.
OBJECTIVE OF THE ASSESSMENT

As specified in the AVC contract, the first technical activity of the program is to assess economically and
developmentally promising food and non-food value chains in the Southern Delta. The objective of the
assessment is to determine the competitiveness of specific value chains and identify which have the
highest potential to spur inclusive economic development in the targeted districts. DAI uses the assessment
to make recommendations to USAID about which value chains AVC should support.
Given that the selection of agricultural value chains is arguably the most critical decision that will be made
during the life of the project, the AVC team—led by Chief of Party William T. Levine and Deputy Chief
of Party Bani Amin—designed the assessment following best practices from www.microlinks.org, which
provides a solid conceptual framework for the analysis.
A value chain analysis is used to understand the systemic factors and conditions under which a value chain
and its firms can achieve higher levels of performance. When a value chain is used as a means for
fostering growth and reducing poverty, the analysis focuses on identifying ways to (1) improve the
competitiveness of value chains with large numbers of small firms, and (2) expand the depth and breadth
of benefits generated. Analysis results offer industry stakeholders a vision for value chain competitiveness
and form the basis for a competitiveness strategy—a plan for eliminating constraints to end market
opportunities and advancing sustainable competitiveness. To gain a thorough understanding of the
agricultural sector of the Feed the Future targeted area within the Southern Delta, the AVC team began
with a contextual analysis and then undertook end market analyses of the value chains under
consideration. This study documents the results of the assessment.
LIMITATIONS
It is important to note that both the contextual analysis and the end market analyses revealed significant
structural and environmental limitations in the target zone that are beyond AVC’s manageable interest, but
that have implications for the project’s ability to realize its objectives and targets. In particular, the target
zone faces unique and significant climate-based threats (cyclones, saline intrusion), soils with organic
matter deficits, poor transport channels, limited or nonexistent cold chain services, unreliable electric
power delivery, and very few processors. These limitations weaken intermediate linkages in the value
chains and make scalability in the region particularly challenging.

The quality of data available for analysis posed another set of limitations. Unfortunately, there is a wide
discrepancy between the available secondary data reported by the Bangladesh Bureau of Statistics (BBS)
and the data reported by the Department of Agricultural Extension (DAE) (see Table
1). To minimize the impact of such deviance in data, the project team visited all regional offices of the
DAE in the FTF zone, collected primary information on farming area and production, and conducted
interviews with deputy directors in each of the DAE regional offices. The variance in data for the area
covered and production of mungbeans is beyond explanation. For 2013, the BBS reports 21,367 hectares
of area coverage in the South with 14,033 tons of mungbeans production. For the same year, the DAE
reports 123,534 hectares in the South and 123,662 tons of production. Our field observations and
interviews with traders and farmers during the mungbeans production period confirm the validity of the
DAE data for volume of production.
Table 1: 2012–13 Production Data for Pulses
Lentils Mungbeans
BBS DAE Data Discrepancy BBS DAE Data Discrepancy
Area Production Area Prod. Area Prod. Area Prod. Area Prod. Area Prod.
(Ha) (Tons) (Ha) (Tons) (Ha) (Tons) (Ha) (Tons) (Ha) (Tons) (Ha) (Tons)
57,568 58,734 87,319 108,738 152% 185% 21,367 14,033 123,534 123,662 578% 881%
SOURCE: AVC compiled data from the Yearbook of Agricultural Statistics of Bangladesh (BBS, 2005, 2008, 2011, 2012–
13) and from local offices of the Department of Agricultural Extension (DAE) services.
In spite of the data challenges, the AVC End Market Assessment clearly reveals that the Southern Delta
has managed to play a major role in natural fiber, tomato, flower, mungbean, and groundnut production,
and a growing role in the other value chains that AVC has identified. Accordingly, the AVC team will
launch a series of coordinated interventions over the life of the project to achieve contractually targeted
intermediate results..
METHODOLOGY
The AVC staff followed a three-step process to select and recommend value chains for final inclusion in
the USAID/Bangladesh AVC project. This section provides an overview of these steps.
1. CREATE MASTER LIST OF CROPS

In October 2013, the AVC team created a list of food and non-food crops in the Southern Delta that could
be used for the AVC’s value chains intervention. The list was formed from research conducted for the
AVC proposal, staff input, and interviews with agriculture sector experts. The list included the following:
Food Crops: banana, beans, bell peppers, broccoli, cabbage, cauliflower, carrot, cucumber, date molasses,
eggplant, green papaya, ground nut, bitter gourd, leafy greens, lentils, mango, mungbean, onion, potato,
soybean, sugarcane, sweet potato, spices (chili, turmeric, ginger, coriander), sweet gourd, tomato, and
watermelon.
Non-Food Crops: bamboo, natural fibers (jute, kenaf, coir, banana, hogla, and other sea grass),
floriculture, leather goods, medicinal plants, natural dyes, and non-timber forestry products.
2. DEVELOP INITIAL VALUE CHAIN SELECTION CRITERIA AND CONDUCT PRELIMINARY

SCREENING
To refine the master list of crops into a manageable shortlist, the AVC technical team collectively ranked
crops against preliminary criteria (see Table 2). Four equally weighted criteria (Weight = 25) align with
the microlinks approach and reflect the AVC team’s goal of achieving broad-based economic growth that
enhances long-term food security by applying a market systems approach. The final criteria is a “Yes or
No” indicator to assess the agronomical and cultural feasibility of this value chain in the Feed the Future
target zone.

Table 2: Preliminary Criteria for Crop Selection by AVC
Initial Criteria Measures Scoring/Weighting
1 Competitiveness Industry scale and growth potential 25
2 Impact Potential Small and medium enterprise (SME) participation and 25
growth potential, income generation
3 Industry Leadership Willingness of lead firms to invest in increased 25
competitiveness and SME participation
4 Cross-Cutting Contribution to gender, nutrition, and environmental 25
objectives
5 Feasibility Agronomical and cultural feasibility in Southern Delta Y/N
The team identified several crops on the master list as infeasible and eliminated them. The remaining
crops were ranked against the four equally weighted criteria and a fifth “Yes or No” indicator on the
basis of staff’s existing knowledge, desk research, and key informant interviews (Table 3). The initial
ranking identified the following crops and generated a shortlist for further research:
Food Crops: banana, chili, green leafy vegetables, ground nut, eggplant, lentils, mango, mungbean,
onion, potato, soybean, sweet gourd, sweet potato, tomato, and watermelon.
Non-Food Crops: flowers, jute, coir, and sea grass.
Table 3: Preliminary Ranking by AVC of the Value Chains
Food
Banana 13 12 12 18 55 Y
Eggplant 14 3 15 15 47 Y
Ground Nut 10 18 23 12 63 Y
Lentils 11 5 23 25 64 Y
Mango 24 25 15 7 71 Y
Mungbean 8 22 23 23 76 Y
Onion 20 2 20 22 64 Y
Potato 14 20 25 5 64 Y
Soybean 12 13 15 2 42 Y
Sweet Gourd 16 8 15 20 59 Y
Sweet Potato 7 10 15 10 42 Y
Spices (chili, turmeric, ginger, coriander) 14 19 20 15 68 Y
Tomato 10 17 23 10 60 Y
Watermelon 14 7 15 5 41 Y
Non-Food
Natural Fibers (jute, kenaf, coir, banana, hogla, and 10 15 25 20 70 Y
other sea grass)
Floriculture 14 20 15 20 69 Y

3. EXPAND SELECTION CRITERIA AND CONDUCT FIELD RESEARCH
To further investigate the shortlisted crops, the staff expanded selection criteria to increase the rigor of the
ranking process. In Figure 1, competitiveness and industry leadership criteria comprise 50 percent of the
scoring weight; another 35 percent make up the development impact, or the ability of the value chain to
include vulnerable populations and small and medium enterprises. The combined weight of 85 percent
reflects the importance of identifying and accelerating value chains with the potential for inclusive growth.
The team applied the criteria to the shortlisted value chains using existing secondary data and conducted
first-hand interviews with value chain actors. The main secondary sources were recent publications of the
BBS and the DAE, and value chain reports prepared by other organizations. The technical team held key
informant interviews (KII) with value chain stakeholders to develop an understanding of each sector and to
resolve data discrepancies.

Figure 1: Selection Criteria for AVC Final Ranking of Crops
The AVC staff interviewed more than 1,000 participants (with 35 percent female participation at the
village level) in eighteen districts, including Jessore, Bagerhat, Khulna, Barisal, Meherpur, Chuadanga,
Magura, Narail, Satkhira, Jhenaidah, Bhola, Barguna, Patuakhali, Faridpur, Shariatpur, Madaripur,
Gopalganj, and Rajbari. Interviewees included 500 farmers, eighteen DAE deputy directors at the district-
level, multiple service providers, input suppliers, processors and marketing companies, exporters, retailers,
and local agriculture-focused non-governmental organizations. For food value chains, the team conducted
key informant interviews with representatives from Square, Bombay Sweets, Pran, Golden Harvest, and
Advanced Chemical Industries (ACI). For non-food value chains, the team interviewed jute mill
representatives, processors, traders, manufacturers, and exporters. The interviewees included
representatives from Faridpur Jute Fibers, Ltd; Natun Bazar; Tarango; Creation; and San Trade, and the
Bangladesh Jute Research Institute and Jute Diversified
Product Promotion Center (JDPC). Cut flower stakeholders included individual farmers in
Jessore/Godkhali and Chakoria, wholesalers and retailers in Jessore and Dhaka, the Bangladesh Flower
Society, Hortex, the Godkhali Flower Farmer Welfare Association, and ADB’s Second Crop
Diversification Project.
To determine the suitability of the target area for specific crops being considered, the team conducted a
comparative analysis of crops in locations outside of the USAID Feed the Future target zone. The analysis
enabled staff to determine the competitiveness of the same crops sourced within and outside of the zone.
Specifically, AVC staff investigated mungbean, lentils, and medicinal plants in Natore; potato and banana
in Bogra; onion and tomato in Rajshahi; mango in Chapai Nawabgani; floriculture

in Chakaria under Cox’s Bazar district; and indigo farmers’ cluster and processing center in Sadar
upazilla under Rangpur district. Results from the analysis led the AVC team to remove the focus on
medicinal plants or bananas, as these crops are more competitive when grown outside the FTF target
zone than when grown inside the zone.
The AVC team’s extensive field research informed the development of a scoring scale for the expanded
selection criteria (see Table 4). Research also led the team to cluster a few crops under common crop
groups. In particular, jute and coir were combined as a “Natural Fibers” chain, and mungbean and lentils
grouped into a “Pulses” chain. Likewise, several horticultural crops grown in the summer season—
namely, bitter gourd, cucumber, eggplant, pointed gourd, and pumpkin—were clustered as a “Summer
Basket” chain. Clustering these products ensured each chain had sufficient production volume and
number of stakeholders for scalability and impact potential.

Table 4: AVC Scoring Scale for Expanded Selection Criteria
Explanation for Scoring
Criteria Data Source Weight Quantitative
Indicators 0 1 2 3 4 5 6 7 8 9 10
Criteria 1: Competitiveness Potential (40%)
National consumption (in
0<$5 $5<20 $20<35 $35<50 $50<65 $65<80 $80<100
10% USD million)
Market Size BBS and DAE
FTF zone production (in
0<$5 $5<15 $15<30 >=$30
USD million)
Percent growth of national
consumption over last 5 years 0<3% 3<6% 6<9% 9<12% 12<15% 15<18% >=18%
Market Growth (annual BBS and DAE 10% (in USD million)
basis) (in USD million) Percent growth in the FTF zone
production over last 5 years 0<5% 5<10% >=10%
(in USD million)
Scope of Value 10% (Qualitative indicator) Low Medium High
Addition
Export/Import Trade Map & Other 5%
Reports (Qualitative indicator) Low Medium High
Substitution Potential
Agroecological 5% (Qualitative indicator) Low Medium High
Suitability
Criteria 2: Impact Potential (35%)
Income Potential Team Assessment 10% 2012–13 return on investment <10% 10%<20% 20%<30% 30%<40% 40%<50% 50%<60% 60%<70% 70%<80% 80%<90% 90<100% 100%<
for farmer
Women and Youth Reports and 10%
Databases (Qualitative Indicator) Low Medium High
Inclusion
Outreach (# of HHs Reports and 5% # of farmers in the FTF zone 10,000< 25,000< 50,000<
Databases involved in value chain <10,000 25,000 50,000 80,000 >80,000
Impacted)
Job Creation Team Assessment 10% (Qualitative indicator) Low Medium High
Criteria 3: Cross-Cutting (15%)

Nutrition BBS and DAE 10% (Qualitative indicator) Low Medium High
Environmental 5%
Team Interviews (Qualitative indicator) Low Medium High
Suitability
Criteria 4: Industry Leadership (10%)
Potential for Private 10%
Field Visits (Qualitative indicator) Low Medium High
Sector Leverage
END MARKET ANALYSIS: METHODOLOGY

The detailed crop selection ranking (see Table 5) led to the selection of eight value chains for inclusion in
the AVC program. These eight, which include six food crops (tomato, potato, mango, groundnut, pulses,
and summer basket) and two non-food crops (natural fibers and flowers), are the focus of the End Market
and Value Chain Analysis in Chapters 2 through 9.
As a final step, the team considered how the top-ranked eight value chains, when taken collectively,
covered the twenty districts in the FTF target zone. As the map in Figure 2 shows, the eight value chains
cover a broad geographic area. The team also considered whether the top-ranked eight value chains as a
whole satisfactorily contributed toward all expected outcomes and targets in the AVC contract.
Figure 2: Geographic Coverage of Selected Value Chains
Note: Map created by AVC staff.
END MARKET ANALYSIS: METHODOLOGY

Table 5: Crop Selection Ranking
CrossCutting Industry
Competitiveness Potential (40%) Impact Potential (35%) (15%) Leadership Feasibility Filter
(10%)
Weight 10 10 10 5 5 10 10 5 10 10 5 10 Y/N
Ground Nut 9.0 3.0 9.5 3.0 3.5 8.0 6.0 4.0 8.0 9.0 4.5 9.0 Y 72.5 4
Tomato 9.0 5.0 9.5 3.5 4.5 9.5 6.0 3.0 8.5 8.0 3.5 9.0 Y 79 1
Pulses 10.0 3.0 8.0 4.5 3.0 10.0 5.0 5.0 5.5 9.5 5.0 8.5 Y 77 2
Mango 10.0 6.0 8.0 3.5 3.5 4.0 3.0 5.0 8.0 8.0 4.0 9.0 Y 76 3
Potato 10.0 4.0 8.0 3.0 3.5 7.0 7.0 5.0 8.0 5.5 3.5 9.0 Y 70.5 6
Summer 10.0 2.0 5.0 2.5 4.0 10.0 7.5 5.0 7.0 9.0 3.5 6.0 Y 67.5 8
Basket
Floriculture 8.0 10.0 6.0 3.0 3.0 10.0 8.5 2.0 9.0 NA 3.0 7.0 Y 69.5 7
Natural Fiber 10.0 7.0 9.0 4.5 3.5 5.5 7.5 5.0 8.0 NA 3.5 8.0 Y 71.5 5
Banana 10.0 0.0 7.0 1.5 2.5 6.5 4.0 3.0 5.0 6.0 3.0 7.0 Y 55.5 10
Watermelon 5.0 6.0 3.0 1.0 2.5 7.0 4.0 2.0 5.0 8.0 3.0 2.5 Y 49 12
Soybean 2.0 8.0 8.0 3.0 2.0 7.0 5.0 1.0 6.0 4.5 3.0 4.0 Y 53.5 11
Sweet Potato 3.0 4.0 4.0 1.0 3.5 7.0 2.0 2.0 4.0 9.0 3.0 2.0 Y 44.5 13
Spices 10.0 7.0 4.5 3.0 3.0 8.0 6.0 4.0 6.0 3.0 3.0 3.5 Y 61 9
(Coriander,
Chili,
Onion)
SUMMARY OF FINDINGS
Despite limitations to development, the value chains that AVC identified have the potential for significant
growth. In 2012–13, the eight value chains generated more than USD 1 billion in earnings, and almost all
of them have demonstrated significant annual growth rate (see Table 7), with the exception of the jute
value chain, as it actually contracted in 2012–13.
Table 7: AVC Agricultural Value Chains Baseline Production Values (2012–13)

FTF targeted zone production value Percentage of national
Value chain
(in millions USD) production value
Pulses $230 60 %
Potatoes $109 4.61 %
Mangoes $119 12.4 %
Summer Basket* $91.7 30 %
Groundnuts $33 35 %
Tomatoes $17.67 16 %
Natural Fiber $400.8 40 %
Cut Flowers $67 90 %
Total $1,077.17
SOURCE: AVC compiled data from BBS (Bangladesh Bureau of Statistics, Dhaka) production data for 2012–13 (unpublished).
* Summer basket crops include: bitter gourd, cucumber, eggplant, pointed gourd, and sweet gourd/pumpkin.
The End Market Analysis and the Value Chain Analysis for each of the eight top-ranked crops is
presented in Chapters 2 through 9 and summarized below. Chapter 1 concludes with an overview of
cross-cutting issues common across the value chains.
NATURAL FIBERS (JUTE AND COIR)

Although jute and coir are produced at different scales in the Southern Delta (coir production is only a
fraction of jute production), AVC staff recommends clustering because of export potential, common end
markets, and potential for employment creation and gender integration. Jute production alone engages
more than 1.8 million farmers in the Southern Delta and 400,000 traders, processors, retailers, and
exporters throughout the country, approximately 60 percent of which are in the South. According to the
Jute Diversified Product Promotion Center, about 34,000 rural women are involved in the sector in all
stages of production. Bangladesh’s competitiveness in the natural fiber sector is compromised, however,
by poor quality inputs and inefficient retting techniques that reduce fiber quality. AVC will focus on
improving inputs and retting processes so that fiber products meet international standards. The AVC team
also will connect processors to international buyers and help them improve product design for international
markets, so that Bangladesh products can compete with products from other countries.
FLORICULTURE
Global production volume for cut flowers is estimated at $109 billion per annum and growing at 15 percent
annually. The Bangladesh market for cut flowers is relatively small, valued at $67 million, but it has
considerable growth potential as consumers’ purchasing power increases and their buying habits include
cut flowers. Soil and climate conditions are well suited to flower cultivation in Bangladesh. The Southern
Delta is the “hub” of the flower industry in Bangladesh, where approximately 90 percent of total flower
production occurs. Approximately 150,000 people are involved in Bangladesh’s floral value chain, and
women are greatly represented in the production and assembly nodes, as well as in the high-end retail
market. Constraints in the sector span the whole value chain, presenting multiple opportunities for AVC
intervention. Specifically, seedlings and mother stock plants are limited for gerbera and other varieties.
Access to cost-effective post-harvest technology is limited, and transportation and packaging is poor, all of
which result in losses of as much as 10 to 15 percent of product value. Finally, a lack of a permanent
market place leads to disorganization in the sector, which also contributes to losses. AVC will focus on
each of these constraints to increase productivity, generate new employment opportunities, and efficiently
link producers to new markets.
GROUNDNUTS
In Bangladesh, groundnut is a very popular confection sold by roadside hawkers and branded retailers
alike. In 2012–2013, Bangladesh produced nearly 50,000 tons of groundnuts. Of this, approximately 35
percent were produced in the FTF targeted districts, where production has significantly increased since
2011. Farmers in southern districts, especially Gopalganj and Faridpur, are showing greater interest in
groundnut farming for its better yield and profit. However, lack of access to premium quality seeds and
traditional methods of cultivation result in lower productivity. Approximately 50 percent of groundnuts are
processed into ready-made snacks like chanachur, or industrially processed confections. AVC will support
processors to strengthen vertical linkages with suppliers of suitable varieties, identify optimal transport
channels in the South, and improve access to modern shelling and drying facilities.
TOMATO
Since 2005, tomato production has increased in Bangladesh at an average rate of 11 percent per year,
making Bangladesh the third largest tomato producer in South Asia. Even with this growth, Bangladesh
continues to import tomatoes to meet summer demand. In addition to fresh consumption, 5 percent of the
industry is for processed food, and this is the fastest growing market segment with growth of about 30
percent per year. The FTF zone lags behind the rest of the country in tomato production. It accounted for
16.10 percent of the total tomato production in 2012–13, with an average growth rate of 1.75 percent—
well below the national growth rate of 10 percent. Moreover, yields are lower in the South than the rest of
the country. AVC staff will work with southern producers to expand production of summer tomatoes by
growing tomatoes on dikes. Dike-produced tomatoes are generally considered “safer” (at less risk of
adulteration because fewer pesticides are applied) and can fetch premium prices from health-conscious
consumers if well marketed. To capitalize on the health advantages, AVC also will develop a specific
marketing strategy for dike-produced tomatoes. Lastly, AVC will promote production and supply of
tomato paste using industrial varieties of tomatoes.
PULSES (LENTIL AND MUNGBEAN)

Pulses are a rich source of fiber and lean protein, containing foliates, vitamin B1, and iron. Out of nearly
ten types of pulses, lentil and mungbean are the most prevalent in the FTF zone. The market for these two
pulses is valued at $400 million, and more than two-thirds of production takes place in the FTF zone. In
the fresh pulses segment (with a market estimated at $382 million), demand exceeds local supply, resulting
in high levels of imported lentils. The opportunity for import substitution is great as consumers prefer the
taste and quality of local varieties and are willing to pay 5 to 10 percent premium. The smaller market
segment of processed pulses, which are used in ready-made snacks like chanachur, is valued at only $18
million, but is growing rapidly. AVC will focus on increasing southern productivity by increasing access to
high-quality inputs and modern cultivation practices, and will strengthen the South’s linkage to industrial
processors countrywide to capitalize on the growing segment of processed products with pulses.
MANGO
Mango has a national market valued at about $1 billion in Bangladesh, and the share of the Southern Delta
is approximately 12 percent. Mango production is growing at approximately 4 percent per year, although
field interviews suggest southern growth is as high as 20 percent per year. Mango producers in the South
are able to grow early season varieties and sell them on the market at the time when the price is at its
highest, giving the region a comparative advantage. However, farmers in the FTF zone are not taking full
advantage of the early growing season, because they do not have adequate knowledge of modern mango
orchard management techniques. AVC will facilitate training in orchard management techniques, exposure
visits to Rajshahi, and linkages with extension and research entities in the North. AVC also will help
southern stakeholders establish a quality regime for mango production, including training in post-harvest
END MARKET ANALYSIS 12

management, ripening and preservation, and establishing pack stations in production hubs. Finally, AVC
will facilitate linkages with national level retailers and wholesalers for mango sourcing from the South.
POTATO
The majority of farmers in Bangladesh produce table potato varieties, suitable for cooking rather than
processing. The domestic market for fresh potatoes, however, is saturated, with production outstripping
demand and resulting in declining prices. Long-term growth in the potato sector relies on emerging growth
in the processing sector and farmer ability to produce varieties suitable for processing. Production in the
South is focused on the table varieties. Climatic conditions in the South do not allow for production of the
early season potato varieties that would allow farmers to take advantage of higher prices. Therefore, for
potato farmers in the South increasing the supply of industrial variety potatoes to processors offers an
opportunity to reduce the impact of market glut and downward price pressure during the peak season. To
increase the supply of industrial potato varieties, AVC will facilitate contracts between processors and
farmers in the South and build farmer and aggregator awareness of proper post-harvest handling
techniques. AVC also will facilitate the establishment of quality control systems at processing facilities to
ensure they meet end market buyer requirements. The staff will support processors and suppliers in
developing business plans and also partner with the USAID cold storage project to support upgrades to
cold-storage systems.
SUMMER BASKET
Of the more than fifteen vegetables grown during the summer in Bangladesh, the AVC team has
designated five, which are the highest contributors to horticultural production, to receive project support:
bitter gourd, cucumber, eggplant, pointed gourd, and pumpkin. Together, the five vegetables are valued at
$227 million. Bangladeshis living at home and abroad are increasing the portion of vegetables in their
diets, which is increasing demand at an estimated 4.75 percent each year in the domestic market and 29
percent in exports. With the burgeoning middle class and urbanization trends, domestic demand is
projected to increase as much as 11 percent annually in the coming years. The FTF zone produces 42
percent of total production volume of summer basket crops. Approximately 245,000 southern farmers are
engaged in summer basket crop cultivation on land and dikes, covering an area of about 18,500 hectares.
To better meet growing international demand, AVC will encourage upgrading this chain by improving the
quality southern produce, linkages between producers and exporters, and linkages with producers in the
Southern Delta. Under this value chain and with summer tomatoes, AVC will develop a specific marketing
strategy for “safe” dike produce, as “safe” produce can fetch premium prices.
CROSS-CUTTING ISSUES
In this section, AVC presents a discussion of cross-cutting issues that are pertinent to all value chains. The
discussion applies to the six food products, which share common attributes. For the two non-food value
chains (i.e., cut flowers and natural fibers), which have unique attributes, cross-cutting sections in the
Natural Fibers chapter (Chapter 7) and Floriculture chapter (Chapter 9) are included as a supplement to the
cross-cutting overview.
Gender
Approximately 50 percent of Bangladeshis are women. Gender disparity is prevalent in virtually every link
of food and non-food value chains within the agriculture sector. Although women make up almost 68
percent of the labor in the agriculture sector, their contribution is rarely recognized.1 Rural Bangladeshi
women often lack access to means of production, market systems, information or extension services and
1
N. H. Karim, Agriculture Management Systems In Bangladesh in Gender Dimensions in Biodiversity Management and Food
Security: Policy and Programme Strategies for Asia (Rome: Food and Agricultural Organization), 1999 (available at
ftp://ftp.fao.org/docrep/fao/005/ac795e/ac795e00.pdf).

therefore the experience to make informed and prudent production and productivity related choices, which
also affects the nutrition of their children.
AVC staff interviews with key informants in the target areas, from January to March of 2014, revealed
that women-owned farms in the Southern Delta villages do not total more than 10 percent. Although
much of the microfinance in rural Bangladesh was created to provide women access to finance, such
access was primarily to alleviate poverty. Only recently have some microfinance institutes (MFIs) begun
to initiate agricultural loans; here, too, a lack of information and awareness about such loans has meant
that only a tiny percentage of the instruments have been acquired by women.
Within the aggregation, wholesaling, and transportation sub-sectors, women are virtually absent as owners.
Sorting and grading are the limited roles open to women. In processing, aside from a handful of locally
made and sold home-made products, and small local food stands and restaurants, women are present on the
assembly lines, but almost never in marketing, laboratory testing, sales, or boardrooms. Furthermore, in
almost every instance in which women and men are employed to do the same job, women earn two-thirds
what men earn.
The cut flowers and natural fibers (non-food) value chains present exceptions. The cut flowers value chain,
which is less than twenty-five years old, is not subject to the cultural restrictions that are widely present in
food production (although women owners remain a minority). Women represent a majority of the
stakeholders in natural fibers microenterprises, such as traditional rope, floor mat and mattress
manufacture, and handicrafts. However, modern-cum-industrial jute and coir enterprises are owned and
operated by men, and women are found only on the assembly lines.
Nutrition
Food safety practices ensure that food will not harm to the consumer when prepared and eaten. Many
confuse food safety with the term food security, which is availability of, and accessibility to, a nutritious
and sustainable supply of food as required for healthy and active life. In Bangladesh, adulteration of
fresh fruit and vegetables and lack of knowledge about healthy food preparation often compromise food
safety.
Food security also presents a significant challenge. Malnutrition is a serious problem in Bangladesh.
About 54 percent of children under age five are severely or moderately malnourished, 36 percent are
underweight (low weight for age), and 10 percent are severely underweight. The proportion of
underweight children is highest at age 36 to 47 months (43 percent).2 The prevalence of night blindness
caused by a vitamin A deficiency is 1.7 percent. About 20 percent of preschool aged children and 25
percent of pregnant women are deficient in vitamin A. Vitamin supplements for young children and
varied diets can eliminate this deficiency.3 While 84 percent of households consume iodized salt, more
than half a million infants remain unprotected from iodine deficiency disorders, and iodine deficiency
disorders affect 68.9 percent of the population.4 The problem of malnutrition in children actually begins
even before they are born. Young girls who are undernourished marry early, are deprived of more
nourishment during pregnancy, produce babies with low birth weights, and are then unable to produce
adequate quantities of breast milk. Malnutrition persists during the first two years of a child’s life. For
the first six months, infants are given an inadequate supply of breast milk; for the next eighteen months
children suffer because of the quality and handling of weaning foods. Malnutrition is a great burden on
the health of the people, adversely affecting physical growth, mental capacity, learning ability, and
productivity.
2
National Institute of Population Research and Training, Bangladesh Demographic and Health Survey 2011: Preliminary
Report (Dhaka, Bangladesh: NIPORT, 2012), 31 (available at http://www.dghs.gov.bd/licts_file/images/BDHS/BDHS_2011.pdf).
3
World Health Organization, Global prevalence of vitamin A deficiency in populations at risk 1995–2005: WHO Global Database
on Vitamin A Deficiency. (Geneva: World Health Organization, 2009) (available at
http://whqlibdoc.who.int/publications/2009/9789241598019_eng.pdf).
4
UNICEF, Tracking Progress on Child and Maternal Nutrition: A Survival and Development Priority (New York: UNICEF, 2009).

Nutrition imbalance is a significant problem within the FTF zone, affecting men, women, and children.
Lack of information, good practices, economic status, natural disasters, intra household food distribution,
lack of decision making power of women and traditional consumption practices have worked against
healthy dietary decisions. Dietary diversity refers to the number of foods consumed across and within food
groups. Low dietary diversity remains a problem in Bangladesh because the people, especially villagers,
eat without knowledge or concern for the nutritional value. Rice and dhal are what the vast majority
consumes on a daily basis. Traditional cooking practices also deteriorate the nutritional value of food. Poor
health practices (washing hands, access to clean drinking water, washing fruits and vegetables before
consuming and cooking) are prevalent and compound the effects of inadequate diets because they lead to
significant diarrheal illnesses. The recent Bangladesh Poverty Assessment by the World Bank5 showed no
significant change in dietary diversity, although there has been a significant decline in poverty.
Environmental Sustainability and Geo-ecological Suitability

Feed the Future works in twenty districts of southern Bangladesh that fall under the agro-ecological zone
of the Ganges River Floodplain (AEZ 11 and AEZ 12). General fertility level ranges from medium to low
based on location.6 The Ganges River Floodplain is formed with deltaic deposits of sands, silt, and mud.
The High Ganges River Floodplain (AEZ 11), which includes the western part of the Ganges River
Floodplain, is predominantly highland and medium highland, whereas the eastern half of the Ganges River
Floodplain (AEZ 12) is low-lying. Soil types include Calcareous Dark Grey Floodplain soils and
Calcareous Brown Floodplain soils. Although the food production potential in this belt is high because of
soil characteristics, the climatic events—including hailstorms, heavy fog, erratic rainfall, partial water
logging, and flash floods—lead to soil degradation, increased salinity, and crop failure. Coastal districts
like Barguna, Pirojpur, Satkhira, Bagerhat are most severely affected. Farmers in these districts change
their cropping pattern to account for soil salinity levels and plant hybrid seeds that are better suited to these
climatic events.
Access to Finance
In the Southern Delta, formal sources of finance include banks, non-banking financial institutions, and
MFIs. Informal sources of finance are primarily value chain financing by traders and input suppliers and
loans from relatives. The Bangladesh Bank (BB), the country’s central bank, has made it mandatory for all
banks to have an agricultural loan portfolio equivalent to 2 percent of their total loan portfolio. Thus, both
public and private banks offer various one-year loan products for farmers, with repayment schedules
designed to match the specific sector’s cash flow pattern. The interest rate charged for a high value crop
loan is 4 percent to 6 percent, whereas for other crops it ranges from approximately 10 percent to 13
percent.
Non-banking financial institutions (NBFIs), such as United Leasing Company Limited (ULC) and
Industrial and Infrastructure Development Finance Company (IIDFC) Limited, are primarily focused in
SME Loans and Channel Financing. However, at the farmers’ level, loans from MFIs are most popular.
MFIs are conveniently located throughout the Southern Delta, and all but the most remote farmers can
access easily because they meet weekly in the MFIs. Unlike a bank, the loan processing time at MFIs is
short and does not require speed money, collateral, or a lengthy documentation process. Farmers find
MFIs attractive despite their products’ high rates of interest. Farmers are generally financed through
microcredit for small-scale self-employment-based activities, which have interest rates of 22 percent to
33 percent and have to be repaid in forty-four or forty-six weekly installments.
5
World Bank, “Bangladesh Poverty Assessment: A Decade of Progress in Reducing Poverty, 2000-2010” (World Bank, June 2013)
(available at http://www.worldbank.org/en/news/feature/2013/06/20/bangladesh-poverty-assessment-a-decadeof-progress-in-
reducing-poverty-2000-2010).
6
S. Islam, ed., “Bangladesh Soil,” Banglapedia, National Encyclopedia of Bangladesh (Banglapedia, 2012) (available at
http://www.banglapedia.org/HT/B_0282.htm).

The most popular mode of finance in the rural areas is value chain financing. The main modes of value
chain financing are the following:
• trade credits from input suppliers. Farmers receive inputs necessary for crops to be harvested at 10 to 15
percent payment and payable after cash is generated from harvest;
• advance in cash or kind from mahajan, or merchants. Merchants provide finance to the local farmers
both in cash and/or in kind, repaid upon mutually agreed terms generally at a premium of 10 to15
percent, or higher for shorter loan terms;
• a trade advance from arathdars or commission agents. The commission agents provide a market place
for the farmers to sell their products and finance through a trade advance at an interest rate as high as 30
percent; and
• a futures contract of crops/grains. The arathdar, or middleman, provides informal futures contracts to
farmers (there is no formal commodity future market for grains/crops in Bangladesh). The local farmers
and middleman speculate a future price, and farmers commit to sell their products in advance.
ENABLING ENVIRONMENT
Status of Inputs
In recent years, despite significant challenges in agriculture in the Southern Delta related to scale and
aggregation, inputs like seed, fertilizer, and pesticides have become more accessible and higher quality.
Major seed companies are now marketing seeds in the region, and farmers are more aware of the
advantages of growing hybrid seeds. The government is taking an active role in making fertilizer more
available in the region, and development projects are educating farmers on balanced fertilizer usage.
However, uptake of new farming practices and use of quality inputs is still low, and traceability is an issue,
as very often farmers receive adulterated seeds in seed packets. Overall, there is a low level of
“downstream” capacity in food and non-food value chains, as farmers typically use rudimentary farming
methods and still have limited access to information on new farming technology or methods.
As recently as September 2014, The Daily Star reported on producers overusing inputs and adding
contaminants to fresh fruits and vegetables to preserve the appearance and shelf life of perishables.7
Negligence in production of value-added food products resulted in widely publicized international
condemnations of Bangladeshi food exports as well as domestic cases of effluent contamination of water
sources. In the case of natural fibers, contamination caused by jute retting continues to be a problem.
Status of Land and Labor

Agricultural livelihoods in the Southern Delta are characterized by low wages and skills, and limited value
addition. Nearly 60 percent of the rural families are marginal (holding less than 0.2 hectare) or landless.
They continue to farm by leasing lands from landowners or by sharecropping, both of which negatively
impact their profitability. Poor farmers who cultivate small land do the work themselves. Comparatively,
farmers who have more land rely on hired labor. Hired labor is available in the region, though the wage
rate is increasing gradually and makes hired labor inaccessible to poor farmers at times. Hired labor is paid
both in cash and in kind.
Status of Market Access

In the Southern Delta, access to markets for agricultural commodities has increased significantly, but is
still subpar. Most villages are now served with more than one market situated in close proximity. For some
remote farmers who have difficulty reaching these markets, small traders have begun collecting
agricultural produce door-to-door to sell to aggregators. There is some evidence that vertical and horizontal
7
P. Roy and B. Habib, “Part 5, Fruit Ripening Chemicals: Illegal, Harmful,” in Speak Out for Safe Food, The Daily Star, September
13, 2014 (available at http://www.thedailystar.net/illegal-harmful-41445).

linkages are improving, though largely on an ad hoc basis and not characteristic of the region as a whole. A
few large agro-based companies (e.g., Bombay Sweets and Patwary Potato Flakes) are contract farming
with smallholder farmers, although this has yet to gain significant hold in the Southern Delta. Some
smallholder farmers have formed associations to improve their access to markets and their bargaining
power. Some buyers (e.g., arathdars, dealers, and retailers) are now communicating and even visiting
farms. Although farmers have better means of communication, the quality of information they receive
about agronomic practices or market prices is inconsistent and unreliable.
Status of Extension Service

The Department of Agricultural Extension (DAE) theoretically provides several services to the farmers,
including field support, seed support, plant protection technology sharing, and training. The Department of
Agricultural Extension is not, however, reaching its putative clientele effectively. Farmers in the FTF
target zone acquire most of their information from input providers and lead farmers and report that the
DAE lacks the manpower and infrastructure to deliver services demanded by farmers in a timely manner.
Improving existing extension services and strengthening linkages with various Government of
Bangladesh (GoB) departments such as the Bangladesh Agricultural Research Council (BARC),
Bangladesh Rice Research Institute (BRRI), Bangladesh Institute of Nuclear Agriculture (BINA),
Bangladesh Agricultural Development Corporation (BADC), and Seed Certification Agency (SCA)
contribute to increased productivity of smallholder farmers. NGOs such as BRAC, Proshika, and
CARITAS also provide extension services that include advice and training and micro-credit for income
generation. A number of projects and donors are working with the DAE to improve and promote its
services among farmers.
Status of Roads, Transport, and Storage Facility

Road networks in the FTF target zone tend to be of uneven quality, and many major roads remain in
serious need of repair. The situation is even more tenuous on char lands, or islands. Farmers mostly use
rickshaw vans to transport their products, although from char lands they often walk long distances to reach
nearby markets. In the southern-most segment of the region, boat and trawler are the preferred choices for
transporting products and people. Overall, the target zone lacks sufficient storage facilities, as most cold-
storage facilities are located in the northern part of the country. Farmers are compelled to sell perishable
products quickly to avoid spillage and prevent product loss, which undermines their bargaining power and
also thwarts efforts to aggregate products for scale. Sometimes, gluts in the market undermine farmers’
earning potential.
More purchasing power

For the past ten years, economic growth in Bangladesh has considerably outpaced population growth,
resulting in sustained growth in real per capita income. The effect is consumers—particularly urban
consumers—have more purchasing power, a phenomenon recognized in the local press as the “rise of the
middle class.” Several pieces of evidence, outlined in the text box “Demographic Transformation Drives
Changes in Bangladesh Consumption Pattern” on page 19, validate this phenomenon, the effect of which is
that consumers had more money to spend after meeting basic food and non-food needs in 2013 relative to
2000. The AVC study team has calculated the Bangladeshi consumer’s increased demand for AVC-
supported crops using the 2010 Household Income and Expenditure Survey (HIES). By calculating the
marginal propensity to consume for select crops (i.e., calculating how much a household tends to spend on
a given agricultural commodity, such as fresh potatoes, out of each taka of additional income), the study
team can project how the rise of the middle class affects demand for AVC crops.

Demographic Transformation Drives Changes in Bangladesh Consumption Patterns
For the past ten years, economic growth in Bangladesh has considerably outpaced population growth and
inflation, leading to a clear pattern of sustained growth in real per capita income (see figure, “Real GDP
Per Capita”).
Real GDP Per Capita, 1998–2013
Growth was particularly strong beginning in 2006, as witnessed by the three consecutive years with real
per capita growth rates in excess of 5 percent and with continued growth above the 4.7 percent level in
every year since (see table below). The steady growth resulted in a total increase in real GDP per capita of
86 percentage points between 2000 and 2013.
Annual Rates of Growth of Real GDP Per Capita, 2000–2013 (%)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
4.0 3.4 2.7 3.6 4.7 4.5 5.4 5.3 5.1 4.7 4.9 5.5 5.0 4.7
Source: AVC team compiled data from factfish.com (available at http://www.factfish.com/statistic-

comparison/psbd/gross%20domestic%20product%20per%20capita%20growth).
The strong growth in per capita real GDP has fueled a phenomenon that is widely recognized in the
Bangladeshi press as the “rise of the middle class.” Although it is difficult to document precisely the
extent of this phenomenon, the scope of this change can be inferred from several pieces of evidence.
One such piece of evidence is the impressive reduction in poverty rates, with severe poverty (defined
as households with expenditure budgets for food and non-food items that is below the minimum
required food consumption budget) decreasing between the dates of the last two national household
income surveys in 2005 and 2010. From 2005 to 2010, severe poverty dropped from 25.1 percent to
17.6 percent nationally and, more impressively, from 14.6 percent to 7.7 percent in urban areas—an
almost 50 percent drop. Moderate poverty (defined as households with expenditure budgets under
the minimum food and non-food requirements) also declined between 2005 and 2010, decreasing
from 40 percent to 31.5 percent nationally and from 28.4 percent to 21.1 percent in urban areas.
Compared with the earlier urban moderate poverty rate of 35.2 percent in 2000, moderate urban
poverty in 2010 had decreased by 40 percent. The decrease in poverty and a growth in population of
24.2 million people from 2000 to 2013 caused a virtual explosion in the number of consumers with
income to spend after meeting minimum consumption needs, particularly in urban areas

CHAPTER 2: PULSES

INTRODUCTION
Pulses, an integral part of the legume family (which includes more than 600 genera and 13,000 species), are
a major source of vegetable protein providing complex carbohydrates, vitamins, and minerals in humans
and animals food. Of the roughly twelve pulses available in Bangladesh, consumers mostly prefer lentil,
mungbean, grass pea, chickpea, and black gram. In this report, pulses refers to lentils (Lens Culinaris) and
mungbeans (Vigna Radiata), the two most prevalently cultivated pulses in the FTF zone.
The market for lentils and mungbeans in Bangladesh is valued at $400 million. The largest market segment
by far (estimated at $382 million) is for fresh pulses used in dhal and other popular dishes. (In Bangladesh,
the lentil crop is commonly referred to as “pulses,” and once pulses are transformed into ready to cook
edible form, it is commonly called “dhal.”) For this segment, demand exceeds local supply, resulting in
high levels of imported lentils. Consumers prefer the taste and quality of local varieties, however, and are
willing to pay 5 to 10 percent premium for local pulses. This presents a large opportunity for import
substitution. A second, much smaller market segment is for processed pulses used in ready-to-eat snacks
such as chanachur. The chanachur segment, valued at $18 million, is growing rapidly according to
processors, retail shops, and confectionary store owners. Population growth and a burgeoning middle class
are driving demand for convenience food, as well as for “premium” quality pulses marketed to health
conscious consumers. Thus, a second market opportunity is to capitalize on the increased demand for
processed and premium pulses.
Production of lentils and mungbeans nationwide has increased in area and volume since 2007–08 at a rate
of 6 and 5 percent, respectively, according to the BBS, though the rate of growth is reported differently by
the DAE. Although the AVC team’s visits with district DAE offices and value chain stakeholders
throughout the FTF zone validated the higher-reported numbers of DAE, this report uses the more
conservative BBS data since it is Bangladesh’s official source of agricultural statistics.
Roughly two-thirds of Bangladesh’s pulses are cultivated in the FTF zone, involving 575,000 smallholder
farmers.8 Lentils and mungbeans require minimal investment and maintenance, making them well suited
for the relatively less fertile lands of Southern char areas. Northern farmers, with better access to irrigation,
inputs, and information, generally prefer to grow cereals and higher-value horticultural crops. Despite this,
northern producers are gaining ground in pulses, too, expanding area and volume faster than the South,
with more favorable yields. Southern producers must adopt modern practices and use better quality inputs
to maintain their dominance and to take advantage of the Government of Bangladesh (GOB) pledges to
increase lentil and mungbean cultivation area by 42 percent and 9.7 percent respectively by 2030.9
While wholesale markets for aggregation and trade of pulses are well established in the FTF zone, and
more than twenty-five commercial millers and twenty-five processors operate in the area, the South faces
major constraints in terms of value addition. Fragmented communication and transport channels leads to
low levels of cooperation among actors and deters upstream actors from establishing contract farming
systems in the region. Sorting facilities near mungbean production clusters are not available, which makes
channeling premium-quality product to higher-end buyers virtually impossible.
8
AVC staff estimated number of farmers using BBS data (data were collected from BBS; the latest 2012–13 collected data is
authenticated by BBS officials but yet to be published in Yearbook of Agricultural Statistics of Bangladesh) for total hecatare
under lentil and mungbean cultivation in 2012–13 and assuming 7 farmers per hectare of land.
9
A. Quasem and F. Yasmin, Agricultural Research Priority: Vision 2030 and Beyond (Farmgate, Dhaka: Bangladesh Agricultural
Research Council, March 2010).

Moreover, because southern millers and processors typically do not have modern machines or use the latest
technology, their product is often broken, misshaped, and discolored, and sells for a lower price as a result.
To take advantage of current market opportunities will require southern value chain actors to diversify
mungbean varieties grown, strengthen vertical linkages between producers and suppliers, and upgrade
milling and processing capacity along the value chain.
SCORING MATRIX
The AVC team has given pulses a score of 77 out of 100 in its overall ranking of value chains (Table 1).
Table 1: Ranking of Pulses Value Chain
Pulses (Lentil and Mungbean)

Criteria Data source Weight Score Explanation
Filter 1: Competitiveness Potential (40%)
Scale BBS 10 10 Approximately a USD 410 million industry
Annual Market BBS 10 3 Consumption growth for pulses in Bangladesh is 5.61
Growth percent; production growth in South is less than 1
percent.
Scope of Value KII 10 8 Other than cooking, both are used as raw materials in
Addition the industrial food products.
Export/ Import Trade Map 5 4.5 While mungbean has export potential, Bangladesh
Substitution imports about USD 150 million lentils annually.
Potential
Agro Ecological Field Recon 5 3 The greater Jessore district is one of the three most
Suitability and KII suitable zones for lentil production in Bangladesh.
Barisal is very suitable for mungbean farming.
Filter 2: Impact Potential (35%)
Income Potential Team 10 10 Return on investment is more than 100 percent.
assessment
Women and Reports and 10 5 For pulses, women are involved in harvesting and
Youth Inclusion databases post-harvest handling, processing, and industry
packaging.
Outreach (# of Reports and 5 5 Southern Delta is the home to approximately 500,000
households databases pulses farmers.
impacted)
Job Creation Team 10 5.5 Post-harvest and processing are labor intensive.
assessment However, the up-gradation of the pulse value chain
may not create high number of jobs.
Filter 3: Cross-Cutting (15%)
Nutrition Journals/ 10 9.5 Pulses are rich in protein and fiber and contain
websites foliates Vitamin B1 and iron.
Environmental Expert 5 5 Farming pulses enhances soil fertility by fixing
Sustainability interview nitrogen nodules in the soil.
Filter 4: Industry Leadership (10%)
Potential for Team 10 8.5 Half a dozen firms lead in lentil and mungbean
Private Sector assessment
Leverage
Filter 5: Feasibility Filter
Can results be (Y/N) Y Pulse is a short duration crop with cultivation period
achieved with of less than four months.
available
resources and
within
timeframe?
Total (100) 77

PORTER’S FIVE FORCES ANALYSIS FOR PULSES
Porter’s Five Forces framework was developed in 1979 by Michael E. Porter of Harvard Business
School, using concepts from industrial organization economics to analyze five interacting factors critical
for an industry to become and remain competitive. The AVC team considered the five factors—supplier
power, buyer power, competitive rivalry, threat of substitution, and threat of new entry—are at play for
the pulses value chain.
Pulses are the primary sources of protein for the rural population in Bangladesh. Although fish, vegetables,
and meat curries are substitutes for pulses, it has its unique place in Bangladesh diet. Because farmers use
retained seeds, productivity is well below its potential. More than 70 percent of lentils consumed in
Bangladesh are imported. Therefore, the international market is the main determinant of price. In the case
of mungbeans, industrial buyers have some influence on price. Generally, the pulse market can be regarded
as perfect competition, with numerous buyers and sellers making transactions at prices set by market
dynamics. New entry at the farm level is not very attractive.
Figure 1: Porter’s Five Forces
Threats of new Entrants: Moderate

Production requires low investment for farmers Bargaining Power of Suppliers: Low
Scarcity of farm lands and competitive new crops leading to Farmers mostly use retained seed and little or no fertilizer
reduced number of pulses farmer Quality inputs (seeds) are not readily available
Processing and marketing needs high start-up capital; several Farmers are price sensitive
large firms dominate the market
Large number of smallholder producers are mainly “price takers”
National market growing at an average 4 percent rate
In premium channel, growing demand spurs new entrants each
year
Competitive Rivalry: Low

Fresh pulses are agricultural commodity; no brand based
marketing; domestic production has not been sufficient to
meet growing demand; prices set by market dynamics, perfect
competition
In premium channel, brand owners usually do not compete on
price but through promotion
In processed channel, market dominated by few large firms
with increased competition among them
Threats of Substitutes: Moderate Bargaining power of the buyers: Moderate to Low

Serves as the key source of protein for rural population
Large demand-supply gap; large quantity of import
Vegetable and fish curry are the main supplementary products
International market is the main determinant of price
Imported pulses not large threat because consumers prefer local
Processors are in clusters
varieties
Number of pulses consumer is numerous
Increasingly being used as raw material in the food industry

END MARKET ANALYSIS
GLOBAL MARKET
While the AVC project will focus on two particular pulses, lentils and mungbeans, data for mungbeans
production and trade are often grouped with “other pulses” and not disaggregated. The discussion of the
global market in this report focuses exclusively on the lentil market for which data are readily available.
In 2013, global production of lentils reached 4.95 million tons, the largest volume in more than twenty
years. Since 1993, lentil production worldwide has increased at an average rate of 3.71 percent per year
with moderate volatility year to year. The major geographic regions producing lentils are South Asia,
North America, Asia, North Africa, and Australia. Table 2 highlights the largest producers since 2007.
Canada and India are consistently top producers.
Table 2: Leading Lentil Producing Countries in 2007 and Their Production Trends (in thousand
tons)
2007 2008 2009 2010 2011 2012 2013
World 3,297,791 2,824,688 3,931,824 4,722,774 4,423,901 4,706,351 4,951,000

Australia 131,000 64,234 143,000 140,000 379,659 463,000 324,100
Canada 733,900 64,234 1,510,200 1,947,100 1,531,900 1,537,900 1,880,500
China 134,000 150,000 120,000 125,000 150,000 145,000 150,000
India 910,000 810,000 953,300 1,031,600 943,800 1,058,700 1,134,000
104,717 56,099 83,985 100,174 71,808 85,000 73,000
Iran
Nepal 164,694 161,147 147,725 151,757 206,869 208,201 226,931
Syria 109,033 34,100 102,461 77,328 112,470 130,229 125,000
Turkey 535,181 131,188 302,181 447,400 405,952 438,000 417,000
USA 165,561 108,545 265,079 392,675 214,640 240,495 227,658
SOURCE: AVC team compiled the data from FAOSTAT (available at http://faostat.fao.org/site/567/default.aspx#ancor).
Global trade of lentils was valued at $1.7 billion in 2013, with 2.59 million tons exported. Canada alone
accounted for $1.1 billion of exports, more than two-thirds of total exports. Australia, Turkey and the
United States each contributed between $136 and $180 million, taking second through fourth place
among exporters. Historically, developing countries do not export large quantities despite the fact many
produce high quantities. Most often, developing countries consume what they grow and even supplement
with imports. Thus, top importers include India, Bangladesh, and Sri Lanka (see Table 3).
Table 3: Percent of Market for Leading Lentil Exporters and Importers Worldwide in 2013
Percent share in Percent share in 2013
Exporter Importer total import
2013 total export
Canada 65.68 % India 25.84 %
Australia 10.39 % Turkey 7.64 %
Turkey 9.64 % Bangladesh 7.58 %
USA 7.84 % Sri Lanka 5.41 %
SOURCE: AVC calculated market percentages based on International Trade Centre’s Trade Map data (available at
http://www.trademap.org/Country_SelProduct_TS.aspx).

Figure 2 presents trend data for global production, global exports, and Bangladesh imports since 2010. The
relative scale of each is clearly illustrated.
Figure 2: Overview of Global Lentil Production, Export, and Bangladesh Imports Since 2010
5.0
4.0
3.0 Global Production
2.0 Global Trade Volume

Bangladesh Import Volume
1.0
0.0
2010 2011 2012 2013
SOURCE: AVC Team compiled the data using the UN Comtrade Database (available at comtrade.un.org/data)
NATIONAL MARKET
Pulses are a popular and inexpensive source of protein that are enjoyed daily across socio-economic strata
in Bangladesh. Bangladesh’s market for lentils and mungbeans is currently valued at about $402 million,
of which approximately $374 million is from lentils and $28 million from mungbeans. Imports contribute
$240 million of the lentil market, as local production satisfies only a small fraction of demand. The value
of imports may, in fact, be underreported given the prevalence of informal trade channels from India and
Myanmar through which additional lentils likely flow. Table 4 presents a snapshot of the national market
in 2013.
Table 4: Snapshot of Bangladesh’s Lentil and Mungbean Market in 2013

Market Volume Value
Share (in tons) (in USD
(in %) millions)
Lentils Domestic 30 93,000 133.83
Production
Imported 70 213,000 239.85
TOTAL 306,000 373.68
Mungbean Domestic 100 25,000 27.86
Production
Imported 0 - -
TOTAL 25,000 27.86
TOTAL 331,000 401.54
SOURCE: AVC compiled production data from unpublished BBS (Bangladesh Bureau of Statistics) source from 2012–13 and
import data from National Board of Revenue, in March 2014.
Trend data for pulses show consistent growth, although external shocks have skewed production and
import figures dramatically at given points in the last decade. For example, in 2006–07, the fungal
pathogen Stemphylium destroyed 88 percent of Bangladesh’s lentil crop. Since 2007, production has
seen a modest 6 percent and 5 percent growth for lentils and mungbeans, respectively. Imports, though,
have been quite volatile in the past six years. In 2007–08, imports virtually came to a standstill because
importers had limited ability to operate during an eighteen-month period when the country was under the
rule of a care-taker government. Rebound-type imports for the following two years resulted in an over-
supply, which importers stored and released into the market gradually, offsetting additional imports in
2010–11. Despite these outliers, the overall picture for the past six years indicates gradual increases in
production and imports (see Figure 3).

Figure 3: Trends in Production and Imports Since 2007–08 (in tons)
200,000
150,000 Lentils Imported
100,000
Lentils Produced
in Bangladesh
50,000
Mungbean
‐ Produced
SOURCE: AVC staff created chart using production data from unpublished BBS (Bangladesh Bureau of Statistics) source from
2012–13 and import data from the National Board of Revenue.
MARKET SEGMENTS
Lentils and pulses have two primary market segments in Bangladesh: fresh and processed.
FRESH SEGMENT
Fresh pulses are typically used in dhal (a soup-like food consumed with cereals such as rice and roti), in
khichuri (an Indian food mixing several pulses with rice), and in Muri ghonto (a dish cooked with rice,
dhal, and fish). Table 5 shows that the largest segment by far is the fresh pulses market segment (96.7
percent of lentils and 52 percent of mungbeans are sold fresh). Local retailers sell fresh pulses in open
markets or grocery shops. Although fresh pulses have been sorted, milled, and polished before being sold,
they often have high contents of broken pieces or foreign substances, or both, because of loose and
unsanitary handling practices.
Table 5: Market Segmentation of Pulses, With Estimated Volumes and Values

Estimated Volume (in Estimated Value (in
Uses thousand tons) USD millions)
Lentil Fresh – Standard 96.7% 295,900 $361
Fresh – Premium 1.7% 5,200 $6
Processed 1.6% 4,900 $6
Mungbean Fresh – Standard 52% 13,000 $14
Fresh – Premium 5% 1,200 $1
Processed 43% 10,800 $12
SOURCE: AVC staff compiled data for table using responses from interviews with value chain actors conducted from January to
March 2014.
In the past five years, the fresh market segment has witnessed some degree of stratification. Standard
quality pulses still constitute 98 percent of the fresh segment (lentil and mungbean, combined), but in
five short years, a “premium” product has grabbed nearly 2 percent of the total market share and
continues to expand. The high-quality premium product, targeting mainly high-end and health
conscious urban customers, is often cleaner than pulses available in the open market. The premium
pulses are frequently sold in pre-weighed, attractive packets containing product information, weight,
price, product origin, manufacturing date and sometimes recipes for cooking (Figure 4). A few large

companies, namely PRAN, Meghna Group of Industries, and ACI, have entered this premium segment
and report that new competitors enter each year hoping to capitalize on the market opportunity.
PROCESSED SEGMENT
Figure 4: Premium Packaged Dhal

Figure 5: Processed Pulses
The second, smaller market segment is for processed pulses used in ready-to-eat snack items, including the
widely popular chanachur and dhal bhaja (Figure 5). The processed segment is dominated by processors
such as Bombay Sweets, PRAN and Square, but also includes more than twenty-five small and medium
processors nationwide that use lentils and mungbeans in popular snacks. In January to June 2014, during
the market assessment period, the AVC team conducted extensive interviews and focus group discussions
with processors. The participants reported that Bangladesh has the right varieties of lentils for fresh and
processed market segments, although the varieties of cultivated mungbeans become brittle and lose flavor
when processed. Since more than half of the mungbeans grown in Bangladesh are sold for use in processed
goods, there is an opportunity for producers to diversify their production into industrial varieties, like those
grown in China and India. To date, these varieties have not been systematically tested for cultivation in
Bangladesh.
While the processed segment is relatively small compared with the fresh segment, it is growing rapidly
with population increases and with increased consumption of convenience foods. Medium sized processors
package chanachur in 2 BDT (.02 USD) bags for school children to purchase. Additionally, as disposable
income rises, more Bengalis are purchasing branded convenience foods including snack items. Rapid
economic growth has exceeded population growth and inflation rates, driving prolonged increases in
household real income that is fueling increased demand for convenience foods and “premium” food
marketed to health conscious consumers willing to pay more for higher quality. Using the raw data shown
in Table 6, which shows how monthly spending on lentils and mungbeans increases with average
household income, the team calculates a marginal propensity to consume (MPC) of 1.98 percent for lentils
and 0.08 percent for mungbeans. For every taka of extra income, 0.0198 taka and .0008 taka are spent on
lentils and mungbeans, respectively. In reality, as income increases, consumers often select more
expensive proteins (i.e., meat); thus the projection of an increased lentil demand is offset to an extent by
more expensive substitutes.
Table 6: Growth in Lentils and Mungbeans Demand (2013–14)

GDP Annual Change in Population Total change MPC Growth in In
per growth RGDP/capita 2014 in GDP Demand Million
capita RGDP/capita
2013
Lentils $ 829 4.70% $38.96 158,500,000 $6,175,635,500 1.98% $122,164,569 122.16
Mungbeans 0.08% $4,940,508 4.94
Note: AVC team generated table with data from the Household Income & Expenditure Survey (BBS, 2010–11). GDP and GDP
growth data were taken from factfish (www.factfish.com/statisticcountry/bangladesh/gross+domestic+product+per+capita).
Population data were taken from World Bank (http://data.worldbank.org/indicator/SP.POP.TOTL).

PRODUCTION AND POST-HARVEST HANDLING
In 2009 the Bangladesh Agricultural Research Council (BARC) published a study on Land Suitability
Assessment and Crop Zoning of Bangladesh that identified approximately 3.8 million hectares of land
suitable for lentil production countrywide, about half of which was classified as highly or “most”
suitable.10 The landscape is equally favorable for mungbeans. While “most suitable” lands span the North
and South, the South is the largest pulse producer today in part because farmers in the North— where
irrigation and high-quality inputs are more readily available and farmers are reputed to be more informed
and innovative—typically prefer to cultivate higher-value crops such as cereals (e.g., boro rice, wheat, and
recently maize) and horticultural crops. Southern farmers thus have an opportunity to dominate pulses
production (see Figure 6 for southern districts producing lentil and mungbean in FTF Zone), although
northern farmers are gaining ground. As Table 7 and Table 8 show, since 2007–08, production of lentils
and mungbeans has increased at a faster pace in the North than the South, both by volume and by area (see
also Figures 7–9 and 10–12). Moreover, yield trends are more favorable in the North than the South. For
lentils, yields are increasing nationwide but at a slower pace in the South; for mungbeans, yields are
declining nationwide and most precipitously in the South. The data indicate southern farmers are losing
competitiveness, and anecdotal evidence suggests this is in large part because southern farmers’ use poor-
quality retained seeds and follow rudimentary farming practices.
Figure 6: Lentil and Mungbeans Producing Districts in the FTF Zone
Note: AVC Geographic Information Systems specialists generated maps based on data collected form secondary sources, including
interviews with twenty district DAE offices and BARC website (http://www.barcapps.gov.bd/maps/).
10
S. G. Hussain, M. K. A. Chowdhury, and M. A. H. Chowdhury, Land Suitability Assessment and Crop Zoning of Bangladesh
(Bangladesh Agricultural Research Council, 2009); Bangladesh Agricultural Research Council, “Suitability Map of Lentil: Zonal
Map of Lentil” (available at http://www.barcapps.gov.bd/cropzoning/homes/bdMap/7).

Table 7: Lentil Production at a Glance (2007–8 to 2012–13)
2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 Average Average
Area Volume
Area Prod Area Prod Area Prod Area Prod Area Prod Area Prod Growth Growth
Lentils
(Ha) (tons) (Ha) (tons) (Ha) (tons) (Ha) (tons) (Ha) (tons) (Ha) (tons) Per Per
Year Year
Bangladesh 72,612 71,535 70,983 60,537 77,320 71,100 83,005 80,442 86,248 80,125 90,002 93,098 4.5 % 6.2 %
Southern 53,026 55,958 52,868 45,744 53,596 49,074 57,459 59,026 56,413 53,046 57,568 58,734 1.7 % 1.98 %
Bangladesh
Note: AVC staff created table with data collected from the Yearbook of Agricultural Statistics of Bangladesh, BBS 2008, 2011 and from Yearbook of Agricultural Statistics
wing of the Bangladesh Bureau of Statistics, unpublished.
Lentil – Yield Trends

Table 8: Mungbean Production at a Glance 2007–8 to 2012–13
2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 Average Average

Area Prod Area Prod Area Prod Area Prod Area Prod Area Prod Area Volume
(Ha) (tons) (Ha) (tons) (Ha) (tons) (Ha) (tons) (Ha) (tons) (Ha) (tons) Growth Per Growth Per
Mungbeans Year Year
Bangladesh 24,177 20,628 21,683 17,890 23,264 20,177 27,441 19,445 36,771 26,240 35,313 24,764 7.9 % 3.7 %
Southern 18,552 16,579 16,851 14,619 17,009 15,964 15,775 11,904 23,682 16,428 21,367 14,033 2.9 % -3.3 %
Bangladesh
Note: AVC staff created table with data collected from the Yearbook of Agricultural Statistics of Bangladesh, BBS 2008, 2011 and from Yearbook of Agricultural Statistics
wing of the Bangladesh Bureau of Statistics, unpublished.

Mungbeans - Yield Trends
Note: AVC staff created table with data collected from the Yearbook of Agricultural Statistics of Bangladesh, BBS 2008, 2011 and from Yearbook of Agricultural Statistics wing of the
Bangladesh Bureau of Statistics, unpublished.

PRODUCTION IN THE FTF ZONE
Given the nutritional benefits of pulses, their suitability for local production, and consumers’ preference
for local varieties, the Government of Bangladesh (GOB) has pledged to increase production of pulses in
the next twenty years, presenting an opportunity for southern farmers to maintain and grow their market
share. In Agricultural Research Priority: Vision 2030 and Beyond, the Government of Bangladesh
commits to increase mungbean cultivation area by 9.7 percent and lentil cultivation area by 42 percent by
2030. In addition, the government sets a productivity target of 2,050 kg/ha for mungbeans (from 970
kg/ha in 2010) and 2,300 kg/ha for lentils (from 988 kg/ha in 2010 )).11 To meet productivity goals,
southern producers will need to upgrade their current production practices and agricultural inputs.
In 2012–13, the FTF district Jessore was the major producer of lentils and the Barisal FTF district was
the major producer of mungbeans. The AVC study team estimated that 584,908 farmers across the FTF
zone produce these pulses, assuming three farmers per 100 decimals under cultivation. Small- and
medium holders are most commonly involved in pulse cultivation, with smallholders working less than
0.14 hectares and mediumholders between 0.14 and 0.41 hectares. Smallholder farmers are not
particularly commercially oriented, but they tend to cultivate for household consumption and sell excess
on an ad hoc basis. Production practices do not vary significantly based on farm size. Farmers obtain
seeds from the prior year’s harvest or from other farmers, and while there are superior seeds and varieties
available, farmers and input suppliers have low knowledge of these. Though inputs are generally
available locally, pulses are popular in large part because they require low inputs and little maintenance.
The technology used by pulse farmers is rudimentary by international standards.
LENTIL PRODUCTION
Most farmers still use retained seeds of “local” varieties for lentil cultivation. A small percentage of
farmers are aware of high yielding varieties of lentils seeds supplied by Bangladesh Agriculture
Development Corporation (BADC). In recent years there has been slow but increasing adoption of series
of varieties released by Bangladesh Agriculture Research Institute (BARI) (BARI masur 3,4,5,6 and 7).
Lentil seeds are mostly broadcast sown, at seed rates of 35 to 45 kilograms per hectare. Single tillage is
provided before sowing the seeds, followed by a laddering. Farmers in the South use a negligible amount
of fertilizer and pesticide throughout the production cycle. Hand-weeding reduces loss of yield. The crop
normally grows under rain-fed conditions, but if necessary a single irrigation is applied.
There are two ways to harvest lentils: (1) the plants are pulled out when almost all the pods turn brown;
or (2) farmers cut the crop at ground level with a sickle and then dry the cuttings on the field or on a
threshing floor. Often, cattle or power threshers are used to trample on the plants to thresh the pods, or
they may husk small quantities of pulses manually using indigenous tools called Jhata (manually
operated rotating stones that crush and split the grain). Farmers clean the grains by winnowing, or
tossing, the produce in the air with forks on a windy day. The grains are then dried in the sun, cooled, and
packaged in polyethylene or jute bags. Finally, grains are stored in a dry place above ground before
selling.
MUNGBEAN PRODUCTION
Farmers predominantly grow a local variety of mungbean, called sonamung. BARImung-2, BARImung-
3, BARImung-4, BARImung-5, BARImung-6 and BINAmung-5 are high-yielding varieties of
11
A. Quasem and F. Yasmin, Agricultural Research Priority: Vision 2030 and Beyond (Farmgate, Dhaka: Bangladesh Agricultural
Research Council, March 2010).

mungbeans and are available in the South. However, input sellers and farmers have limited knowledge
about how to grow high-yielding varieties.
For one hectare of land, 22 to 25 kilograms of seeds are required. Before sowing seeds, farmers prepare
the land by plowing it three to four times, pulverizing it, and making the land free from big clods and
weeds. Mungbean seeds are usually broadcast sown. Most of the farmers do not use any fertilizer or
irrigation for mungbean production. Weeding depends on the condition of the field. If required, farmers
weed once twenty to twenty-five days after the crop emerges. Pesticides are used to protect the crop from
diseases.
Harvesting of mungbeans is done in two to three cycles. In the first cycle, farmers harvest 60 to 80
kilograms of pods, which substantially increase in the following crop cycles. Following the harvest,
farmers and family members clean and sun-dry their harvest to make the mungbeans ready to take to
market. Farmers keep a portion of the pods, which are stored above ground at home, to use as seeds in
the next cropping cycle.
Table 9: Prevalent Cropping Pattern of Pulses in the South
Crop Varieties Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Lentil
Jute
Fallow
Transplanted Aman
Mungbean
Lentil
Mungbean
Maize
Fallow
Transplanted
Aman
Lentil
Mustard
Mungbean
Source: AVC staff developed the table based on information collected from interviews with deputy directors at DAE offices in
twenty districts and focus group discussions with farmers.
The AVC team interviewed farmers and held focus group discussions (FGDs) to learn the most common
cropping patterns (see Table 9). Farmers responded that nearly 150,000 hectares of land in the South, part
of which is suitable for pulses cultivation, remain fallow after harvesting of Rabi crops. With pulses’ short
duration, a three-crop sequence is possible, which is advantageous because their ability to fix nitrogen in
soil increases fertility for successive non-legume crops. The three-crop sequence also contributes to
dietary diversity and an increase in household income.12
12
M. G. Neogi, “Mungbean Cultivation in Southern Districts,” Daily Sun, January 14, 2013 (available at
http://www.dailysun.com/old_version/details_yes_14-01-2013_Mungbean-cultivation-in-southern-districts_379_2_17_1_0.html).

POST-HARVEST HANDLING AND PROCESSING OF PULSES IN THE FTF ZONE
Milling is an age-old industry in Bangladesh. Whole pulses are milled into split dhal at the pulse mills,
and the process includes cleaning, husking, splitting, separating, and bagging. With advancement of
technologies, power operated grinders have come into existence for small commercial level operations in
rural communities. Large-scale commercial mills use heavier machinery usually fabricated by local
artisans. Commercial milling involves cleaning the raw materials, size-grading, water mixing, drying,
hulling, splitting, separating broken grains, and, finally, polishing before marketing.
Dhal mills are established mainly in nine districts of Bangladesh, four of which are in the FTF zone.
Most of the southern millers—especially the twenty to thirty in Takerhat in the Gopalganj District— do
not use modern milling practices. Dhal processed in Takerhat mills is broken, misshaped, discolored, and
dull. As a result, the Takerhat dhal market is losing competitiveness to other dhal milling hubs around
the country.
Although processed food from pulses is a small market segment, it is growing rapidly. According to
interviews in the summer of 2014 representatives of Bombay Sweets, Square Consumers, and PRAN,
their combined yearly demand has increased steadily in recent years, reaching 2,400 tons of lentils and
5,700 tons of mungbeans in 2013. In addition, small SMEs involved in processing require comparable
quantities of pulses. More businesses are entering the market each year, not only for these processed
products, but also to package premium fresh dhal for higher-end consumers.
Table 10: Lentils and Mungbeans - Industrial Applications by Bangladeshi Food Processors
Yearly Requirement
Company (approx. in tons) Main Use
Lentils Mungbeans
Bombay Sweets 1,200 1,200 Chanachur
Square Consumers 1,200 1,500 Chanachur, Fried dhal
PRAN 0 3,000 Chanachur, Fried dhal
Other SME Companies* 2,400 5,100 Chanachur, Fried dhal
SOURCE: Data compiled from interviews conducted in summer 2014 by AVC field staff with company representatives. * Rani
Chanachur and Sohel Chanachur, Jessore; Amrita Chanachur, Barisal; three small home-based Chanachur processors, Dhaka and
Gopalganj.
SEASONALITY
Although March to May is the peak season for pulses, prices do not fluctuate throughout the year in large
part because import substitution ensures availability of supply year round. When stored in dry form pulses
have a long shelf life, and supply can be regulated by storing surplus at harvest time and releasing it into
the market throughout the year. Figures 13 and 14 show the average wholesale price of lentils and mung
beans in Bangladesh from 2000 to 2011 as having a steadily increasing upward trend. The price spike in
lentils in 2008–09 was a residual effect from low imports in 2007–08. All stored pulses had been released
into the market; prices skyrocketed until imports again filled the demand supply gap.

Figure 13: Change in Average Wholesale Price of Lentil, 2000–01 to 2010–11
SOURCE: AVC created chart using website of Department of Agricultural Marketing, Government of People’s Republic of
Bangladesh, Ministry of Agriculture (available at) and Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh:
BBS, 2005, 2008, 2011), 291–95, 307–11, 295–99 (respectively).
Figure 14: Growth of Average Wholesale Market Price of Lentil, 2000–01 to 2010–11
90.00 78.48
80.00 67.85
70.00 59.00
60.00
47.47
43.53
50.00 38.46
40.00 27.99 27.87 29.37
25.54 26.69
30.00
20.00
10.00
0.00
2000‐012001 ‐022002 ‐032003 ‐042004 ‐052005 ‐062006 ‐072007 ‐082008 ‐092009 ‐102010 ‐11
SOURCE: AVC created chart using website of Department of Agricultural Marketing, Government of People’s Republic of
Bangladesh, Ministry of Agriculture (available at) and Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh:

PULSES CHANNEL MAP AND VALUE CHAIN ACTORS
The actors depicted in the Pulses Channel Map (Figure 15) are described on detail in the following pages.
Figure 15: Pulses Channel Map
Note: AVC team developed map after numerous field visits and key informant interviews during January–August
2014.
Input suppliers
Input suppliers provide seeds and agro-chemical products, such as fertilizer and pesticide, to farmers. The
percentage of retained seed usage for pulses is high in Bangladesh. Farmers who do not use retained seeds
purchase seeds from the seed sellers, who also sell other inputs. Input sellers sell products mostly for cash
but occasionally on credit and provide some embedded services to producers, such as extension advice.
Competition and cooperation does exist among the agro-input sellers; occasionally, input sellers help one
another with inventories and short-term loans.
Farmers
Small and medium-holder farmers alike collect necessary inputs for production and are directly involved
in production in field, along with family members and hired laborers. They reap the harvest, manage post-
harvest, and sell the pulses to local faria (small traders). For larger quantities, farmers may carry the

produce to market to sell pulses to local arathdar (middlemen), bypassing local faria. Farmers usually
keep a small portion of the produce for family consumption, and then sell the remainder for cash. Farmers
share farming knowledge and sometimes exchange seeds. They also take part in bulking their harvest and
share transport costs from the farm-gate to the market place.
Contract farmers work directly for a company supplier or agent. An upstream actor (processor or end
market actor) provides required inputs and technical support, through a company supplier, directly to
farmers for a specified amount of produce. In return, farmers are contractually obliged to sell their full
harvest to the company at a price mutually agreed to before the crop is cultivated.
Traders
Faria are small traders who purchase pulses from the farmers and do the first level of bulking. Faria
usually sell to arathdar or directly to dhal mills. Arathdar are the main “middlemen” in the trade of pulses.
They procure from farmers, faria, and traders and supply forward actors. They receive a commission from
both backward and forward actors. A primary level of grading, drying, and packaging takes place at large
trader levels, often by hired laborers. Traders supply to the mills and to the company suppliers.
Traders and arathdar cooperate extensively to procure pulses, market pulses, share transport costs, and
fulfill large orders (in terms of quantities and deadlines).
Importers
Approximately 20 large and 150 medium importers supply significant quantities of lentils to Bangladesh,
sourced largely from India and Canada. Imported whole grains are milled at captive mills, owned by the
importers themselves (about thirty exist), or, more often, at independent mills. Milled imports are sold
directly to wholesale markets.
Dhal Millers
Millers are local processors crush the lentils or mungbeans to produce refined grains, which are then called
Masoor dhal or Mug dhal respectively. In 2014, approximately 300 mills of varying sizes operated
throughout Bangladesh. Of these, roughly 100 mills were exclusively engaged in lentils processing, and
the remaining processed all types of pulses, including lentils. Most mills are located in the same vicinity as
the production hubs. Producers and traders from districts without dhal mills incur additional transport and
storage costs to reach millers, which erodes their margins or diminishes their competitiveness.
Millers can operate in one of two ways. Millers can crush pulses into dhal and sell to wholesalers, chain
shops, branded owners, or processing companies. Alternatively, some millers take orders first and mill
only upon receipt of orders. Millers generally cooperate by sharing orders and procuring raw materials
jointly to reduce costs.
Wholesalers
There are large wholesale markets dedicated to pulses trading. In the North, the main wholesale market is
Baneshwar in the Rajshahi district. In the FTF zone, two wholesale markets dominate the pulses trade. The
first market, Kaliganj, in the Jhenaidah district, moves approximately 23,000 tons of lentils and 17,000
tons of mungbeans per year. More than twenty small markets in five adjacent districts provide supplies to
the Kaliganj market. Millers and industrial processors are the main customers. Forty large traders and
twenty medium and small traders sell to dhal mills located in Rajshahi, Faridpur, Bagerhat, Khulna,
Mirkadim, Takerhat, Natore, Savar, Rangpur, Chapainawabganj, and Pabna.
The second wholesale market in the FTF zone, Takerhatin in the Gopalganj district, is conveniently
located in the vicinity of twenty-seven active dhal mills that process about 5,000 tons of lentils and 600
tons of mungbeans annually. Dhal millers in this area supply 75 percent of the total output to nationwide
markets and 25 percent dhal to the local and regional markets within the FTF zone.

Processing Companies
Company suppliers purchase pulses from all possible channels and supply industrial processors. If
procured pulses are not yet milled, industrial processors mill pulses in captive mills or outsource. After
milling, processors manufacture different value-added products, including dal moth and chanachur. The
dominant processors are Bombay Sweets, Square, and PRAN, but about twenty-five additional small and
medium processors in Jessore and Khulna produce chanachur. Some processors adopt a “low price, high
volume” business strategy to sell chanachur at 2 BDT/bag to rural school children.
There is a high level of rivalry and low level of cooperation among the processors in their individual
drive to capture a bigger market share. However, processors are commonly members of the same
associations and jointly advocate for business enabling environment improvements to advance the
industry.
Brand Owners
Several large companies and organizations with recognizable brands have opportunistically entered the
pulses market by procuring premium-quality dhal and packaging and branding it for wide distribution.
BRAC, for example, attractively packages premium-quality lentils and mungbeans under its name, which
already has widespread recognition and high customer loyalty. Brand owners sell their products in two
ways. If their products are already in demand, they require retail stores to purchase the products directly.
However, if the products are new and without a loyal consumer base, the brand owners may publicize the
product nationwide to build demand and provide it to retailers with an agreement that retailers will only
pay for what is purchased by consumers and the remaining supply can be returned to the brand owner. In
this way, the brand owner reduces the retailers’ risk and incentivizes retailers to carry the product.
Distributors
Distributors do not purchase the products, but instead are paid on commission or at a set price by brand
owners and processing companies to move products to retail outlets. Brand owners and processing
companies frequently have relationships with different distributors in each district, as distributors often
focus on a specific geographic area to penetrate rural retail outlets. Distributors may carry products from
multiple processors or have a specific contractual relationship to distribute goods from just one brand
owner.
Retailers
There are three types of retailers. The first sells in open markets that are prevalent in rural and urban
areas. These markets, known as “wet markets,” sell mostly commodities, such as flour, dhal, and spices.
The second retail outlet is grocery and chain shops found primarily in urban centers (e.g., Unimart,
Meena Bazaar, Lavendar), which carry standard and premium dhal, both loose and packaged. The third
and final type of retailer is small retailers that sell confectionary items and packaged food. These retailers
are found in rural and urban areas, and many are part of the informal market.
MARKET CHANNELS
The pulses market can be divided into three major channels. The first is by far the dominant channel,
with 95 percent of the product flow. The second and third channel, although relatively new and less
developed, are fast-growing segments that present real growth opportunities.
CHANNEL 1: FRESH STANDARD-QUALITY, UNPACKAGED PULSES

In Bangladesh, unpackaged pulses sold in open markets or at chain shops and groceries constitute the
largest market channel. Approximately 52 percent of mungbean is sold in this channel, and 97 percent of
lentils, of which about 70 percent are imported. In this channel millers source product from Takerhat and
Kaliganj markets, among others, and sell to retailers, of which about 25 percent are in the FTF zone and
75 percent are elsewhere. The supply is generally inconsistent as many broken and less polished grains

are found in the supply. The channel, even if not growing rapidly, still presents a market opportunity for
import-substitution given that consumers prefer the local varieties of pulses.
CHANNEL 2: FRESH PREMIUM-QUALITY PULSES, LOOSE AND PACKAGED

As the middle class has grown and consumers have become more health conscious and aware of food
safety, a new market channel has emerged in the last five years for premium-quality pulses. In this
channel, high-quality pulses are sold in chain shops and by formal retailers either as loose or packaged
dhal. This premium product is often cleaner than product sold through channel 1, and contains fewer
broken pieces. The packages contain product information, weight, price, product origin, manufacturing
date, and sometimes recipes for cooking. Although this channel is the newest and smallest of the channels,
it is gaining ground gradually.
CHANNEL 3: PROCESSED MARKET

This market is for snack foods and other processed, ready-to-eat products that contain pulses. Bombay
Sweets, PRAN, and Square are major actors in this channel, but more than twenty-five smaller processors
in the FTF zone also are players. A few companies in the northern districts of Bangladesh are using a
contract-farming model to procure pulses. The companies in this market use inferior equipment and are
slow to adopt technology, resulting in high inefficiency.
MARGIN ANALYSIS
Figure 16 shows how value is shared or distributed among the pulses value chain actors. Farmers of both
lentils and mungbeans are the most profitable value chain actors, with traders, millers, wholesalers, and
even retailers profiting only marginally.
Figure 16: Gross Margin for Lentils

90
80
8
5
70 5
6
60
50
34
40 84
30
20
26
10
0
Revenue Retailer wholesaler Miller Traders Farmer Input
SOURCE: AVC team did margin analysis using secondary information from interviews with each of the market actors, January to
June 2014.
Total revenue from selling the final output of one kilogram of lentils (after post-harvest loss adjustment)
is 84 BDT (1.05 USD). The farmer whose margin is 34 BDT is by far the highest earning among the
value chain actors. The retailer is a distant second with gross margin of 8 BDT. The other actors, namely
the trader, the miller, and the wholesaler barely make a minimum gross margin (5 and 6 BDT) each.

Figure 17: Gross Margin for Mungbeans
80
4
70
15
60
2
50
40 32
76
30
20
10 23
0
Revenue Retailer Miller Traders Farmer Input
SOURCE: AVC team did margin analysis using secondary information from interviews with each of the market actors, January to
June 2014.
Total revenue from selling the final quantity (after post-harvest loss) of one kilogram of mungbeans is
BDT 76 (Figure 17). The farmer makes the highest gross margin of BDT 32, and the traders make the
lowest margin. The miller and retailer also make attractive gross margins from sales.
DYNAMIC TRENDS
• Dynamic trend #1: Growing demand for pulses coupled with government priority on increasing pulse
production and strong consumer preference for local varieties is incentivizing farmers to expand
production. Increasing demand for pulses and their high profitability at the farmer level of has triggered
increased production for mungbean and lentils since 2007. However, locally grown lentils still meet only
30 percent of demand, as 70 percent are imported. Local varieties, however, fetch higher prices because of
strong consumers preference. While lentil production is growing by volume and area throughout the
country, the North is experiencing faster growth and with more favorable trends in yields.
• Dynamic trend # 2: Consumer demand for premium-quality loose and packaged pulses is increasing
market segmentation and growth opportunities for processors, brand owners, and chain shops. Dynamic
trend #2 is driving market channel 2, which is the fastest growing channel. Continued growth will drive
value chain upgrades and encourage the adoption of new technology and innovation.
OPPORTUNITIES AND CONSTRAINTS IN PULSES

Based on the above analysis, the AVC team identified the following as major market opportunities and
corresponding constraints.
Opportunity #1: Improve production in the FTF zone by capitalizing on the overall high demand for
pulses in the national market and on the opportunity for import substitution. Although northern producers
recently have expanded production of pulses and improved yields at a faster pace than southern producers,
farmers in the South can protect and increase their share of the national market by updating their
production practices and using higher quality seeds for high-yielding varieties. The increased output per
hectare from the same amount of land under cultivation also will enhance the farmer’s income levels.
Specific barriers to seizing this opportunity include the following:

• Use of retained seeds results in poor yield per hectare. More than 90 percent farmers use retained, often
degenerated, seeds. Farmers in the South do not have knowledge or exposure to the improved varieties of
pulses seeds (BARI lentils and BARI mungbeans) available in the country or the benefits of cultivating
these varieties.
• Traditional farming practices among the farmers lead to poor yields. Most of the pulses farmers do not
use any irrigation and apply minimum dosages of fertilizers. They follow rudimentary methods of
cultivation and thus obtain poor harvests.
• Weak extension services impede the flow of knowledge along the value chain. Farmers have limited
access to information about modern farming practices for pulses. Input suppliers that provide extension
services often overlook pulses, as do agents of the agricultural extension department. Likewise, private
sector companies do not emphasize the production or
marketing of high-quality seeds for pulses, and donors and NGOs are not currently focused on
production enhancements in pulses.
Opportunity #2: Capitalize on growing demand for processed and premium pulses by forging
sustainable linkages between processors, traders, and southern producers and upgrading the value
chain. Processors, chain stores, and brand owners are rapidly diversifying into new segments and require
consistent supply of premium quality product. To address this market opportunity, southern value chain
actors need a well-coordinated marketing and distribution channel, as well as improved technology and
management practices to increase the competitiveness of pulses produced in the FTF zone.
For southern pulse farmers, specific barriers to seizing this opportunity include the following:
• Difficult transport system leads to limited access to national markets. At present, a lack of economies of
scale and difficult transportation in the South are disincentives for national and regional buyers to source
pulses from the South. Northern producers are being engaged in contract farming more readily, and the
South is losing competitiveness.
• Poor milling machineries lead to significant losses and quality degradation of kernels. Entrepreneurs in
the South use outdated milling practices and primitive machinery for husking pulses, which results in
broken, misshaped, discolored, and less shiny kernels unsuitable for premium markets.

CHAPTER 3: POTATO

INTRODUCTION
In Bangladesh, potatoes are by far the most popular vegetable. In 2013, 8.6 million tons were produced,
compared with other fresh vegetables (1.4 million tons produced in 2013). Out of the total 1.6 million
potato farmers in Bangladesh, approximately 72,000 are located in the USAID FTF target zone. Potato
production in the South is relatively recent and accounts for only 4.6 percent of the national potato
production. However, some producers in the South have introduced advanced farming practices and have
been able to get yields as high as 22 tons per hectare, compared with the national average of 19 tons per
hectare.
The majority of farmers in Bangladesh produce table potato varieties, suitable for cooking instead of
processing. The national market for fresh potatoes is saturated, with production outstripping demand and
resulting in declining prices. Long-term growth in the potato sector relies on emerging growth in the
processing sector and the farmer’s ability to produce varieties suitable for processing. All of the
production in the South is focused on table potato varieties. The climate in the South is not suitable for
production of early potato varieties that would allow farmers to take advantage of high prices early in the
season. Therefore, to reduce the impact of market glut and the downward price pressure during the peak
season, southern potato farmers have an opportunity to increase the supply of industrial variety potatoes
to processors.
The rationale, along with the ranking matrix, for selecting the potato value chain for AVC project
support, and the industry analysis based on the Porters’ Five Forces model, are described below.

SCORING MATRIX
The AVC team has given potato a score of 73.5 out of 100 in its overall ranking of value chains (see
Table 1).
Table 1: AVC Ranking of Potato Value Chain
Potato
Criteria Data source Weight Score Explanation
Scale BBS 10 10 Potato farming more than USD 2 billion industry, with
South contributing 5 percent approximately.
Annual Market BBS 10 4 Potato sector is growing at the rate of 8 percent in
Growth Bangladesh. However the growth rate in Southern Delta
is less than 2 percent in Bangladesh.
Scope of Value Key 10 8 Potato has significant industrial use worldwide. It can
Addition Informant be used as a raw material for potato chips, potato
Interview wedges, and potato flakes. The market for industrial
potatoes in Bangladesh is growing rapidly.
Export/ Trade Map 5 3 Scope for exporting potato and potato products is
Import Substitution increasing. In 2011 Bangladesh exported about USD 34
Potential million potato and potato products.
Agro Ecological Field recon 5 3.5 More than one fourth of the FTF zone is suitable for
Suitability and Key potato farming. In Bangladesh, approximately 440,000
Informant hectares are cultivated with potatoes.
Interview
Income Potential Team 10 7 Return on investment is about 50 percent.
assessment
Women and Youth Reports and 10 7 Sowing, harvest, post-harvest handling, sorting,
Inclusion databases grading, product processing, and industry packaging.
Outreach (# of Reports and 5 5 More than 20,000 hectares of land coverage. Southern
households databases Delta is the home to approximately 72,000 potato
impacted) farmers.
Job Creation Team 10 8 For each hectare of table potato more than 210 labor
assessment days required for harvesting, post-harvest handling, and
processing. Long value chain and has significant scope
of job creation in each step of the chain.
Filter 3: Cross-cutting (15%)

Nutrition Journals and 10 5.5 Staple food. Constitute mostly carbohydrate.
websites
Environmental Expert 5 3.5 Application of chemical fertilizer, especially nitrogen, is
Sustainability interview quite high.
Potential for Private Team 10 9 Handful of farms can set industry trends.
Sector Leverage assessment
Can results be (Y/N) Y Potato is a short duration crop with cultivation period
achieved with the less than four months.
available resources
and within
timeframe?
Total 73.5
(100)

PORTER’S FIVE FORCES ANALYSIS FOR POTATO
Below, the team utilized Porter’s Five Forces Analysis to examine one of its key value chairs:
potatoes.
Potato is regarded as a staple crop in Bangladesh. Bangladesh produces approximately 8.5 million
tons of potatoes annually. More than 90 percent of these are table potatoes. Demand for potato in
Bangladesh ranges between seven to eight million tons. The price of potatoes largely depends on the
quantity of production. In a good year, seasonal glut reduces price to an incredibly low level.
Similarly under production can drive the price to high. Gradually the industrial use of potatoes is
increasing. However, the processors do not have access to the right varieties of potatoes. Instead of
industrial varieties, processors are often forced to use table potatoes as raw materials.
END MARKET ANALYSIS

GLOBAL MARKET
Globally, production of potatoes increased by 17 percent between 2003 and 2013, from 316.4 million
tons to 367.7 million tons per year (Figure 2). Since 2003, potato production has been declining in
Eastern European countries, such as Russia and Poland, and shifting to eastern and South Asia. In
2013, China was the largest potato producer in the world, producing more than 24 percent of all
potatoes, more than the total production of the entire South Asian region. India produced an
additional 12 percent, and Russia produced 8 percent. Compared with growth rates of world
production, South Asian potato production has expanded at a much higher rate since 2003, by 91
percent to a total of more than 66 million tons. In 2013, Bangladesh was the seventh largest potato
producer in the world with a total of 8.6 million tons produced.

Figure 2: Global Production of Potatoes (in Millions of Tons) (2003–13)
400
350
300 Rest of World
250
China
200
150 South Asia
100
50 Bangladesh
Source: AVC team developed graph with data gathered at FAOSTAT, the database for the Food and Agriculture
Organization of the United Nations (available at http://faostat.fao.org/).
The overwhelming majority of potatoes are consumed in their country of origin, with only 3 percent
of the total volume of fresh potatoes reaching international markets. The total export value of fresh
potatoes was $3.61 billion in 2013. Other potato products are also exported, including potato seed
($918 million), potato flakes ($479 million), and potato flour or meal ($107 million). The largest
potato importers, accounting for more than 50 percent of all fresh potato imports, are in Western
Europe, with extensive reexports across Europe.
Table 2 shows trade in potato products in from 2008-2013 as reported by countries worldwide using
the Harmonized System (HS) code, an internationally standardized system of names and numbers to
classify traded products. As shown, world trade in fresh potatoes has been expanding the most
aggressively, at nearly 50 percent from 2008 to 2013; other potato products have variable growth
rates. The average unit price for potatoes on the world market increases with additional processing
into potato flour and flakes.
As a region, South Asian fresh potato exports account for less than 4 percent of global exports.
Pakistan is the largest exporter, exporting $130.3 million in 2013, while India exported $33.6 million.
The majority of South Asian potatoes exports are fresh table potatoes and are exported to the Middle
East and to South Asia. The region is a net importer of potato seed, and trade in potato flakes and
flour takes place largely within South Asia.
Table 2: World Trade in Potato Products (2013)

Total Value of Market Average unit Exports from
HS Code Product Exports in 2013 growth price SAARC13
(USD millions) (2008–13) (USD/ton) (USD millions)
70190 Potatoes 3,606 49.7 % 344 175
70110 Potato seed 918 2.6 % 589 1
110520 Potato flakes 478 25.5 % 1228 2.1
110510 Potato flour and meal 107 -12.2 % 1076 4.75
Source: AVC staff compiled the table with data from the UN COMTRADE Database (available at
http://comtrade.un.org/data).
13
SAARC – South Asian Association for Regional Cooperation, which includes Afghanistan, Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan, and Sri Lanka.

In 2013, Bangladesh exported 33,737 tons of fresh potatoes, valued USD 8.4 million, and 3,900 tons
of processed potato products (flakes and starch), valued USD 4.8 million. Similar to the South Asian
regional potato trade pattern, lower value fresh potatoes comprise the vast majority of Bangladesh
potato exports. From 2005 to 2013, Bangladesh fresh potato exports grew at an average rate of 28
percent per year. Export volumes, however, remain very small, and Bangladesh exports of fresh
potatoes are not competitive compared with other leading producers in the region, such as Pakistan
and India. The top export destination for Bangladesh’s potato in 2014 was Malaysia
NATIONAL MARKET
Market Overview
The national market for potatoes is valued at approximately USD 2.3 billion (fresh potatoes and
processed potato products). As shown in Table 3, national consumption includes 8.5 million tons of
fresh potatoes and 22,530 tons of processed potato products (based on total production, exports, and
imports). The potato processing industry uses only 55,604 tons (0.64 percent) of the total 8.6 million
tons produced. The per unit price of processed potato products, however, is significantly higher than
that of fresh potatoes.
Table 3: National Market of Fresh Potatoes and Processed Potato Products (2012–13)
Unit price Total
Unit of potato National
National
Import Export Consumption price and value Market
Potatoes Production
(Tons) (Tons) (Tons) (USD added Value
(Tons)
per ton) (USD per (USD
ton)14 million)
1 Fresh Potatoes 19,335 33,737 8,560,115 250 n/a 2,140
8,630,120
2 Processed 3,250 3,900 22,530 164
Potato 23,180
Products
Potato Chips 17,280 650 0 17,930 9,375 8,719 159
Frozen French 1,600 0 3,000 2,375 2,209 6.7
Fries 1,400
Potato Flakes 3,200 500 2,800 900 1,250 1,163 1.0
Potato Starch 1,300 500 1,100 700 1,200 1,116 0.8
Source: AVC team compiled the information with production data from BBS. Data for 2012–13 was collected from BBS
Head Office (Director of Agriculture Wing). Export and import data was collected from National Board of Revenue
(NBR) and Trade Map (http://www.trademap.org/stDataSources.aspx).
Fresh potatoes account for approximately 92.85 percent of the overall market value for potatoes
(Figure 3). Processed potato products account for a little more than 7 percent, with potato chips
accounting for most of it (6.78 percent). Over the last five years national demand for processed potato
products, such as potato chips, frozen French fries, flakes, starch, has been increasing because of
increased incomes and a gradual increase in consumption of ready-made foods.
14
The market value is estimated by the AVC team based on the share of potato inputs and corresponding value added in
the production of processed potato products, not including the value of other ingredients. The unit price of processed
potato products includes the cost of potato inputs and other costs, such as land, labor, and capital, and does not include the
cost of other ingredients. As estimated by processors, for one ton of final product, 7 percent of non-potato ingredients are
required.

Figure 3: Fresh and Processed Potato Consumption (share of the national market value)
6.78% 0.29% 0.05% 0.03%

Potato Fresh Consumption
Potato Chips
Frozen French fries
Potato Flakes
Potato Starch 92.85%
Source: AVC team developed the graph with production data from BBS. Data for 2012–13 was collected from BBS Head
Office (Director of Agriculture Wing). Export and import data was collected from National Board of Revenue (NBR) and
Trade Map (http://www.trademap.org/stDataSources.aspx).
In 2013 Bangladesh imported 19,335 tons of fresh potatoes and 3,250 tons of processed potato
products (French fries, potato chips, and limited quantity of potato flakes and starch. Imports of
both fresh and processed potato remain small compared with the overall production. Bangladesh
imposes an import duty of about 66 percent on imported processed potato items, which also
triggers the growth of national processed potato products.
Figure 4: Market Trends in Fresh Potato (2005–13)
Source: AVC team developed the graph with production data from BBS. Data for 2012–13 was collected from BBS Head
Office (Director of Agriculture Wing). Export and import data was collected from National Board of Revenue (NBR) and
Trade Map (http://www.trademap.org/stDataSources.aspx).
MARKET SEGMENTS AND CONSUMPTION TRENDS

Two market segments can be distinguished in the national market for potatoes: fresh potatoes and
processed potato products.
FRESH POTATOES
The fresh potato market segment value is USD 2.1 billion, with consumption volume of 8.5 million
tons. Potato production has increased significantly in recent years. From 2008 to 2013 it reached 8.6
million tons per year, compared with an average of about 4.5 million tons per year from 2003 to 2007.
From 2005 to 2013, fresh potato production and consumption increased at an average rate of

approximately 7 percent per year. Exports grew at 28 percent per year during the same time period,
while imports declined at a rate of nearly 16 percent per year (Figure 4). Current production is more
than sufficient to meet national demand.
Increased consumption of fresh potatoes is a result of the overall GDP growth of more than 4.7
percent per year since 2004 and a gradual increase in incomes. Using the 2010 Household Income
and Expenditure Survey (HIES),15 the AVC team calculated the impact of increasing incomes on
fresh potato expenditure (Figure 5). Using data from the survey, the team calculated a marginal
propensity to consume potatoes at 1.37 percent, which means that for every taka of extra income,
BDT 0.0137 are spent on fresh potatoes.
Figure 5: Per Capita Income and Expenditure on Fresh Potatoes (BDT/Month) (2010)
120
100
80
60
40
20
0
0 1000 2000 3000 4000 5000 6000 7000
Average income per capita
Source: Bangladesh - Household Income and Expenditure Survey: Key Findings and Results 2010 (Washington, DC:
World Bank, 2011).
The net impact of the increase in income, based on the annual growth rate in real GDP of 4.7
percent per year, is shown in Table 4. In 2013, the total increase in real GDP was USD 6,175
million. Given that consumers are likely to spend BDT 0.0137 on fresh potatoes for every taka of
extra income, having 6,175 million increase in real GDP translates into an additional BDT 84.3
million spent on fresh potatoes alone. Thus, the annual effect of income increase on fresh potato
demand in 2013 was 84.30, which represents 4 percent growth in potato demand.
Table 4: Annual Income Effect on Potato Demand (2013)

GDP per Annual Changes in 2014 Total Changes in MPC Growth in
capita 2013 Growth in RGDP/Cap Population RGDP of potato demand
(USD) RGDP/Cap (USD) (million) (million USD) potato (million USD)
829 4.7 % 38.96 158.5 6,175 1.37 % 84.30
Total fresh potato market in 2013 = USD 2,153 million
Annual income effect on fresh potato demand = 4 percent (based on 2013 market size)
Source: Household Income & Expenditure Survey (Dhaka, Bangladesh: BBS, 2011).
15
Household Income & Expenditure Survey (Dhaka, Bangladesh: BBS, 2011).

The national market for fresh potatoes however is saturated, with production outstripping demand,
leading to a surplus of potatoes on the market. As production has increased, the price of fresh potatoes
has been decreasing at an average rate of 8.8 percent per year from 2006–07 to 2011–12.16 In 2006–
07 the harvest time average market price was BDT 13.11 per kg. The market price reached BDT 8.27
per kg in 2011–12. With the glut on the market, farmers have become price takers. Export markets are
highly competitive, and immediate growth opportunities in the potato sector lie in the ability to
supply the processed potato market segment.
PROCESSED POTATO PRODUCTS

The processed potato market segment is valued at USD 164 million with consumption volume of
22,530 tons of potato products. National demand for potato chips and French fries has been growing
with increased incomes, growth of the middle class population, increased urbanization, and consumer
preference for readymade food and snacks. In addition, demand for potato flakes and starch is
increasing from national producers of food products and pharmaceuticals. The national potato
processing industry was almost nonexistent five to seven years ago, but has achieved significant
growth in the last five years with five new potato chip producers entering the market during this
period. Historic consumption data for this market segment are not available, and this analysis is based
on end market interviews with processors and other market actors. All key informants interviewed for
this study indicate that the market for processed potato products has been growing at 10 percent per
year and is expected to continue growing.
Potato chips and French fries account for most of the national market for processed potatoes. Several
large processors interviewed have reported 15 to 20 percent annual growth in revenues over the last
five years. There are twenty potato chip and potato cracker producers (potato crackers are locally
produced potato chips that use potato starch and floor as ingredients instead of fresh potatoes ) active
on the market. Alooz, Sun Chips, Party Chips, Rani Chips, and Keln chips are local potato chip
brands, which were established in the last five years. Established in 2006 as an export oriented
business, Golden Harvest controls 85 percent of the market for French fries production and is now
solely focused on the national market. “Our domestic sales are increasing at a rate of 20 percent per
year, and export market is not attractive for us at this moment. Our current production is not enough
to meet our domestic demand,” said Mr. Samad Chowdhury, Chief Operating Officer of Golden
Harvest. In 2011 Golden Harvest conducted a public survey of urban dwellers (French fries have yet
to penetrate the rural market) and found that 90 percent of the people between the ages of 15 and 45
consume French fries on a regular basis.
Potato flakes and starch hold a small share of the national market. Both are exported, although in
small volumes. In 2013, Bangladesh exported 3,900 tons of potato flakes and starch, valued at USD
4.8 million. Two local companies—Patwary Potato Flakes, Ltd., and Bikrampur Potato Flakes
Industries, Ltd.— produce potato flakes, although mainly for export. National food producers, such as
Bombay Sweets and PRAN, are increasing their national sourcing of potato flakes for production of
biscuits and potato crackers. At the time of this report, the AVC team was in discussions with an
international buyer interested in sourcing potato flakes from Bangladesh if local processors are able to
supply flakes made out of quality processing grade potatoes. The company’s projected procurement
need for 2014–15 is 2,000 tons of potato flakes (with an equivalent industrial potato requirement of
12,000 tons) and could reach 10,000 tons of flakes per year by 2017–18. Potato starch is used by food
and non-food industries in Bangladesh for production of crackers, biscuits, ice cream, baked goods,
and pharmaceuticals. These industries import potato starch from March to December and procure
16
Bangladesh Bureau of Statistics (BBS), Statistical Yearbook of Bangladesh 2012 (Dhaka: Statistics and Informatics
Division, Ministry of Planning, 2013).

from national sources from January to April. Although local companies are seeking to increase their
domestic procurements, the main potato starch producer in Bangladesh (Flamingo Agro Tech) has
only been able to operate sporadically so far.
Processors usually procure potatoes at harvest, some through contract farming arrangements to ensure
consistent supply. Processors are seeking industrial varieties of potatoes, which produce higher yields
and have a higher dry matter content. High dry matter content (more than 20 percent) is required for
efficient processing and a higher quality product. Larger tubers (100 gram) are sought by French fry
producers. Because only 5 percent of farmers grow industrial varieties, processors are unable to fill
their demand for industrial potatoes. Many processors source table potatoes, which results in up to 25
percent loss in production and a lower quality product. In 2012–13, 55,604 tons of industrial variety
potatoes were required to produce 23,180 tons of processed potato products was 23,180 tons (Table
5). If the national demand for processed potato products grows at 10 percent per year, as projected by
industry stakeholders, the annual requirement for industrial variety potatoes could reach 89,559 tons
by 2018.
Table 5: Processed Potato Products – Potatoes Required and Demanded (2012–13)

Production Quantity17 Required Potatoes (tons) Conversion
Product (tons) Ratio
Potato Chips 17,280 21,600 100:80
Frozen French Fry 1,400 3,500 100:40
Potato Flake 3,200 22,857 100:14
Potato Starch 1,300 7,800 100:17
Total Processed Potato Products 23,180 55,604
Note: AVC team developed the table based on data collected from market assessment surveys and key informant
interviews conducted by staff from January to June 2014.
SEASONAL CONSUMPTION PATTERN AND PRICES

Consumption of potatoes remains constant throughout the year, dropping slightly from June
through
August when substitute summer vegetables enter the market. Potatoes are sown and harvested
between October and March, but usually become available on the market as early as December. The
price of potato largely depends on production volumes. In a year of good harvest, seasonal glut
reduces price to low levels, while underproduction can drive the price up. During harvest, farmers
usually sell their produce at farm gate for BDT 8 per kg or directly to local market retailers at BDT 10
to12 per kg. During the rest of the year, the wholesale price reaches BDT 18 to 20 per kg and the
retail price is 20 to 24 per kg (Figure 5). Producers of industrial potatoes are able to get a premium
price of BDT 2 more per kg than producers of table potatoes.
17
Note that quantities produced are predominantly of table potatoes, but industrial potatoes are required for processed
products. When table potatoes are used instead of industrial varieties for chips, fries, flakes, and starch, more than seven
times the volume of potatoes is required since table potatoes have higher water content than industrial varieties.
Introducing industrial varieties, such as Asterix, or Courage, would lower the ratio to 5 kilos of fresh potatoes per 1 kilo
of processed potato.

Figure 5: Retail (Weekly) Price Trends of Potato (2012)
Note: AVC created chart using website of Department of Agricultural Marketing, Government of the People’s Republic
of Bangladesh, Ministry of Agriculture (available at
http://www.dam.gov.bd/damweb/jsp/yearlyMarketPriceComparision.jsp).

PRODUCTION IN THE FTF ZONE AND THE REST OF BANGLADESH
In 2012–13, 8.6 million tons of potatoes were produced on 444,333 hectares of land in Bangladesh.
The FTF zone produced approximately 396,519 tons on 19,527 hectares. There are a total of 1.6
million potato farmers in Bangladesh, with an estimated 72,348 in the FTF zone. Munsiganj, Bogra,
Rangpur, and Rajshahi are the major potato producing hubs in Bangladesh. Potato production in the
South, or the FTF zone, is relatively new. In 2012–13, the FTF zone accounted for only 4.6 percent of
the total potato production with the average annual production growth rate of 1.04 percent, compared
with the national production growth rate of 7.4 percent per year (Table 6).
Table 6: Comparative Analysis of Potato Production in FTF Zone and All of Bangladesh (2012–
13)
Variables FTF Zone Bangladesh
Area (Hectare) 19,527 444,333
Yield (Tons/ Hectare) 20.31 19.36
Production in tons 396,519 8,603,120
Average annual production growth rate (2005–13) 1.04 7.41
Market value (USD million) 109.04 2,365.86
FTF share of land under potato cultivation 4.39 %
Percentage production in the FTF 4.61%
Note: AVC team developed the table with data collected during the market assessment period, January–June 2014.
In the South, potatoes are produced in Bhola, several districts in the Jessore region, and Satkhira
districts. Potato farms in these areas yield approximately 22 tons of potatoes per hectare, which is
higher than the national average of 19.36 tons (Table 7). Some producers in the South have
introduced advanced farming practices and have been able to yield as much as 30 tons per hectare.
Table 7: Major Potato Producing Hubs and Yield in the FTF Zone (2012–13)
Districts Area (Hectare) Tons/Hectare Production (Tons)
Bhola 2,864 22.86 65,479
Jessore 2,717 22.25 60,463
Satkhira 3,344 16.16 54,051
Meherpur 1,703 24.09 41,013
Chuadanga 1,465 23.08 33,810
Jhenaidah 1,221 21.79 26,598
Shariatpur 1,005 22.64 22,752
Note: AVC team developed the table with data collected from Bangladesh Bureau of Statistics, Director of Agriculture
(unpublished source).
Potato is a winter crop, sown from October to December, usually in late November. Harvesting
takes place eighty to ninety days after sowing depending on the varieties. Although potatoes

become available on the market as early as December, farmers continue to harvest through March.
Some farmers in the North produce early potato varieties and are able to sell at high price in
December. Because of the soil condition, farmers in the South are unable to produce early potato
varieties. Farmers in the South harvest their produce until the last week of March and are usually
unable to take advantage of the early harvest market price.
Potato farmers in the South use one of the following cropping patterns:
Aman + Potato + Pumpkin
Potato + Jute + Aman
Potato + Boro + Aman
Transplanted Aus + Radish + Potato + Pumpkin
Table 8: Sowing and Harvest Schedule of Potatoes and Other Crops
Potato varieties
Potato
Jute
Radish
Boro
Aman
Transplanted Aus
Pumpkin
Note: Data compiled by AVC team from interviews with farmers and twenty DAE district offices in the FTF region.
About 95 percent of farmers grow table potato varieties. It is estimated that about 4 percent of farmers
engage in contract farming for processors, and about 1 percent grow industrial varieties
commercially. In the South only table potatoes are produced. Industrial varieties were released for
general production in Bangladesh only in 2008. Demand for industrial seed varieties from farmers is
low, mainly because of a lack of awareness of market opportunities in this segment. However, these
varieties are slowly gaining popularity in select potato growing areas throughout the country, as
demand from the processing industry grows. Availability of certified seeds is limited, and demand
from farmers is low. Only 5 to 10 percent of farmers are using certified seed. Seventy percent of
farmers use retained seed, both self-retained and purchased from input suppliers. Old potato varieties
are often affected by fungus, which results in about 20 percent production loss. Using quality seeds
could double current yields.

PRODUCTION COSTS AND PROFITABILITY
Although potato harvesting is labor-intensive, it is not capital intensive for the farmer. Table 9
provides an example of production costs incurred by an advanced table potato farmer in the Faridpur
region of the
South. The main costs are operational, and no upfront capital investments are required. The farmer
cultivates his own land of 1.6 hectares (the cost of leasing land is not included)18 and sells the produce
at farm-gate without incurring transportation costs.
Table 9: Cost and Return (per hectare) for Table Potato Farmer in Kadirdi, Faridpur (2012–13)
Item Table Potatoes
Unit Rate (BDT/unit) Cost (BDT)
Kg Person no.
days
Tillage (rent, # of times) 12.5 893 11,163
Fertilizer
TSP (kg) 17.5 27 472.5
MoP (kg) 17.5 15 262.5
Urea (kg) 455 16 7,280
Zinc (kg) 10 160 1,600
Boron (kg) 10 400 4,000
Sulfur (kg) 27.5 160 4,400
Gypsum 90 6 540
Seed purchase 500 37.5 18,750
Labor- sowing (person-days) 72.5 300 21,750
Irrigation (rent, # of times) 12.5 300 3,750
Labor-bed raising 52.5 300 15,750
Spray Medicine 10 3,571 35,710
Hum pulling – labor 17.5 300 5,250
Potato Harvesting – labor 72.5 300 21,750
Land rental or opportunity cost 0 0 0
Total costs 152,428
Outputs
Produce (kg) 28572.5 8 228,580
By-products (kg) 0 0 0
Total income 228,580
Net return 76,145
Benefit cost ratio 1.50:1
Note: Data compiled from in-depth interviews with farmers and input sellers by AVC team, January to June 2014.
The benefit-cost ratio for table potatoes is 1.50:1 (Table 9), meaning that investing BDT 1 in table
potato production can generate BDT 1.50 in income. As a comparison, Table 10 shows projected
production cost and return for cultivation of industrial potato varieties. Industrial variety
18
In Kadirdi, Faridpur, land lease value is BDT 60,000–75,000 per hectare. Opportunity cost of land is not considered for
this analysis.

production requires approximately 10 percent higherproduction costs, while generating BDT
320,000 in income (based on an output of 32,000 kg and the price of BDT 10 per kg through a
contract farming arrangement) and a net return of BDT 152,330. The benefit cost ratio in this case
is 1.91:1.
Table 10: Cost and Return for Industrial Variety Potatoes (per hectare) (2014)
Item Industrial Variety Potatoes
Unit Rate (BDT/unit) Cost (BDT)
Kg
Total costs (10 percent higher 167670

compared to that of table potatoes))
Outputs
Produce (kg) 35,000 10 350,000
By-products (kg) 0 0 0
Net return 182,330
Benefit cost ratio 1.91:1
Note: Data compiled from in-depth interviews with farmers and input sellers by AVC team, January to June 2014.
POST-HARVEST HANDLING
The main steps in post-harvest handling of potatoes include harvesting by farmers and sorting and
grading, usually performed by traders. Approximately 30 percent of the harvest goes into cold
storage and is marketed throughout the year. Cold storage is particularly important when high
production of table potatoes results in a surplus of potatoes on the market during the harvesting
months. Total national cold storage capacity for potatoes is about four million tons.19 However,
out of 327 cold storages, 287 are currently active with a storage capacity of 2.7 million tons. In the
FTF zone, there are 25 cold storages with capacity of 125,000 tons. Cold storage facilities are
available in Jessore, Khulna, Satkhira, Bhola, Jinaidah, and Meherpur. A lack of storage capacity
can lead to high levels of waste when a bumper harvest occurs.
PROCESSING
Potatoes are used in production of a variety of food and non-food products. The potato processing
industry is capital intensive. Potato chip and French fry producers are experiencing 10 to 15
percent annual growth, while processors of potato flakes and starch are operating under capacity.
Constraints faced by the potato processing industry are described further in this report.
19
Action for Enterprises (AFE), Potato Program Completion Report (Arlington, VA: AFE, 2012), 7.

POTATO CHANNEL MAP AND VALUE CHAIN ACTORS
Figure 6 shows the various actors and channels in the potato value chain. Each actor is described
below.
Figure 6: Potato Channel Map

Input Suppliers
Key inputs for potato farmers include fertilizers, seed, and rent of equipment, such as irrigation tools,
spray machines, and tillers. Inputs are sold by input suppliers, who purchase them from wholesale
suppliers and government institutions, and sell them to farmers at the village or community level.
Some input suppliers sell single products, such as seed or fertilizer, while others carry multiple
products and equipment. Input sellers mostly sell on a cash basis and sometimes offer credit to
farmers of no more than 40 percent, usually for one week or a month. Farmers located in the same
geographic area collect inputs from companies jointly to share transportation costs.
Farmers
Three types of farmers are involved in potato production. Table potato farmers constitute about 95
percent of all potato farmers. They own their land and cultivate potatoes for sale in the market and for
household consumption. Contract farmers (about 4 percent) work directly for processing companies,
company supply agents, or seed producers. Contracting companies provide necessary inputs and
technical support to farmers on the condition that farmers will supply their full production to the
sponsoring company. Commercial farmers (only about 1 percent) cultivate industrial variety potatoes
only and sell their production to processing company supply agents at a premium price. Potato
farmers are usually medium sized (less than 0.5 ha) and large (0.5–0.20 ha). Contract and commercial
potato farmers are split equally between medium and large-sized farmers; while the majority of table
potato farmers (about 80 percent) are medium sized.
All types of farmers receive necessary inputs, such as fertilizer, seeds, and pesticide, either from input
sellers or from processor’s supply agents, and cultivate potato either on their own land, shared
cropping land, or on leased land. Apart from using commercial inputs, farmers sometimes use their
own organic fertilizer, and self-retailed seeds. Farmers usually keep a small portion of potatoes for
their own consumption and sell the rest to faria (small traders), traders or directly on the local market.
All contract farmers in the same geographic area receive necessary inputs and training jointly from
the sponsor company. Other farmers often share transportation costs through purchasing bulk seed or
jointly selling their production.
Traders
There are several types of traders active in the potato value chain.
Small Traders (Faria)

Faria are small scale traders who purchase potatoes directly from farmers and sell in local markets or
to local arathdar and large traders. Faria prefer cash transactions but in some cases provide one week
credit to farmers or other traders. Faria mainly purchase goods from farmers individually and
sometimes in bulk as a group. Faria usually share transportation costs by jointly transporting their
crops.
Commission Agents (arathdar)

Arathdar act as middlemen in the chain where they provide space to farmers and faria to sell their
produce to large traders and wholesalers. They also facilitate linkages between sellers and national
and regional traders in return for percentage commission from both parties, which is received in cash
at the time of the transaction. Arathdar sometimes purchase produce from farmers. All arathdar
maintain the same commission rate. Sometimes, they act as a guarantor in credit transactions.
Large Traders
Large traders purchase potatoes in bulk from faria, farmers, and local arathdar. They mainly
supply to the national and regional markets around the country. Traders sometimes sell to national
and regional wholesalers directly or through arathdar. They also sell to the stockists and to the

processor’s supply agents. Traders sometimes sort and grade the produce before selling. Traders
maintain regular contact with regional and national markets to understand price trends and market
requirements and are a key source of market information. Traders usually purchase and sell on a
cash basis. It is estimated that about 50 percent of potato production is sold through large traders.
Stockist
Stockists procure potatoes in bulk from farmers, faria and large traders at a low price. They rent
space inside a cold storage and store their produce until the supply falls and prices go up. Once the
price increases, stockist releases the potatoes and sells them at a higher price usually through
arathdars. All their transactions are in cash.
Cold Storage
Cold store owners provide storage facilities to stockists, traders, or farmers by renting space to
preserve potatoes in bulk for a given period of time. In some cases, a cold storage owner can
become a stockist by purchasing potatoes from farmers in bulk and then selling them. Cold storage
owners provide both cash and credit payment options. They are members of an association to
mitigate policy-related constraints and monitor market prices. About 30 percent of total potato
production is stored in cold storages ensuring a year round supply.20
Wholesalers
Wholesalers operate on the regional and national level and often occupy fixed space in urban
wholesale markets. They supply directly to processors and to local bazaar vendors who sell fresh
potatoes.
Processors
Potato processors are specialized by product and include producers of potato chips, frenchfries,
potato flakes, and potato starch. Large processing companies cultivate potatoes for their use
through contract farming based on their annual production requirements. They also procure
potatoes from other farmers and through company supply agents. Smaller processors procure
potatoes from supply agents, traders, and directly from wholesale markets. Companies usually
purchase from suppliers on a one-month credit. Companies procuring potatoes from contract
farmers disburse payment on a weekly basis.
Processors usually have their own distributors through which they sell their products to retailers.
Sometimes processors sell their products to distributors based on distributor’s orders. Transactions
are done on a cash basis.
Company Suppliers/Agents
Supply agents supply potatoes to processors based on the procurement requirements, and purchase
potatoes from farmers, faria, or traders.
Distributors: Distributors are active in the processed potato market segment and supply final
products to retailers or sell directly to consumers. Distributors can work for one or more
processors.
20
“Wearing multiple hats” is a reality in the potato value chain. Potato flake processors are also cold chain facility owners
and traders. Potato flake processors operate at 15 percent of capacity or less, which can be explained in part by limited
demand, and by price fluctuations. As prices for fresh potatoes rise, processors, who are also cold storage owners, will
become traders and release their potatoes for sale on the fresh market because they can earn more than they would if they
processed their stocks.

Retailers: Retailers of fresh potatoes are vendors who sell directly to consumers at local bazaars.
They purchase potatoes from different sources such as arathdar, wholesalers, and farmers.
Retailers of processed potato products include grocery stores, chain stores, fast food restaurants,
and hotels. They purchase products from distributors and often purchase products jointly with other
retailers to share transportation costs.
Exporters (fresh potato): Exporters of fresh potatoes are small businesses that sell small
quantities directly to export markets, usually based on personal connections. Exporters purchase
from farmers, faria, and traders, and also perform grading, sorting and packaging. Exporters make
cash purchases and receive payment after delivering their orders through letter of credit.
Importers (fresh potatoes and processed potato products): Processed potato product imports
are negligible. Some processors import processed potato items, such as potato starch, to use in the
production of final products. Small quantities of fresh potatoes are imported by traders and
wholesalers and are sold through urban trading markets, but this channel is weak and very small
compared with overall production volume.
MARKET CHANNELS
CHANNEL 1: PROCESSED POTATO PRODUCTS (NATIONAL AND EXPORT)
The processed potato channel is the second largest in terms of total volume and value, but has the
highest projected growth rate and the highest per unit value. Potato processors procure potatoes
from different sources and sell finished products through distributors. Consumers purchase potato
products in grocery stores, large chain shops, fast food restaurants, and hotels. Producers of potato
flakes and starch sell directly to other food processors in the national market, as well as directly to
buyers in export markets. Exports constitute a small share of the processed potato production and
are combined into this channel on the value chain map, as the national value chain is the same.
CHANNEL 2: FRESH POTATOES (NATIONAL)

The fresh potatoes channel is the largest channel in terms of total volume and value, but represents
a volatile and oversaturated market with the lowest per unit value. Fresh potatoes are sold to
consumers by local bazaar vendors. It is estimated that about 50 percent of production volume is
sold through large traders, 30 percent through cold storages, and the rest through other actors, as
shown on the potato value chain map (see Figure 6).
CHANNEL 3: FRESH POTATOES (EXPORT)

Fresh potato exports represent a separate channel in the value chain, but are negligible in terms of
both volume and value. Exports have been increasing, but from a very low base. Fresh potato
exporters procure potatoes from traders and sell directly to buyers in export markets, mainly in
Malaysia and the United Kingdom.

MARGIN ANALYSIS
The waterfall chart in Figure 7 shows how value is distributed among the potato value chain actors
for fresh potato production and considers losses incurred at different points along the value chain.
Figure 7: Waterfall Analysis of Gross Margins for Fresh Potato (in BDT)
25
20 3
15 2
10 20 7
5 6.5 Gross margin
0 1.5
Source: AVC team developed waterfall chart using responses from interviews with market actors during market assessment
from January to June 2014.
Out of total revenue of BDT 20 for a kilogram of fresh potatoes, a stockist makes the highest gross
margin (BDT 7), followed by the farmer with gross margin of BDT 6.5. Farmers sell potatoes at
BDT 8 per kilogram at a cost of about BDT 1.5. Retailers and wholesalers make BDT 3 and BDT
2 gross margins per kilogram, respectively. While the stockists make the highest gross margins,
they also incur significant storage expenses, make the highest investment, and take on the risk of
waste.
DYNAMIC TRENDS
The AVC study team identified two key dynamic trends in the market for potatoes: (1) An
increased national market for processed potato products is driving the growth of the potato
processing industry, and (2) the national market for fresh potatoes is becoming saturated, with
production outstripping demand.
Dynamic Trend #1: Increased national market for processed potato products is driving the growth
of the potato processing industry. With increased GDP and incomes, national demand for
processed potato products has been growing over the past ten years. This includes consumer
demand for processed potato products, as well as demand from the domestic food processing
industry for potato ingredients. While current exports of potato flakes and starch are small, export
opportunities for potato flakes in international market may increase. At the time of this report, the
AVC team was in discussions with a large international buyer that has expressed interest in
sourcing potato flakes from processors in Bangladesh.
Dynamic Trend #2: National market for fresh potatoes is getting saturated, with production
outstripping demand. A surplus of potatoes on the market has caused prices to decline consistently.
With 95 percent of potato production focused on table potato varieties, farmers are frequent
victims of market glut and price fluctuations. Production has been growing at more than 7 percent
per year since 2005, while demand for fresh potatoes is projected to grow at only 4 percent per
year.
OPPORTUNITIES AND CONSTRAINTS

In this section, the AVC staff discusses opportunities for upgrading identified within the potato
value chain as well as the main constraints that are impeding realization of each opportunity.

Opportunity #1: Increase the national market for processed potato products as well as potential
exports to create business opportunities for value-added production in the potato value chain.
Significant constraints to this opportunity include the following:

• Lack of stable supply of industrial potatoes prevents sustainable long-term linkages between
farmers and processors that would prolong processor buying periods. Potato farmers mainly
cultivate table potato varieties, most of which have a 16 to 17 percent dry matter content and low
productivity (18 to 20 ton/h). For cost-efficient production, processors need varieties with at least
20 percent dry matter content and higher yields. Processors buy potatoes from traders at a
wholesale price based on their monthly production requirements and export orders. When the
market price of potatoes is low, processors are able to buy potatoes in bulk. However, when the
price goes up, many processing plants remain closed because of high production costs. Contract
farming arrangements would ensure a consistent supply of suitable potato varieties at a fixed price,
ensuring the market for the farmers and secure supply and cost efficient production for processors.
• Lack of business and financial planning capacity on the part of potato processors, particularly
supply costing. The efficiency and profitability of processors are further constrained by a lack of
strategic planning with regard to production volumes, required investments, and projected returns.
• Lack of international standards in food safety management practices at processing plants limits
export opportunities. The potato processing industry in Bangladesh is in a state of infancy, and
processing plants are managed inefficiently. Lack of skilled workforce is one of the key
constraints. Specifically, the owners and plant managers lack awareness and knowledge about
Good Manufacturing Practices (GMPs). The majority of processing companies do not have
HACCP or ISO 9001:2008 certifications,21 required by international buyers.
• Lack of appropriate technology and post-harvest handling methods result in losses and reduce the
income for all value chain actors. Poor practices during harvesting, field handling, storage,
transportation, and processing result in reduced quantity and inferior quality. Post-harvest losses in
the potato value chain are about 15 percent on average. The loss in cold storages alone is estimated
at approximately 3 percent. Cold storage facilities use outdated technologies and inefficient energy
management practices, and lack skilled work force.
Opportunity #2: Increase the farmer’s supply of industrial variety potatoes to processors to reduce
the impact of market glut and downward price pressure during the peak season.
Significant constraints to this opportunity include the following:

• Farmers lack awareness of the market potential of industrial potato varieties and are victims of
price fall during peak season. Volatile market price caused by irregular production increases is a
serious threat to all value chain actors. Farmers lack awareness of the market potential of industrial
varieties and continue to cultivate table potato varieties, even though the market for fresh potatoes
is getting saturated.
• Difficult transport system leads to limited access by southern potato farmers to national markets.
Growth of processed food manufacturers has increased the demand for potato based processed
food items in end markets. However, potatoes produced in the southern districts have very weak
and irregular access to the high value markets, mainly because of a poor transportation network.
Linkages with agents who supply processing companies is also quite limited because of the
geographic barriers of the Southern Delta.
21
HACCP, or Hazard Analysis and Critical Control Points, is a management system in which food safety is addressed
through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement,
and handling to manufacturing, distribution, and consumption of the finished product. ISO 9001:2008 (International
Organization for Standardization) sets the requirements of a quality management system.

•
CHAPTER 4: SUMMER
VEGETABLE BASKET

INTRODUCTION
Of the more than fifteen vegetables grown during the summer season in Bangladesh, the AVC
team has chosen the five that are the highest contributors to horticultural production in the FTF
zone to receive project support: bitter gourd, cucumber, eggplant, pointed gourd, and pumpkin
(known locally as sweet gourd). While no single crop has sufficient production volume to justify
selection, in combination these five crops have critical mass to ensure scalability and impact
potential. Moreover, by selecting this “summer basket” for project support, the AVC project will
have a complement of selected value chains that include winter and summer crops, ensuring year-
round progress toward results achievement.
The national market for bitter gourd, cucumber, eggplant, pointed gourd, and pumpkin (from here
forward referred to as “summer basket crops”) is valued at $227 million. Each year Bangladeshis
living at home and abroad are increasing the portion of vegetables in their diets, which is driving
demand at an estimated 4.75 percent in the national market and 29 percent in exports. With the
burgeoning middle class and urbanization trends, national demand is projected to increase as much
as 11 percent annually in the coming years.
The FTF zone produces 42 percent of the total production volume of summer basket crops.
Approximately 245,000 southern farmers are engaged in summer basket crop cultivation on land
and dikes, covering an area of about 18,500 hectares. Cultivation requires approximately 15,000
full-time equivalent workers. Because the summer basket crops value chain focuses on fresh
produce to market, there is limited or no value addition involving freezing, drying, preserving, or
processing vegetables.
The summer basket value chain has three primary market channels, each of which is relatively
simple with just three to four nodes between farm and fork. The national market has two channels:
vegetables sold in the FTF zone (22 percent of total volume) and vegetables sold to mass markets
in urban centers and districts outside of the FTF zone (70 percent of total volume). The third and
final channel is the export market, which currently constitutes 8 percent of the total production
volume.
Despite the simplicity of the chain, many constraints impede the consistent flow of high quality
vegetables to market. As with many AVC-selected value chains, primary constraints include
limited understanding of modern cultivation and post-harvest techniques, lack of access to quality
inputs, and finance, and few or no cold storage facilities in the FTF zone. Unique to the summer
basket value chain are constraints related to limited air cargo space for perishable vegetables
exports, and no quality control system governing the chain to ensure consistent supply of quality
vegetables.

SCORING MATRIX
In its overall ranking of value chains, the AVC team has given summer basket crops a score of 74
out of 100, as shown in Table 1.
Table 1: AVC Ranking of Summer Vegetable Basket

Data Criteria
Filters Score Explanation
source /Weightage
Scale BBS 10 10 The FTF Zone cultivates summer basket crops on about
18,500 hectares, producing 170,730 tons in 2013
Annual Market BBS 10 2 National market demand is increasing at and export
Growth demand at 29% average annual growth 6%, projected to
increase as high as 11% annually.
Scope of Value KII 10 5 Do not have much scope for processing since AVC is
Addition focused on fresh exports
Export/ Trade map 5 4.5 10 percent of the production is exported and the current
Import and others export rate is growing at 29 percent rate.
substitution
potential
Agro Ecological Field recon 5 4 Soil and climate of the Southern Delta is quite well
suitability and KII suited for vegetable cultivation.
Income potential Team 10 10 Currently the profit margin for farmers ranges from
assessment 25%-160% depending on the crop. Upgrading the value
chain will improve these margins, which will have direct
impact on farmers in the Southern Delta.
Women and Reports and 10 7.5 Significant involvement of women in farming, harvest
Youth Inclusion databases and post-harvest handling. In some areas of Southern
Delta the level of involvement is more than 50 percent.
Outreach(no of Reports and 5 5 Potential outreach is 242,000 farmers
households databases
impacted
Job Creation Team 10 7 The scope for creating new employment is large as
assessment approximately 15,127 casual laborers are required per
year to assist in cultivation and harvesting crops.
Filter 3: Cross cutting (15%)
Nutrition Nutrition 10 9 Great sources of vital amino acids and important
journals and vitamins and minerals, and consumers are recognizing
websites the nutritional benefits of vegetables in their diets.
Environmental AAS 5 3.5 While overuse of pesticides and fertilizers is prevalent
Sustainability and farmer education is needed to encourage proper
application practices, vegetable farming if done safely is
good for soil composition and helps strengthen
productivity of other crops in the rotation.
Potential for KII and 10 6.5 Opportunities for private sector leverage are less
private sector Team numerous than in value chains with significant
leverage assessment processing, however, there is opportunity for investment
in cold storage and transport to strengthen the chain.
Can results be (Y/N) Y Yes, as a two to four months crop, the project can make
achieved within incremental progress each year.
the available
resources and
timeframe?
Total (100) 74.0

PORTER’S FIVE FORCES ANALYSIS FOR SUMMER VEGETABLE BASKET
Below, the AVC team considered how the five factors—supplier power, buyer power, competitive
rivalry, threat of substitution, and threat of new entry—are at play for the summer vegetable basket
value chain.
Over the last decade, the consumption and production of summer vegetables has increased, driven
in part by population growth. The area of land devoted to vegetable farming is increasing, as is
adoption of new farming technologies. The involvement of trader syndicates in the value chain
increases the price after farm gate, as traders and their syndicates largely control supply and prices.
Collusion of the syndicates allows the traders to make super normal profits.

END MARKET ANALYSIS
GLOBAL MARKET
The Harmonized System (HS) codes corresponding with AVC’s five summer basket crops are
070700, 070930, 070993, 070999, which account for, in order, cucumbers, eggplant, pumpkin and
gourds, and “other,” which includes bitter gourds. The global market discussion that follows
draws on production and trade data from these four codes exclusively.
Production of summer basket crops worldwide increased 2.9 percent annually from 2009 to 2012,
from 126 million tons to 138 million tons.22 While only 2 percent of total production volume is
traded across borders, exports for summer basket crops have increased at an average of 27 percent
annually. Spain, Netherlands, and Mexico were the top exporters in 2012. China, while only the
fourth largest exporter of summer basket vegetables, is a leader in production and export of other
vegetables, helping position Asia as a world leader in vegetable production. Bangladesh’s portion
of the global trade market is less than 1 percent.
Table 2: Top Five Exporters of Summer Basket Vegetables (2012)

Export Volume Share of
(in tons) Global Export
Volume
WORLD 4,795,396 100%
Spain 1,895,975 39.5%
Mexico 1,538,143 32.1%
Netherlands 1,001,646 20.9%
China 563,576 11.8%
USA 139,118 2.9%
Source: Calculation done by AVC team with data from UN COMTRADE Database (available at
http://comtrade.un.org/).
NATIONAL MARKET
More than 20 percent of the total population is employed in the agriculture sector. The vegetable
sector contributed approximately USD 1.72 billion to Bangladesh’s gross domestic product in FY
2010–11, with production reaching 3.1 million tons and covering an area of 451,800 hectares.23
The consumption behavior of Bangladeshis has changed over the last ten years. Each year
consumers are including more vegetables in their diets, which is driving growth in the sector at
approximately 6 percent in volume per year. Table 3 presents nationwide trends since 2007–08 in
area and volume for the AVC’s five selected summer crops. All crops increased production volume
more than 5 percent annually, with the exception of eggplant, which only gained popularity in the
past two years. The volume per hectare (yield) has risen across the board, a sign that farmers are
using better quality seeds and inputs.
22
Detailed calculation was done by AVC team from FAOSTAT website (available at
http://faostat.fao.org/site/567/default.aspx#ancor).
23
AVC team made calculations based on data from 2011 Yearbook of Agricultural Statistics of Bangladesh (Dhaka,
Bangladesh: BBS, 2011).

Table 3: Trends in Summer Basket Crops: Area and Volume Produced, 2007–08 to 2012–13
2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 Average Average
area production
Area Prod Area Prod Area Prod Area Prod Area Prod Area Prod
growth growth per
(Ha) (MT) (Ha) (MT) (Ha) (MT) (Ha) (MT) (Ha) (MT) (Ha) (MT) per year year
Bitter 21,240 39,642 21,688 40,127 22,143 41,419 22,793 45,097 23,511 52,211 23,890 52,020 2.38% 5.59%
Gourd
Cucumber 17,930 36,740 17,891 43,902 18,935 56,152 19,030 48,448 19,445 50,090 19,827 48,685 2.03% 5.79%
Eggplant 45,417 12,730 44,737 123,779 44,377 125,080 44,268 124,384 41,608 126,992 42,268 131,65 4 -1.43% 1.41%
Pointed 24,048 70,367 24,558 72,473 24,749 78,084 25,655 83,246 24,847* 88,749* 25,040* 94,616* 0.81% 6.10%
Gourd
Pumpkin 26,081 52,520 27,505 92,519 27,427 92,900 15,347 22,269 28,062 78,572 28,920 79,212 2.09% 8.75%
Total 134,716 321,999 136,379 372,800 137,628 393,635 126,093 323,444 137,473 396,614 139,945 406,187 0.76% 4.75%
Note: AVC accumulated data from 2008 and 2011 Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh:
BBS, 2008, 2011), 136–46, 137–47 (respectively); and 2012–13 Yearbook of Agricultural Statistics (unpublished). The AVC
team developed the table based on its analysis. Some missing data was filled based on extrapolation. *BBS data unavailable.
For years 2011–13, AVC team extrapolated data based on growth trends.
INTERNATIONAL MARKET DEMAND TRENDS

While Bangladesh does not have any vegetable imports of significance other than tomato or onions, it
does export summer vegetables. The Government of Bangladesh is encouraging exports by offering
cash incentives as high as 20 percent on freight on board (FOB) price. Consumers of exported
vegetables are largely Bangladeshi diaspora, and citizens of Bangladesh residing and working in other
countries. There is no export from Bangladesh targeting the mainstream consumer markets of the
destination countries.
Figure 2: Global Export Trend for AVC Summer Vegetables (2009–13)
Source: Chart developed by AVC staff based on data compiled from UN COMTRADE Database (available at
http://comtrade.un.org/data).
The Horticulture Export Development Foundation, hereinafter the Hortex Foundation, is a local NGO
that supports promotion and marketing of exportable agricultural products and seventy-six
Bangladesh exporters are registered reports that 40,416 tons of vegetables were exported in 2012,
with the United Kingdom, Saudi Arabia, and United Arab Emirates being the top markets. Hortex
was not able to disaggregate by AVC’s summer basket crops, but a representative estimated that
cucumber, eggplant, bitter gourd, pointed gourd, and pumpkin comprised the largest portion of the
roughly twenty-five crops included in this export figure. As such, the AVC team assumed that
summer basket crops comprised 80 percent of exported vegetables, or 32,500 tons.

The trend data for Bangladesh vegetable exports show sharp increases since 2008, signaling this
market segment has significant potential for growth. The average annual growth rate over the last five
years is approximately 29 percent (see Table 4). By FY 2012–13, the export value of the fresh
vegetables stood at USD 110.34 million.24 Using the export to production percentage of all vegetables
(8 percent) as the proxy for summer basket, export for the selected crops was approximately USD 8.8
million in FY 2012– 13. Table 4 represents the time series for exports of all edible vegetables, roots,
and tubers.
Table 4: Growth in Bangladesh Exports, 2008–9 to 2013–14

Average Annual
2008–09 2009–10 2010–11 2011–12 2012–13 2013–14
Growth
Total Export Value 41.34 45.72 70.64 77.43 110.34 147.55 28.98%
in USD Million
Source: AVC staff compiled data for table from the Marketing Wing of the Hortex Foundation, Dhaka, Bangladesh.
Figure 2: Market Share of Total Vegetable Exports, DATE NEEDED?
Market Share of Total Vegetable Exports

United Kingdom
23% Saudi Arabia
38%
7% United Arab Emirates
Malaysia
7%
12% Kuwait
12%
Italy
1% Other
Source: AVC staff compiled data for table from the Marketing Wing of the Hortex Foundation, Dhaka, Bangladesh.
NATIONAL MARKET DEMAND TRENDS

Bangladesh’s population growth and burgeoning middle class is driving growth in the vegetable
sector and its supporting industries (such as seeds, pesticides, and integrated pest management,
fertilizer, agro-processing, and retailing). As shown in Chapter 1, rapid economic growth has
exceeded population growth and inflation rates, driving sustained increases in household real income.
Using data from the Household Income & Expenditure Survey25 showing how monthly spending on
vegetables increases with average household income, the team calculated a marginal propensity to
consume of 3.32 percent for summer vegetables, meaning that for every 1 taka of extra income,
0.0332 taka are spent on vegetables (Table 5). The marginal propensity to consume equals potential
growth in the national market equivalent to $204 million annually for vegetables, which is an 11.9
percent increase in the national market in the coming year.
24
Data provided by an internal, unpublished report by the Marketing Wing of the Hortex Foundation, Dhaka, Bangladesh
25
Household Income & Expenditure Survey (Dhaka, Bangladesh: BBS) (available at
http://www.bbs.gov.bd/PageReportLists.aspx?PARENTKEY=66).

Table 5: Marginal Propensity to Consume Vegetables as Calculated by AVC Study Team (2013)
Annual Marginal Growth in

GDP/ Total Increase in
Growth Population Propensity Summer
capita ∆ in RGDP/capita GDP
RGDP/ (in million) to Vegetable
2013 (in million USD)
capita Consume Demand
$829 4.70% $38.96 158.5 $6,175 3.32% $204,731,580

Source: BBS, Household Income & Expenditure Survey (Dhaka, Bangladesh: BBS) (available at
Table 6: Harvest Time Market Price of Summer Vegetables (2006–10)

2006 2010
Vegetables (in taka/kg) (in taka/kg) Average Price Increase
Bitter Gourd 25 36 9.5%

Cucumber 19 27 9.2%
Eggplant 23 18 -5.9%
Pointed Gourd 19 23 4.9%
Pumpkin 15 21 8.8%
Source: Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: BBS, 2008, 2011), 312–13, 300–01
(respectively).
NATIONAL PRICES TRENDS

Vegetable prices are driven not only by consumer demand but also quantity of supply in the market.
Table 6 shows changes in harvest time market price per kilogram from 2006 to 2010 for each AVC
summer basket crop. For all products but eggplant, prices increased, an indication that demand
exceeded supply. The falling price of eggplant could signal supply exceeded demand (glut), but
anecdotal evidence from farmers and traders suggests this is not the case. Instead, they believe prices
were artificially high in 2006 because supply was so low customers were willing to pay exorbitant
prices. Now that production is increasing the price is rationalizing.
Price data for exported vegetable crops were not readily available. However, when the AVC team
conducted interviews with marketing personnel at the Hortex Foundation, the director of marketing
reported an average export value of $2,259/ton in 2010–11. By converting this export value into taka
and kilograms, the average export price is BDT 180/kg, seven times greater than the local market
price. The calculation is imprecise because it is based on an export value for all vegetables, not just
the five AVC summer basket crops. Nonetheless, it serves to demonstrate the high prices that
exported crops fetch.
It is noteworthy that in the national market, prices fluctuate throughout the year based on seasonality
(see Figure 3). Once harvested crops reach the market in mass, prices fall, sometimes by as much as
half. Smoothing out the season fluctuations in supply (by better storage and cold chain) would help
prevent gluts from April to June and ensure higher prices year round. Pumpkin is easy to preserve so
farmers release it to market throughout the year and thus it is the only summer basket vegetable with
a relatively stable price point throughout the year.

NATIONAL MARKET CHARACTERISTICS
Vegetables sold in national markets in Dhaka, Sylhet, and Chittagong typically travel through two
intermediary markets en route to terminal markets: (1) neighborhood markets (or haats) and (2)
regional markets (there is at least one per district in the FTF zone). As explained in this section, the
market scenario differs for each crop grown in the FTF zone.
Bitter Gourd: Fifty percent of bitter gourds grown in the Jessore region are transported by truck to
Dhaka markets, a small portion is exported directly from Jessore to the Middle East for the Bengali
dispora residing there, and the remainder is sold in Jessore regional markets. In Khulna, 45 percent is
transported to Dhaka, 25 percent is supplied to the Barisal regional market and 20 percent to the
Faridpur regional market, and 10 percent is sold at the haats in Khulna. Haats are weekly or bi-weekly
large markets bazars in rural Bangladesh.
Cucumber: Cucumbers grown in Jessore are primarily sold in Dhaka (80 percent), and the remainder
is consumed locally. In Khulna, 45 percent of the dike-grown cucumbers are sold in Dhaka markets,
another 45 percent in the Barisal and Faridpur regional markets, and the remaining 10 percent is sold
at the local haats or bazaars in Khulna.
Eggplant: Sixty percent of eggplants grown in Jessore are sold in the Dhaka market. Approximately,
20 percent is sold at the Satkhira and Khulna regional markets, and the remaining 20 percent is sold in
the local market. Eggplant is not grown in Khulna.
Pointed Gourd: About 60 percent of pointed gourds from Jessore are transported to Dhaka, leaving 40
percent for local trading. Pointed gourds are not grown in Faridpur or Barisal, and only minimally in
Khulna.
Pumpkin: Sixty percent of the pumpkins from the Jessore region are sold at the regional market, 40
percent in Barisal, and 20 percent in Khulna. The local market absorbs 20 percent, and the remaining
20 percent is supplied to the Dhaka market.

Figure 3: Effects of Seasonality on Vegetable Prices in National Market (2008–12)
Pointed Gourd Cucumber
Pumpkin Bitter Gourd
website of the Department of Agricultural Marketing, Government of the People’s Republic of Bangladesh, Ministry of Agriculture (available at
web/).
END MARKET ANALYSIS: SUMMER BASKET 76
PRODUCTION
Production of the selected summer vegetables in the FTF zone constitutes approximately 44 percent of the total
national production. In 2012–13, national production of the summer basket crops was approximately 406,000
tons, whereas the production in the FTF zone was approximately 180,000 tons (see Table 7).
Table 7: Summer Basket Production Data (2012–13)

FTF Zone Share of
FTF Zone National Production from
Barisal* (in Khulna** Dhaka*** Total Total the FTF
tons) (in tons) (in tons) Production Production Zone
Bitter Gourd 1,684 11,858 2,214 15,756 52,020 30.3%

Cucumber 1,789 9,606 1,250 12,645 48,685 26.0%
Eggplant 916 41,789 5,569 48,274 131,654 36.7%
Pointed Gourd 651 72,451 - 73,102 94,616 77.3%
Pumpkin 1,455 25,067 4,322 30,844 79,212 38.9%
TOTAL 6,495 160,771 13,355 180,621 406,187 44.5%
SOURCE: AVC created table with data from BBS unpublished report.
* The Barisal region includes Barisal, Pirojpur, Jhalokathi, Patuakhali, Borguna, and Bhola.
** The Khulna region includes Jessore, Jhenaidah, Magura, Narail, Khulna, Bagerhat, Satkhira, Chuadanga, and Meherpur.
*** The Dhaka region includes Faridpur, Madaripur, Gopalganj, Rajbari, and Sariatpur.
In the FTF zone, approximately 242,844 farmers are engaged in cultivating the selected summer vegetables on
about 18,500 hectares of land. The average land size cultivated by each farmer differs by vegetables, ranging
usually between 0.04 to 0.10 hectares (i.e., 10 to 25 decimals). Approximately 74 percent of total farmers in
the FTF zone are located in the Khulna division, with the remainder in the Barisal and Dhaka divisions. Figure
4 illustrates which crops are grown in each of the twenty FTF districts.
The AVC team collected data first-hand to estimate the number of person days of labor required to cultivate
and harvest summer basket crops in the FTF zone (see Table 8). Each year, nearly 4 million person days of
labor are required, or approximately 15,000 full-time equivalent jobs (260 person days = 1 full-time
equivalent job).
Table 8: Full-Time Equivalent Jobs in Summer Basket

Number of labor days Total area Total person days Full-time
required per hectare cultivated required equivalent job
(in hectare)
Bitter Gourd 262.5 2,604 683,655 2,629
Cucumber 225 1,882 423,360 1,628
Eggplant 262.5 5,686 1,492,680 5,741
Pointed Gourd 262.5 2,130 559,020 2,150
Pumpkin 150 5,162 774,240 2,978
TOTAL 465 17,464 3,932,955 15,127
Note: Estimates for summer basket labor days and FTE jobs calculated by AVC team using data from field collected from January to
June 2014.

Figure 4: Geographic Coverage of Summer Basket Crops
Note: Map developed by AVC’s Geographic Information Systems specialist based on secondary data collected from field and from
DAE offices from January to June 2014.
PRODUCTION PRACTICES
In the Southern Delta, the summer vegetables are grown both on land and on dikes, which are the
embankments of fish ponds. Dike farming, common for bitter gourd, cucumber, and pointed gourd, is
environmentally friendly because chemical fertilizer and pesticides are not applied as frequently as in land
farming. Farmers are not keen to apply chemical fertilizers that could pollute the adjacent pond water and
jeopardize the fish that are vital to their livelihoods. Instead, these farmers use pheromone traps and other bio-
pesticides for pest control. For fertilizer, farmers typically enrich dikes with nutrient-rich soil from the bottom
of ponds when ponds are dry, a cost-efficient approach to improving the lands’ fertility without harming the
water bodies. They also use micro nutrients, such as boron and zinc, to enhance the quality and quantity of the

harvest. Improved access to information about effective use of pheromones and safe fertilizers and widespread
adoption of these cultivation practices will greatly improve the productivity and quality of dike farming.
Dike-farmed vegetables, if marketed effectively, have the potential to fill a specific market niche. Because
they are less susceptible to over-application of pesticides and fertilizers, they are safer for consumption and
thus will appeal to health-conscious consumers. These crops can fetch higher-thanaverage prices in urban
markets if properly sorted, transported, and marketed.
Dike and land farmers use hybrid seeds for higher yields when cultivating cucumbers and openpollinated
varieties when growing eggplant. Open-pollinated seeds are retained over seasons and degrade in quality.
Land farmers also do not consistently use proper fertilizer (chemical and compost), or irrigate their lands in a
timely way after planting. Input sellers, branded input manufacturers, neighboring farmers, and extension
workers from the DAE are the primary sources of information about cultivation practices. However,
information is slow to reach farmers, and farmers are slow to adopt improved practices. Timing is a chief issue
undercutting productivity, as farmers are not sowing and harvesting at the ideal times, which reduces the
quality and shelf life of their crops.
PRODUCTION SCHEDULE AND COSTS

The production schedule of selected summer vegetables varies. Table 9 presents the sowing and harvesting
schedule for each of the selected vegetables.
Table 9: Sowing and Harvesting Schedule for Summer Basket Crops

Crop Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Varieties
Bitter Gourd
Cucumber
Eggplant
Pumpkin
Pointed
Gourd
Transplanted
Aman
Potato
Tomato
Radish
Jute
**Note: Sowing and harvesting times vary by area and are affected by climate change and soil conditions. Source: AVC team
constructed the table based on secondary data collected from key informant interviews, in-depth interviews with farmers, and
interviews with officials of DAE and BARI.
AVC staff held interviews in the FTF region from January to June 2014. According to traders and other value
chain stakeholders interviewed, post-harvest losses spoil roughly 10 percent of summer basket crops. Driving
factors include harvesting at improper times (pre- or post-maturity) and storing crops in improper containers.
Farmers do not always know how to determine the proper harvest time, and the result is a crop with a reduced
shelf life. Farmers clean and sort vegetables immediately and frequently sell to middlemen (farias or
arathdars) on the day of harvest. More than one day may be required for farias and arathdars to reach the
market. Produce is often transported in bamboo baskets or in sacks, which can introduce moisture to crops that
is harmful, especially to cucumbers and bitter gourd. When dike farmers pick crops, they may rest bamboo
baskets in the ponds, which results in high moisture content. Traders spray water on the produce for freshness,

but this can be counterproductive. With no Cold storage facilities are not available along the chain, and
produce can be exposed to extreme temperatures and result in high losses.
At the assembly point, another level of sorting and grading is done. The best quality produce is sent to the
export and national markets. The remainder is sold at the local and regional markets. Summer vegetables are
transported to national destinations in sacks instead of specialty packaging. Traders use special packaging for
exports, following the buyers’ requirements.
SUMMER BASKET CHANNEL MAP AND VALUE CHAIN ACTORS

Figure 5 shows the various actors and channels in the summer basket chain. Each actor is described below.
Input suppliers
Farmers source seeds and agro-chemical products, including fertilizers, pesticides, insecticides, micronutrients,
and growth hormones, from input suppliers. Most input sellers sell all possible agro inputs, although there are a
few retailers exclusively selling seeds. Lal Teer, BRAC, ACI, and Syngenta Bangladesh have established their
own brand shops for selling inputs. Most input sellers sell products on cash and credit terms. Many provide
embedded services to producers, organizing training and workshops to disseminate information about their
products. Sometimes farmers collectively purchase inputs from companies and share among themselves,
particularly for high-cost inputs and machines.
Farmers
Farmers buy inputs from input retailers and exchange seedlings with other farmers. They plow, plant, weed,
and harvest crops, and do initial grading and sorting of their produce. Family members assist farmers in almost
all phases, as do casual workers. Farmers transport commodities from farm gate to nearby assembly points.
Large farmers often sell their produce directly from the field. Farmers most often sell their commodities to
traders on the spot market on a cash basis, but on occasion they sell vegetables directly to local markets in the
FTF zone. Farmers often combine their harvest with those of others and share transportation costs.

Figure 5: Summer Basket Channel Map
Note: AVC team developed map after numerous field visits and key informant interviews during January-August 2014.
n the FTF zone, there are approximately 50,000 dike farmers, equivalent to roughly 16 percent of the total
number of vegetable farmers. Approximately 20,000 of these are clustered in the Rupsha area of Bagerhat
district. Of the land farmers, there are approximately 121,000 tenant farmers. Table 10 presents the number of
farmers producing summer crops by crop and region, as well as the ratio of those who own land to those who
are land tenants.

Table 10: Number of Farmers Producing Summer Basket Crops
FY 2012–13
Estimated Total Number of Estimated Percentage of Tenant Farmers
Farmers by Crop
(Dike and Land Farmers)
Barisal Khulna Dhaka Barisal Khulna Dhaka
Bitter Gourd 18,376 37,068 6,983 25% 35% 18%

Cucumber 11,964 19,464 2,997 26% 25% 24%
Eggplant 13,113 61,147 22,511 26% 55% 27%
Pointed Gourd 49 46,169 6,635 7% 45% 21%
Pumpkin 20,793 44,482 9,275 25% 45% 34%
Total 64,295 208,330 48,401
Note: AVC team compiled data from interviews with deputy directors of DAE in twenty districts in the FTF region and interviews with
farmers, traders, vegetable exporters, and the Hortex Foundation from January to June of 2014.
Collection Point Traders: Typically, farmers come to local collection points to sell produce to small traders,
known as faria. On occasion, farias buy vegetables directly from the farm gate. Farias sort, grade, and pack
their aggregated vegetables and market those at the haat, or bazaars.
Commission agents, known as local arathdar, own or rent space in local markets, and take a commission—
usually about 5 to 10 percent of sales revenue—for facilitating sales. They also provide end market
information to the producers and assist farmers with financing.
Suppliers for retail chain stores and exporters procure products either from collection markets or from the
farmgate. Retailers and exporters often provide plastic bins to minimize losses during transport.
Because they cannot procure directly from farmers, long-distance traders depend on local small traders, faria
and arathdar, for a supply of vegetables to sell to urban retailers through commission agents. All traders
employ laborers for grading, sorting, loading, unloading, and then transporting to targeted destinations.
Traders sell on the spot at market and negotiate prices and terms, including selling on credit and through
mobile banking. Traders often share transportation costs.
Regional Arathdars. At national wholesale markets (e.g., Karwan, Sham Bazar, and Jatrabari Bazars in
Dhaka and Gazipur outside Dhaka) and district wholesale markets, sales are facilitated by commission
agents, also known as regional arathdar. They lease physical space in wholesale markets where they broker
deals by connecting long-distance traders with buyers. Urban buyers are typically SME retailers, super
stores, or ambulant street vendors. District buyers can be retailers or, more often, wholesalers in districts.
Wholesalers. Wholesalers purchase bulk produce from regional arathdar in district wholesale markets.
They sell their product on cash terms to sub-district retailers.
Retailers. There are four types of retailers in the formal market: (1) retailers in the Feed the Future zone that
sell in open markets catering to local market consumers; (2) ambulant street vendors who often sell door-to-
door in urban areas; (3) SME retailers in urban areas that sell in very small shops and in open markets; and

(4) “super stores” like Meena Bazaar, Agora, Unimart, and others in Dhaka and divisional towns. There are
an estimated 50 super stores in Dhaka, and 30,000 SME retailers nationwide.
Exporters. There are approximately 200 vegetable exporters in Bangladesh, of which 76 exporters were
registered with the Hortex Foundation26 in June 2014.
MARKET CHANNELS
There are three major channels in the vegetable value chain map.
CHANNEL 1: LOCAL MARKET IN PRODUCTION ZONE

Channel 1 is the shortest value chain. Approximately 22 percent of the produce flows through this channel.
Farmers usually take their produce to local markets to sell to consumers directly, or through local retailers.
Sometimes farias collect the commodities from the farm gate and sell in the local markets. The absorptive
capacity of this channel is the lowest of the three channels.
CHANNEL 2: MASS URBAN MARKET

Although it is by far the largest channel in the vegetable value chain, the mass urban market channel is short.
Although there are only three levels between the farms and consumers, there are numerous actors at all levels
of this value chain, making it difficult for any individual actor to influence market forces. Vegetables flow
through this channel from farmer through farias (traders), wholesalers, and commission agents and finally to
retailers and ambulant street vendors who service mass markets in Dhaka and other districts. Approximately
68.5 percent of the total production in the zone flows through this channel to meet the demand of urban and
district markets. On the basis of the marginal propensity to consume calculation discussed in the “National
Market” section above, this channel has relatively high absorptive capacity.
CHANNEL 3: INTERNATIONAL MARKET

This channel is a niche market for exporting premium quality vegetables to international ethnic markets that
serve diaspora communities. This is a small volume market in which the main players are approximately 200
vegetable exporters, of which 76 exporters were registered with the Hortex Foundation. The government is
encouraging growth in this market by offering cash incentives as high as 20 percent on the FOB price. In FY
2012–13, only 8 percent of the total production of the AVC summer vegetable basket was exported. Based on
recent growth in the export market (exceeding 25 percent per year), this channel has the highest absorptive
capacity of the three channels.27
MARGIN ANALYSIS
The waterfall analysis in Figure 6 shows how value is shared and distributed among the value chain actors
and considers post-harvest losses incurred at different points of the value chain. The team included just one
waterfall for cucumber, as all summer basket crops have similar gross margins for each value chain actor.
Farmers and retailers have the highest gross margin for all five summer crops. Taking cucumber as the
example, the gross margin for famers is BDT 15 per kilogram. Retailers are a close second with a gross
margin of BDT 12 per kilogram. Arathdar make an attractive commission of 10 percent of the traders’
revenue.
26
Data were collected from The Horticulture Export Development Foundation, the Hortex Foundation, which provides
marketing data via its web site (available at http://www.hortex.org/index.htm). 27 Id.

Figure 6: Gross Margin Analysis for Cucumber (in BDT/kg)
40
Waterfall analysis for cucumber
35
30
12
25
20 2
34 3
15 Gross margin
10 15
5
0 2
RevenueRetailerArathdarTradersFarmer Input
Note: The AVC team developed the waterfall chart from interviews with market actors during market assessment, January–June 2014.
Table 11 presents a summary of the AVC team’s market analysis of summer vegetables. All basket crops are
profitable for the farmer, with eggplant and pumpkin as the most profitable (with a 160.6 percent and 113.5
percent profit margin, respectively).
Table 11: AVC Market Assessment of Summer Vegetables (in BDT)

Bitter Pointed
List of Expenses Cucumber Eggplant Pumpkin
Gourd Gourd
Land Lease Value 24,000 24,000 24,000 24,000 24,000
Land Preparation 2,273 5,000 3,000 3,000 970
Input Cost 67,167 44,719 72,561 8,106 33,621
Irrigation Cost 6,061 3,125 11,111 2,424 6,061
Labor 29,697 31,250 57,778 5,455 30,909
Transportation 4,167 2,500 8,889 2,424 3,333
Total Cost of Production 133,365 110,594 177,339 45,409 98,894
Total quantity produced (in kg) 9,091 10,000 35,556 9,697 7,273
Farm-gate price/kg 19 17 12.5 10 17
Total Revenue 172,729 170,000 444,450 96,970 123,641
Profit 39,364 59,406 267,111 51,561 24,747
Profit Margin 29.5% 53.7% 160.6% 113.5% 25.0%
Note: AVC staff conducted market assessment from January to June of 2014.
DYNAMIC TREND
The study team identified one dynamic trend, namely that farmers lack access to information about improved
production and post-harvest practices, which limits their ability to take advantage of increasing consumer

demand for higher quality, nutritious foods. The potential to earn higher profits will incentivize farmers and
traders to improve production yields, minimize post-harvest losses, and refine marketing to ensure highest-
quality produce fetches top prices.

In this section, the AVC staff discusses opportunities for upgrading the summer basket value chain and the
related constraints.
Opportunity #1: Capitalize on high export growth by improving production and transport of high quality
produce to countries with significant presence of ethnic Bangladeshi communities. The 29 percent growth in
the export channel signals increased demand by ethnic Bangladeshi communities living abroad. This market
opportunity can be exploited with increased productivity, better quality control, vertical linkages among the
actors, and other logistical support.
The following are specific constraints to realizing the full potential of this opportunity:
• Insufficient information and training to improve cultivation and post-harvesting practices. Dike and land
farmers lack access to information about modern production practices and proper use of inputs. Moreover,
roughly 10 percent of harvest is lost because of poor postharvest handling
• Lack of quality control system along the chain results in inability to consistently meet demand for premium
quality vegetables. Because of a limited understanding of the market potential of premium quality
vegetables, there is no quality control system is in place—formal or informal—to standardize production and
handling. The widespread adoption of quality standards will require cooperation both vertically and
horizontally and lead firms to drive change, which may include, but is not limited to, helping exporters
obtain phytosanitary certification (e.g., Codex Alimentarius Commission, ISO/HACCP).27
• Inadequate air cargo space for perishable vegetables has become a bottleneck for increasing export volume.
Exporters work mostly with local airlines that have limited or no space for vegetable cargoes, which limits
the volume of vegetables that Bangladesh can export.
• Limited access to credit for escalating the existing production to a commercial scale. Vegetable farmers
usually take high-interest rates and weekly repayments loans from traditional micro credit NGOs.
Nongovernmental organizations such as the Rural
Reconstruction Foundation (RRF) and Jagoroni Chokro Foundation (JCF) offer crop specific agricultural
loans with cash flow based repayment schedules. However, many of the farmers are not aware of the
availability of these specialty loan products. Bangladesh Bank has identified eggplant, bitter gourds, pointed
gourd, and pumpkin as high value crops and offers agricultural loans at less than 13 percent rate. However,
farmers rarely can secure these loans because of the lengthy and complex processing of loan applications and
the requirement of collateral and speed money.
27
Phytosanitary certification is used to attest that consignments meet phytosanitary import requirements and is undertaken by an NPPO
(National Plant Protection Organization). A phytosanitary certificate for export or for re-export can be issued only by a public officer
who is technically qualified and duly authorized by an NPPO (ISPM 12). The Codex Alimentarius is a collection of internationally
recognized standards, codes of practice, guidelines, and other recommendations relating to foods, food production, and food safety.
ISO (International Organization for Standardization) is an international standardsetting body composed of representatives from various
national standards organizations. HACCP is a management system in which food safety is addressed through the analysis and control
of biological, chemical, and physical hazards from raw material production, procurement, and handling to manufacturing, distribution,
and consumption.

Opportunity #2: There is an opportunity to increase vegetable production and serve the growing demand for
vegetables in the national market as consumers increasingly recognize vegetables as an important component
of their diet. Growth in population and GDP is also driving the increase in national demand.
The following constraints are barriers to achieving this opportunity.
• Use of low potency vegetable seeds results in poor yield per hectare. When farmers use openpollinated
varieties of seeds, they often used seeds retained over multiple seasons, which degrades the quality. Better
education is needed along with access to high-quality seeds at affordable prices.
• Farmers lack access to off-season varieties and varieties with longer shelf life. Over planting of the leading
varieties can result in vegetable gluts in the peak season, which depresses prices and farmers’ profit margins.
If farmers receive information about and access to early varieties, they can regulate the seasonal fluctuations
in supply and fetch better prices year round.
• Irresponsible and inefficient post-harvest practices lead to substantial loss beyond farm gate. This
duplicates the constraint under Opportunity #1 above.
• Lack of adequate preservation facilities for vegetables forces farmer to sell crops shortly after the harvest,
depriving them of a good price. The shortage of storage contributes both to market gluts and to high post-
harvest losses.
Opportunity #3: Capitalize on increased health awareness among the vegetable consumers and a
growing demand for safe vegetables. Dike farmers are unaware that their produce has higher potential
value because of organic-like production. Similarly, consumers are unaware of greater food safety of
summer basket crops produced on dikes. Developing a common production and sales strategy, alongside
contractual linkages to major urban super markets and a public awareness campaign, could significantly
improve dike farmers’ incomes.
• Inadequate knowledge of farmers regarding fertilizer and pesticide dosage. While dike farmers often use
forms of pesticides and fertilizers that are not harmful to fish in adjacent water bodies, they are not
knowledgeable about Good Agricultural Practice (GAP) and similar standards. Dike farmers need additional
information about optimal fertilizer and pesticide dosages for productivity and quality.
• Absence of trusted marketing channel for marketing safe vegetables at premium price. As there is no formal
marketing channel to designate “safe” vegetables in the market, value chain actors are not able to fetch
premium prices from health-conscious consumers willing to pay a premium for higher-quality produce.
• Marketing companies of agricultural commodities do not have experience and know-how for branding fruits
and vegetables. Same as above.
• Limited access to credit for escalating the existing production to a commercial scale. Vegetable farmers
usually secure high-interest loans with weekly repayment schedules from traditional micro credit NGOs.
There are NGOs, such as the Rural Reconstruction Foundation (RRF) and Jagoroni Chokro Foundation
(JCF), which offer crop-specific, cash flow agricultural loans. Many farmers are not aware of the availability
of these specialty loan products. Bangladesh Bank has identified eggplant, bitter gourds, pointed gourd, and
pumpkin as high value crops and offers agricultural loans at less than 13 percent rate. However, farmers
rarely can secure these loans because of the lengthy and complex processing of loan applications and the
requirement of collateral and speed money.

CHAPTER 5: MANGOES

INTRODUCTION
Bangladesh has a long history of mango cultivation. Although Bangladesh is one of the top mango producers
in the world, it exports only negligible amounts of mango with most production consumed in the national
market. National demand for mango is very strong, and the country imports small quantities of mangoes
from Pakistan, India, and Thailand during off-season periods. Consumers in Bangladesh prefer mango more
than baked foods and other sweet items, and sales of these items decrease during mango harvest season. The
price of mangos has been increasing, despite the continued increase in production over the past decade.
Mango is a high value crop that secures considerable profit for the growers. North Bangladesh is home to the
country’s leading mango production hubs. Rajshahi and Chapainawabganj districts produce high-quality
mangos that are preferred by consumers because of their taste. However, mango producers in the South enjoy
a comparative advantage of being able to grow early season varieties and sell them on the market at the time
when the price is highest. In the South, local mango varieties are harvested fifteen to twenty-five days before
the peak season starts. As a result, farmers in the South have been increasing their investments in mango
orchards and mango production to take advantage of this opportunity. Approximately 46,000 farmers (based
on estimates of 2.5 farmers per hectare of land and 18,377 hectares of mango orchards)28 grow mangoes in
the FTF target zone in the South.
The rationale, along with the ranking matrix, for selecting the mango value chain for AVC project support,
and the industry analysis based on the Porters’ Five Forces model, are described below.
SCORING MATRIX
In its overall ranking of value chains, the AVC team has given mango a score of 76 out of 100, as shown in
Table 1.
Table 1: AVC Ranking of Mango
Mango
Criteria Data source Weightage Score Explanation
Scale BBS 10 10 About one billion dollar industry; the share of the
Southern Delta is approximately 12 percent
Annual Market BBS, AVC 10 10 Mango industry is growing at approximately 4
Growth market percent per year. AVC field interviews indicate a 20
assessment percent growth of mango industry in Southern
Bangladesh.
Scope of Value Key 10 8 Significant scope for value addition; in post-harvest
Addition Informant and in processing. The trend of using mango
Interview processing (few mango items) is increasing.
Export/ Trade map 5 3.5 Bangladesh imports approximately 30 thousand
Import and others MTs of mangoes annually; usually from India,
substitution Pakistan and Thailand .
potential
Agro Ecological Field recon 5 3.5 The numbers of mango orchards are growing in
suitability and KII Southern Delta. Farmers in Southern Delta believe
that the soil and climate in the zone are quite
suitable for growing mangoes.
28
AVC collected statistics from Bangladesh Bureau of Statistics, agricultural wing, 2012 (unpublished).

Income potential Team 10 4 IRR is over 40 percent.
assessment
Women and Reports and 10 3 Women are less involved in mango value chain.
Youth Inclusion databases However, a large number of youths are involved in
all steps of the sector.
Outreach(no of Reports and 5 5 Southern Delta is the home to approximately 46
households databases thousand mango farmers.
impacted
Job Creation Team 10 8 Estimated number of mango farmers in FTF region
assessment is 45,942 with 17,670 full time equivalent job
options. The upgrading of the industry is likely to
create significant jobs in the sector.
Nutrition 10 8 Mango is a highly nutritious crop. It is rich in
vitamin A as well as other micronutrients.
Environmental 5 4 Large mango trees contribute in up-grading air
Sustainability quality
potential for 10 9 Farming, processing, marketing all are conducted
private sector by private sector enterprises.
leverage
Can results be (Y/N) Y Mango is an annual crop. Appropriate interventions
achieved within in production and post-harvest phases can generate
the available quick results.
resources and
timeframe?
Total (100) 76

PORTER’S FIVE FORCES ANALYSIS FOR MANGO
Below, the AVC team considered how the five factors—supplier power, buyer power, competitive rivalry,
threat of substitution, and threat of new entry—are at play for Bangladesh’s mango value chain.
Mango is approximately a USD 1 billion industry in Bangladesh. It’s regarded as the king of the fruits. It
replaces many snack items in mango season. In FY 2012–13, consumption was approximately 1 million tons
per year and growing with the growth in GDP and population. Ninety percent of mangoes are consumed in
Bangladesh as a fresh commodity. Households, restaurants, and hotels consume various kinds of mango
juices and drinks. Mango is also being used as a raw material for food processing industries. Bangladesh
imports about 5 percent mangoes, mostly from India and also from Pakistan and Thailand. Mango farming is
very profitable. More than 40,000 farmers from the FTF zone are involved in the industry.

END MARKET ANALYSIS
GLOBAL MARKET
Global mango production has almost doubled in the past decade, reaching 42 million tons in 2012 (see
Figure 1). Between 2005 and 2012 global mango production grew on average at 3.6 percent per year.
Asia is the largest mango producer, representing more than three-fourths of the global production,
Figure 1: World Mango Production Trend (2000–12)
Note: AVC team developed figure with data from FAOSTAT (available at http://faostat.fao.org/site/567/default.aspx#ancor).
followed by the Americas and Africa with about 13 and 10 percent production, respectively. On the Asian
continent, India is the largest producer (15 million tons), followed by China (more than 4.5 million tons),
Thailand (2.6 million tons), and Pakistan (1.9 million tons).
As shown in Table 2, South Asian countries together produce 18.42 million tons of mangoes, which accounts
for more than 43 percent of world production. Mango production in Bangladesh has experienced steady
growth over the past decade. However, the yields are lower than other producers in the region.
Table 2: Global and Asian Fresh Mango Production (2005–12)

Growth Area Harvested Yield Production Share of
Rate 2005– (thousand (tons/hectare) (million tons) World
12 (%) hectares) Production
Bangladesh 6.16 124 7.72 0.95 2.24
China 1.03 476 9.61 4.57 10.84
India 3.69 2300 6.63 15.25 36.19
Pakistan 2.20 174 11.21 1.95 4.63
Thailand 5.66 318 8.33 2.65 6.29
South Asia 4.19 2649 6.95 18.42 43.71
World 3.61 5167 8.16 42.14 100.00
Note: AVC team compiled data from FAOSTAT (available at http://faostat.fao.org/site/567/default.aspx#ancor).
Mango is a fruit that is mainly consumed locally, and only 4 percent of world mango production is traded. In
2013, the total value of global mango exports was USD 1.3 billion. The world’s major mango importers in
2013 were the United States (436,085 tons) and Europe (225,000 tons). India, the largest mango exporter,
increased its export volumes almost tenfold between 2000 and 2013. Pakistan, the Philippines, and Thailand

are also notable exporters. Bangladesh exports negligible amounts of fresh mangoes and processed mango
products.
NATIONAL MARKET
Market Overview
The national market for mangoes is valued at approximately USD 950 million, including fresh mangoes and
processed mango products. In 2013, Bangladesh produced 956,867 tons of mangoes.
Figure 3: Processed Mango Consumption

Consumption (2012–13) (2012–13)
Note: AVC team created chart from different sources of data, including NBR, BBS, and AVC market assessment
done from January to June 2014.
Figure 2: Fresh and Processed Mango

More than 98 percent of mango production is consumed fresh, while consumption of processed mango
products accounts for a little less than 2 percent (Figure 2). Mango pulp is used for preparing mango juice
and mango bar (a fruit snack bar), while mango pickle and mango chatney (a type of pickle that cannot be
preserved for long periods), are processed from mango brine. Among processed mango products, mango
pulp has the highest market share at almost 97 percent (Figure 3). As shown in Table 3, all local mango
production is consumed nationally. Of the 894,323 tons produced, the mango processing industry used
62,544 tons. Processors use low-grade mangoes for processing items; the average per kilogram price of low-
grade mangoes is BDT 20. Although Bangladesh does not export considerable amounts of mangos, in 2013,
it imported about 30,000 tons of mangoes during the off-season period, mainly from Thailand and India.
Table 3: Mango Consumption in 2013 (in tons)
Mango Fresh 894,323 1.00 894,323 30,000 10 924,313 1000 924.31

Mango Processed 62,544 3.97 7.37 62,541 250 15.64
Mango Pulp* 30,200 2.00 60,400 250 15.10
Mango Brine** 1,930 1.11 2,144 250 0.54
Note: AVC compiled data from different sources, including NBR, BBS, and an AVC market assessment conducted from January to
June 2014.
*100 kg mangoes produce 50 kg mango pulp. **100 kg mangoes produce 90 kg mango brine.

Market Segments and Consumption Trends
Fresh mangoes. The national market for fresh mangoes is valued at USD 924.31 million. Mango production
is almost equal to consumption and increased at an average rate of approximately 5.5 percent per year from
2005 to 2013. In 2013, annual production of mangoes reached approximately 1 million tons compared with
0.62 million tons in 2005 (Figure 4). Despite increased production, the price of fresh mangoes also increased
from BDT 15 in 2009 to BDT 20 in 2013. Mango is the first fruit of choice in Bangladesh. It is highly
popular with consumers and is always in high demand.
Figure 4: Mango Production Trend (2005–13)
Note: AVC team created chart from different sources of data, including NBR,
BBS, and AVC market assessment done from January to June 2014.
Figure 5: Mango Consumption with Income
Source: BBS, Household Income & Expenditure Survey (Dhaka, Bangladesh: BBS)
(available at http://www.bbs.gov.bd/PageReportLists.aspx?PARENTKEY=66).
Consumption of other fruits and sweets goes down during the mango season. Consumers prefer premium
varieties of mangos grown in the North of the country because of their superior taste. However, consumers
are willing to pay premium prices for mangos that arrive on the market early in the season. Recently,
consumers have become increasingly aware of the health and safety concerns related to the use of
preservatives by mango farmers and traders to reduce perishability during transport and trading. Consumers
are willing to pay premium price as high as BDT 150 per kg for mangos that are safe. However, at the
moment there is no mechanism for ensuring quality and safety of mangos through appropriate branding or

certification. Consumer demand for fresh mangoes has been growing with the increases in the GDP and
incomes, and is expected to continue growing.
Based on the 2010 Household Income and Expenditure Survey (BIHS), the AVC team calculated the impact
of increasing incomes on fresh mango expenditure. Using the data from the survey, the team calculated a
marginal propensity to consume fresh mangoes at 2.9 percent, which means that for every taka of extra
income, 0.029 taka are spent on fresh mangoes. Figure 5 shows per capita expenditure per month on fresh
mangoes increases with increased incomes.
The net impact of this increase in income, based on the current growth rate in real GDP of 4.7 percent per
year, is shown in Table 4. In 2013, the total annual increase in real GDP was USD 6,175 million. It indicates
that fresh mango consumption has increased by approximately USD 180 million. The annual effect of
income increase on fresh mango demand in 2013 was therefore 19.5 percent.
Table 4: Annual Income Effect on Mango Demand in Bangladesh, 2013–14

GDP per Annual Changes in Population Total Changes in MPC Growth in
capita Growth in RGDP/Cap in Million RGDP/Cap (in of Mango
2013(USD) RGDP/Cap (USD) (2014) million USD) Mango Demand (in
million USD)
829 4.70% 38.963 158.5 6,175 2.9% 180.31
Total fresh mango market = USD 924.31 million
Annual Income effect on fresh mango demand =19.5 %
Note: AVC team combined data from World Bank Bangladesh chapter (available at
http://data.worldbank.org/indicator/SP.POP.TOTL) and Household Income and Expenditure Survey (published by Bangladesh Bureau
of Statistics) for calculating marginal propensity to consumption for mangoes.
Processed mango products

The market for processed mango products is valued at USD 15.6 million (Table 3). Many also process
mango bar, chutney, or pickle at home. In this report AVC staff are only considering the market value of
industrial processed items. Mango processing industry uses the cheapest and lower quality varieties of
mangoes. The market for processed mango products is therefore very small and, according to processors
interviewed for this study, has experienced slow growth with the exception of mango bar production, which
has been increasing at 15 percent per year.
SEASONAL CONSUMPTION PATTERN AND PRICES

As shown in Figure 6, the price of fresh mangoes has been increasing from 2009 to 2013. Mango is available
on the market between May and August, and the market price is highest during in first few weeks of the
season before the produce from the key production hubs in the North enters the market. Consumers are eager
to buy mangoes as early as possible, which gives farmers in the South a price advantage, as they are able to
produce early varieties, harvesting as early as mid-April, and sell their produce while the price is at its
highest. Retail price of premium varieties during the peak season is BDT 80 per kg. Early season mangoes,
even of not premium variety, can be sold for as high as BDT 150 per kg. During the harvest season, other
non-premium varieties of fresh mangos are sold for BDT 50 to 60 per kg. Processed varieties are sold for
BDT 20 per kg.

Figure 6: Price Trend of Mango (2009–13)
Note: AVC developed figure using data from Department of Agricultural Marketing (DAM), Ministry of Agriculture, Government of
People’s Republic of Bangladesh (available at www. dam.gov.bd/).

PRODUCTION IN THE FTF ZONE AND THE REST OF BANGLADESH
Mango is the second largest fruit in Bangladesh in terms of fruit cultivation area, with bananas occupying 42
percent of the area and mango 19 percent. Rajshahi, Chapainawabganj, and Dinajpur are the main mango
growing regions in Bangladesh. Chapainawabganj alone produces almost 200,000 tons of mangoes on
23,282 hectares of land. The total number of farmers that grow mango in Bangladesh is estimated at 306,280,
with around 45,942 of them located in the FTF zone.
According to BBS data presented in Table 5, total production of mangos in the South was 118,644 tons in
2012–13 and has had a negative growth rate since 2008. However, AVC field assessment suggests that many
new mango orchards have been established in last five years in the South, almost doubling the number of
existing orchards. According to focus group discussions and field interviews, farmers are investing in mango
cultivation to take advantage of the South’s ability to produce early season mangoes, and mango production
in the South is growing at about 20 percent per year.
Table 5: Mango Production in Bangladesh and the FTF Zone (2012–13)

Area (Hectare) 18,600 124,000
Yield (Tons/ Hectare) 6.38 7.72
Production in Tons 118,644 956,867
Average growth percentage (Production) 2008– 2013 -2.16 3.68
Market value (USD million) 119 957

FTF share of land under mango cultivation 15%
Percentage production in the FTF zone 12.4 %
Note: AVC staff prepared table with data from Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: BBS, 2005,
2011), 123–35, 124–36.

Table 6: Major Mango Producing Hubs in the FTF Zone
Districts Production (tons)
Rajbari 18,030
Jessore 9,403
Jinaidah 10,732
Narial 8,490
Meherpur 9,468
Satkhira 7,553
Patuakhali 8,620
Note: AVC staff compiled table with data from Bangladesh Bureau of Statistics, agricultural wing (unpublished data).
The Southern Delta constitutes 15 percent of the total mango cultivated area in Bangladesh and 12 percent of
the production volume. In 2011–12, average mango yield per hectare in Bangladesh was 7.72 tons, and 6.38
tons in the Southern Delta. Overall mango productivity in Bangladesh is lower than that of other producers in
the region, with Pakistan, for example, producing yields of 10 to 11 tons per hectare. Lower yields are
mainly a result of poor orchard management practices. Farmers in the Southern Delta are using traditional
practices and rarely use improved practices, such as modified basin method29 or hole irrigation system.30
Commercial mango cultivation is relatively new in the Southern Delta. Mango producing areas in the South
include Rajbari, Patuakhali, a few districts in Jessore region, and Satkhira.
29
When the trees are in full bearing stage, generally two irrigations are needed in modified basin method—one at full bloom and
another at pea stage of fruit. This is helpful in reducing fruit drop and improving fruit size. In modified basin method a dike should be
constructed around each tree to prevent water run-off during irrigation.
30
Irrigation may be applied using hole system also. In this system, four 20 cm deep and 15 cm wide holes are dug 1.5 to 2 m away from
the trunk and holes are filled first to capacity with water. After filling the last few holes, water poured earlier will be dried and the holes
should be filled again.

PRODUCTION SCHEDULE
Farmers plant both short and long duration mango varieties. Short duration varieties bear commercial
quantities of fruit within five years, while long duration varieties take ten years to produce commercial
quantities of product. Consumers prefer the taste of long duration varieties and are willing to pay a premium
price for them. Sometimes advanced farmers mix different varieties (early and long duration varieties) of
mangoes in an effort to improve the overall profitability of their orchards.
Some advanced farmers also practice inter-cropping in their mango orchards to increase their profits while
the orchard is not producing. Cultivation of pulses, mustard, vegetables or medicinal plants in mango
orchards increases overall income for the growers. In the first three years, when mango trees are small and
there is less possibility of shade, farmers grow winter crops including winter vegetables and pulses. They
also produce rice when it needs less irrigation in the orchard during these periods. Between three to five
years, farmers produce crops that are less susceptible to shade such as, okra, arum, red-amaranth, chili,
ginger, and turmeric. When mango trees become big, farmers produce cattle grass mainly for household use
or sometimes for sale.
Two types of mango cultivation are used in Bangladesh: (1) Elite mango varieties propagated through
grafting and other vegetative means known locally as “Kalam Aam,” and (2) varieties grown by planting
saplings, or small trees, known locally as “Guti Aam.” Grafting produces high yields and is commonly used
for commercial fresh mango production. The second type of cultivation produces lower yields and is mainly
used for producing processing varieties of mangoes. Farmers purchase saplings either from the nurseries or
from the traders. The number of days needed for fruit to mature depends on the variety and the climatic
conditions. However, in general, fruits mature 90 to 130 days from the fruit-set stage. Some of the common
varieties of mango grown in Bangladesh are listed in Table 7.
Table 7: Available Mango Varieties in Bangladesh

Harvesting Period Variety
Early season varieties Mid-May to mid-June Gopalbhog, Brindabani
Mid-season varieties Mid-June to late-June Himsagar, Mohanbhog,

Khirsapat, Langra, Misribhog,
Krisanbhog, Kohitoor,
Lakhanbhog, Daseri
Late season varieties July to mid-August Fazli, Ashwina, Kuapahari,
Chausa, Amrapali
Note: AVC team developed this chart from key informant interviews during their market assessment from January to June 2014.
Fifty percent of mangoes produced in the South are premium varieties (such as Langra and
Himsagor), 10 percent are processing varieties (not produced commercially), and 40 percent are Amrapali
variety. Although Amrapali is a late season variety and not premium quality, it is becoming increasingly
popular with producers in the South, where it can be harvested in early season because of climatic conditions
there. Producers in the South can receive a high price, before the mangoes produced in the North enter the
market.

PRODUCTION COST AND PROFITABILITY
Mango is a labor-intensive crop. Labor is required for orchard nursing and harvesting, and for safeguarding
the orchards, and accounts for about 65 percent of the total production cost for one hectare of orchard.
Mango is a long duration crop. Table 8 presents the estimated profit margin calculations for a ten-year
orchard, using data collected from several advanced farmers in the South during the AVC assessment. The
example assumes a 1.4 hectares mango orchard. Table 9 includes calculations for production costs and return
during the last year, when the orchard starts producing commercial quantities of mangoes. In this example,
the farmer produces mixed varieties, such as Amrapaly, Langra, Himsagor, and some local varieties, and
sells his produce at the local market. Transportation costs to market are included in costs. Land lease value is
not included in this calculation as the farmer produces on his own land. However, in Kotchadpur, Jinaidah
district, land lease value is BDT 60,000 to BDT 75,000 per hectare.
During the first two years this farmer did not get any return from the orchard, while he invested BDT 58,000
for seedlings and other costs, such as land preparation, tillage, fertilizer, irrigation, and fencing. In the third
year, the farmer cultivated other crops in the orchard, such as rice and mungbeans, and netted BDT 8,000
from selling these crops. The total outflow in ten years is around BDT 0.4 million while total inflow from the
orchard is around BDT one million. The net flow of this orchard is BDT 578,220 constituting an internal rate
of return (IRR) of 42 percent. It means that the annual rate of return for the investment is 42 percent. The net
present value (NPV) of the ten-year mango orchard is BDT 115,736.82, considering the 18 percent
discounted rate and excluding its terminal value.
The forecasted cash flows project that the mango farmers will break even in the sixth year.
Table 8: Cash Flow of a Ten-Year Mango Orchard (1.4 Ha)

Year Outflow (BDT) Inflow (BDT) Net flow (BDT)
1 50,000 0 -50,000
2 8,000 0 -8,000
3 12,000 20,000 8,000
4 44,000 50,000 6,000
5 49,000 75,000 26,000
6 50,000 90,000 40,000
7 54,000 120,000 66,000
8 56,000 180,000 124,000
9 58,670 234,000 175,330
10 61,110 252,000 190,890
Total 442,780 1,021,000 578,220
IRR* 42%
NPV** 115,736.00 BDT
Note: Data compiled by AVC staff during field assessment survey, January to June 2014.
* IRR (internal rate of return).
* *NPV (net present value) of an investment based on discounted rate and a series of future payments (negative values) and income
(positive values).

Table 9 calculates the estimated annual return from one mango orchard. Farmers often plant a mix of
different mango varieties to minimize risk. The example used in Table 9 assumes an orchard planted with
mixed varieties and uses an average farm gate price to calculate income. The total production was 18,000
kilograms (18 tons) per hectare, and the total income was BDT 630,000, based on an average per kilogram
price of BDT 35 (or BDT 35,000 per ton).
Table 9: Cost of Production and Return per Hectare of Mango Orchard
Item Fresh Mango

Unit Rate (BDT/kg) Cost (BDT)
Kg Person days Number
Number of seed trees 450

Orchard nursing 50 200 10,000
Irrigation 7.5 1,000 7,500
TSP (kg) 90 27 2,430
MoP (kg) 45 15 675
Boron (kg) 7.5 400 3,000
Urea (kg) 45 16 720
Zinc (kg) 7.5 160 1,200
Medicine (spray) 10 2,000 20,000
Labor-Harvest (person days) 57.5 200 11,500
Carrying cost (in 20 kg crates) 18,000 0.5 9,000
Arathdar (commission agent) 18,000 0.25 4,500
Safeguarding orchards 150 200 30,000
Land lease value 0

Total costs 100,525
Outputs
Fruits 18,000 35 630,000
By-products (kg) 0
Net return 529,475
Note: AVC team compiled data during field assessment survey from January to June, 2014.
The major steps in post-harvest handling for mangoes include harvesting, washing and cleaning performed
by farmers, and sorting, grading and packing usually performed by both farmers and traders. Farmers in the
South frequently harvest their produce before maturity. Most do not use recommended doses of ripening
agents, such as carbide. Farmers also rarely follow improved washing and cleaning techniques for using hot
and cold water treatment after harvest. Only a few farmers are using appropriate packaging, such as crates
for long-distance transportation, and many use bags instead. Only about 50 percent of farmers, mostly in the
North, are estimated to sort and grade their produce. Bangladesh has no cold storage facilities for mangoes.

Because of the capital intensive nature of cold storage and the advanced technology required for hot and cold
water treatment facilities, to date no private sector investment has taken place in cold storage.
Processing
The mango processing industry in Bangladesh includes four key products: mango juice, mango bar, pickle,
and chatney. Ice cream producers also use mango flavor for producing mango ice cream. There are ten to
twelve mango processing firms in Bangadesh, most with low production capacity. Processing companies do
not have specialized preservation facilities. The key mango processing companies and their production
capacity (as of FY 2012–13) are shown in Table 10.
Table 10: Production Capacity of Mango Processing Companies in Bangladesh (2012–13)

Mango Pulp Mango Brine
Company Quantity (Tons) Company Quantity (Tons)
PRAN 24,000 PRAN 1,000
Vegan Agro 2,200 BD Food 200
Chapai Agro 1,500 Square 100
Hashem Food 1,000 Chapai Agro 100
Abdul Momen Ltd 600 Hashem Food 100
Akij Pulp Processing 500 Promi 100
Bonoful Co. Ltd 200 Masafi Food & beverage 100
Green Tech Ltd 200 Chapai Green harvest 100
Ahmed 100
Vegan Agro 30
Total 30,200 Total 1,930
Note: AVC team compiled data from key informant interviews conducted during market assessment, January to June 2014.

MANGO CHANNEL MAP AND VALUE CHAIN ACTORS
Figure 7 shows the various actors and channels in the mango value. Each actor is described below.
Figure 7: Mango Channel Map
Input suppliers: There are two types of input suppliers active in the mango value chain. One type includes
suppliers of fertilizer, medicines, pesticides, hormones, and equipment, such as irrigation tools, spray
machines, and spare parts. These companies procure inputs from private sector suppliers and government
institutions at a wholesale price and sell them to farmers at the village or community level for a retail price.

The other type of input suppliers is seedling sellers. Seedling sellers either produce seedlings and sell directly
to farmers or to other seed sellers or procure seedlings from different seed companies and seedling growers
and sell them in the market. Input sellers mostly perform cash transactions and sometimes provide credit to
farmers for a period ranging from seven days to one month, depending on the sales volume.
Farmers: Different types of farmers engage in mango cultivation. It is estimated that only about 20 percent
of farmers are engaged in the production cycle from planting orchard trees to nurturing trees to selling
mangoes. About 50 percent of farmers lease land for mango cultivation for a fee. Mango farmers who own
land usually rent land to other mango growers for a period of three to four years. Farmers either sell mangoes
after harvest or they sell fruit-bearing trees to other farmers. Many entrepreneurs are engaged in purchasing
and selling mango orchards at different stages of production.
Sale of orchards under cultivation by farmers at either flowering or fruit-bearing stage is common. Farmers
who purchase an orchard at flowering stage engage in further cultivation of the orchard until it comes to
fruition and may further resell the trees once again after fruition. The final buyer of the trees then takes care
of the orchard, harvests the trees, and finally sells fresh mangoes to buyers. Farmers sell mangoes to different
value chain actors including beparis (small traders), large traders, arathdars (commission agents), and
sometimes to processing company suppliers. Farmers also sell mangoes directly to the consumer.
Traders: There are several types of traders active in the mango value chain.
• Beparis/Small traders: Small traders purchase mangoes from farmers and supply to large scale traders,
processing company suppliers, and local arathdars. They mainly trade at the local level, and all the
transactions take place in cash. Usually several small traders purchase mangos in a group and share their
transportation costs from farm-gate to market. It is estimated that about 5 percent of the mango trade goes
through small traders.
• Large traders: Large traders procure mangos from farmers and small traders and sell directly at national
and regional markets, as well as to arathdars, or commission agents, and processing company suppliers.
Large farmers handle an estimated 45 percent of the mango trade. Traders usually grade and sort the produce
by quality and variety and sell each separately. All transactions take place in cash, although sometimes
traders may offer credit for a period of up to one week.
• Arathdars, or Commission Agents: Arathdars act as middlemen in the chain where they provide space to
farmers and farias to sell their produce to large traders and wholesalers. They also facilitate linkages between
sellers and national and regional traders in return for percentage commission from both parties, which is
received in cash at the time of the transaction. Arathdars sometimes purchase produce from farmers. Local
arathdars are based in the production hub area, while national and regional arathdars operate in urban areas.
All arathdars maintain the same commission rate and sometimes act as a guarantor in credit transactions.
Wholesalers: Wholesalers operate on the regional and national level and often occupy fixed space in urban
wholesale markets. They procure mangoes in bulk from local arathdars and large traders and sell directly to
retailers. All transactions take place in cash.
Company suppliers: Supply agents supply fresh mangoes to processors based on the procurement
requirements, and purchase mangoes from farmers and small and large traders. Transactions take place in
cash. Company suppliers also perform grading and sorting of fresh mangos according to the processor’s
requirements.
Processors: There are two types of processing companies operating in the mango value chain:

• Processing companies with captive pulp facilities: Companies, such as Pran, Hasem, and Akij, produce
mango pulp and brine and then manufacture final products, such as mango juice, bar, pickles, and chatney.
Some companies, such as Square Ltd and Ahmed, only produce brine that they use to produce mango pickle.
These processing companies purchase mangoes during the harvest season to produce pulp and brine and then
manufacture the final product throughout the year. These companies mostly procure fresh mangos on a cash
basis from their suppliers or sometimes directly from farmers. They have their own distribution channels
through which they sell their finished products to retailers. Processing companies with captive facilities
account for 85 percent of processed mango products.
• Processing companies without captive facilities: These companies produce only pulp and brine and then
supply it to companies that make finished mango products. Some companies concentrate on producing only
pulp or only brine, while some produce both. Companies usually procure fresh mango from their suppliers
and sometimes procure directly from farmers. They include Vagan Agro, Chapai Agro Ltd, and Abdul
Momen. Processing companies without captive facilities produce about 15 percent of processed mango
products.
Distributors: Distributors are active in the processed mango products market segment and supply products to
retailers or sell directly to consumers. One distributor can work for more than one processing company.
Retailers: Retailers are the last link in the value chain. Retailers of fresh mangoes include fresh fruit vendors
and chain shops. Regional and national retailers purchase fresh mangos from wholesalers and arathdars.
Local retailers usually procure mangos directly from farmers and small traders to sell at the local level.
Retailers purchase mangos for cash. They often purchase products jointly with other retailers to share
transportation costs. Retailers of processed mango products include urban grocery stores and large chain
stores. They usually buy products from the distributors at a wholesale price and sell at the retail price.
Importers: Importers in the mango value chain include food and beverage importers that import juice and
supply it to retail stores. Some large chain stores import directly and sell products to end consumers at a
retail price.
MARKET CHANNELS
The two key market channels in the mango value chain focus on the national market:
CHANNEL 1: FRESH MANGOES (NATIONAL MARKET)

This is the dominant channel in the domestic market and represents 98 percent of total mango production. It
has the highest total market value and per unit price. Products in this channel are sold either at local markets
at the production hub or at regional and national markets. Around 3 percent of the production volume is
consumed directly by households, with the rest of production reaching the final consumer through fresh fruit
vendors and chain shops. It is estimated that about 20 percent of trade takes place through wholesalers and
about 80 percent through arathdars.
CHANNEL 2: PROCESSED MANGO PRODUCTS (NATIONAL MARKET)

This channel accounts for only two percent of the total production. This is also the lowest value channel, as
processors prefer lower cost mango—which often are highly variable in taste, color, and size--for industrial
use. Per unit price of the final product is also one fourth of the price of fresh mangoes. This is a small volume
market in which the main players are company suppliers and processing companies. Processed products
reach final consumers through grocery stores and chain shops.

MARGIN ANALYSIS
The waterfall chart in Figure 8 describes how value is distributed among the mango value chain actors for
fresh mango production and considers losses incurred at different points along the value chain. Out of total
revenue for 1 kg of fresh mangoes, farmers make the highest gross margin (BDT 33), followed by traders
(BDT 19) and retailers (BDT 14). However, traders and retailers incur significant transportation expenses
and bear the burden of waste, usually at 5 to10 percent.
Figure 8: Waterfall Analysis for Fresh Mango (in BDT), January to June 2014
80
70
60 14
50
19
40
Gross margin
68
30
20 33
10
0 2
Revenue Retailer Traders Farmer Input
Note: AVC compiled data from market assessment conducted from January to June, 2014.
DYNAMIC TRENDS
The study team identified two key dynamic trends in the domestic market for mangoes:
Dynamic Trend #1: Market for fresh mangoes has been growing continuously and consumer demand for
mangoes continues to be strong. According to focus group discussions and field interviews, mango
production in the South is growing at about 20 percent per year. Farmers in the South have been increasing
their investments in mango orchards and almost doubled the number of orchards in the last five years.
Farmers are keen to take advantage of South’s ability to produce early season mangoes.
Dynamic Trend #2: Consumers in Bangladesh have become increasingly aware of and concerned about
food safety issues in mango production. Indiscriminate use of hazardous chemicals, growth hormones, and
ripening agents by farmers in mango production has an adverse impact on consumer health. Many consumers
avoid buying mangoes from the open market unless they are sure that the produce comes from a safe source.

In this section the AVC team provides a discussion of opportunities for upgrading identified within the
mango value chain as well as the main constraints that are impeding realization of each opportunity.

Opportunity #1: Opportunity to enhance yields and quality of mangoes produced in the FTF zone.
Disseminating knowledge on good orchard management will significantly improve overall mango
productivity in the South. Increased yields from orchards under cultivation will also enhance incomes.
Constraints to enhanced productivity in the South include the following:
• Farmers do not have adequate knowledge of modern mango orchard management techniques. Farmers lack
awareness of the most effective methods of nurturing mango trees, harvesting techniques, and timing, all
crucial for producing the best quality product. As a result, farmers fail to obtain optimum output from mango
trees.
• Improper use of pesticides and fertilizers results in poor production. Farmers do not know the proper dosage
of fertilizer required for their land, which depends on the soil type, structure, and nutrient content. Farmers
usually apply as much fertilizer are they can afford, which increases production costs and destroys the
balance of soil nutrients leading to less fertile soil in the long run. Poor farming practices can be
environmentally damaging, and excess dosage of pesticides and fertilizer can have negative health effects.
Input sellers also are not knowledgeable about the appropriate use of fertilizers.
• Mango farmers do not use recommended doses of ripening agents and are not familiar with appropriate uses
of carbides (ripening agent). Farmers in the south often harvest their produce before maturity, as most of
them produce early varieties. Only a few farmers use crates for packing and long-distance transportation.
Opportunity #2: Opportunity to enhance use of orchard land through intercropping. Since mango is a long
duration crop, intercropping in a mango orchard can increase farmer incomes and ensure better use of land.
Mango farmers in the northern districts of Bangladesh practice intercropping winter season crops and
vegetables in mango orchards.
Barriers to this opportunity include the following:
• Mango growers in the South are not familiar with intercropping techniques. Relevant extension services for
mango growing are too weak and ineffective to inform farmers of the benefits of intercropping and other
modern cultivation practices. As a result, underuse of orchard land remains prevalent in the South.
Opportunity #3: Opportunity exists for serving high-end consumer markets with proper branding and
marketing of mangoes as safe products. A common practice in the production of mangoes, and all fruits
generally, is the indiscriminate use of hazardous chemicals, growth hormones, and ripening agents, which
has an adverse impact on consumers’ health. In recent years, many consumers have avoided buying fruits,
especially mangoes, from markets unless they are sure that the produce comes from a safe source. Increased
awareness of consumers and concerns over food safety has created an opportunity for marketing and
branding of southern mangoes as safe products. if producers receive training on post-harvest handling and
are able to ensure safe production and post-harvest management practices.
Constraints to this opportunity include the following:
• Farmers lack the knowledge of proper dosages of pesticides and safe growth regulators. As a result,
indiscriminate usage of pesticides and growth hormones result in harmful residual effects on human health.
• Farmers and traders of mangoes often use high levels of formalin to increase the shelf life of ripe mangoes.
Such irresponsible methods of post-harvest handling and overuse of preservatives and ripening agents pose a
threat to human health.

CHAPTER 6: TOMATOES

INTRODUCTION
Bangladesh is the third largest tomato producer in South Asia. In 2012–13, Bangladesh produced about
251,000 tons of tomatoes; 95 percent of tomatoes were consumed fresh. The total market value of fresh and
processed tomatoes for FY 2012–13 was approximately USD 156 million. From 2005 to 2012, tomato
production increased at an average rate of approximately 11 percent per year, the highest in South Asia.
Fresh tomato consumption increased at an even higher rate of 13 percent per year.
The market for fresh tomatoes is highly seasonal, with the bulk of tomatoes produced during the winter
season. There is a small summer season in which locally produced summer tomatoes come onstream and vie
with imports from India. Prices for tomatoes follow a clear seasonal trend: prices are generally low in the
peak production period in the winter and higher during the rest of the year. There is significant potential to
increase value by spreading out production beyond the peak months when prices are lowest. The high growth
of processed tomatoes is opening up a new source of demand that, while starting from a low base, can also
have the potential to relieve market pressure on tomatoes during peak periods.
The share of processed tomatoes is only 5 percent of the industry; however, it is the fastest growing market
segment, with growth of about 30 percent per year. Processed tomato products include mainly tomato paste
and tomato sauces and ketchup. Tomato paste is largely an intermediate product used in the manufacturing of
tomato sauces and ketchup; there is little direct consumer market for tomato paste in Bangladesh. Tomato
paste processors procure fresh tomatoes and sell tomato pastes to sauce manufacturing companies. Street
vendors use tomatoes as additive items and in local prepared food items such as chanachur, chatpati, and
muri. Tomatoes are frequently used as ingredients in other foods, such as salad and curry dishes.
Changing consumer habits are driving the strong growth in the market for fresh and processed tomatoes in
Bangladesh. Tomatoes are increasingly being used as a complementary food product, and the increased
consumption of prepared meals means that tomato sauces are being used more and more. Consumer
behavioral trends, strong economic growth (6.5 GDP growth is greater than 6 percent), and rapid
urbanization and economic development, overlaid with a 1.2 percent growth in population in 2012, combine
to drive the rapid growth in the market.31
31
World Bank Open Data (available at http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG).
SCORING MATRIX
In its overall evaluation of the tomato value chain, the AVC team assigned tomatoes a value of 79 out of 100
points (see Table 1).
Table 1: AVC Ranking of Tomato Value Chain

Tomato
Criteria Data Source Weight Score Explanation

Scale BBS 10 9 USD 155 million industry. The South contributes
approximately USD 18 million.
Annual Market BBS 10 5 In Bangladesh tomato sector is growing at the rate of 11
Growth percent a year. However in Southern Delta the rate is less
than 2 percent. The AVC assessment shows that the
introduction of summer tomato in Southern Delta has had
positive impact on productivity for both summer and winter
tomato and changed the growth rate.
Scope of Value Key 10 9.5 An industrial crop with long value chain; has significant
Addition Informant scope for value addition in post harvesting and processing
Interview stage.
Export/ Trade Map, 5 3.5 Tomato sauce and ketchup in good demand in international
Import Ruhuk market. The demand for the product is increasing nationally,
Substitution Amin, CIS and 30 percent of demand is met through imports.
Potential cell, NBR
Agro Ecological Field recon 5 4.5 Winter in Bangladesh offers an ideal climate for tomato
suitability and Key farming (18o–24o C and eight hours direct sunlight). Majority
Informant of the soil on the mainland Southern Delta is suitable (loamy
Interview soil, with pH range 5.5–6.8) for tomato farming.
Income Potential Team 10 9.5 Estimated net profit per hectare is more than USD 23,000 in
Assessment six months. Benefit-cost ratio 2.1:1.
Women and Reports and 10 6 Has scope for women involvement in harvesting, postharvest
Youth Inclusion Databases handling, processing and industrial packaging. While youth
has the scope to work in all steps of the value chain.
Outreach (# of Reports and 5 3 Land coverage 5,000 hectares involving more than 38,000
households Databases farm households.
impacted)
Job Creation Team 10 8.5 Tomato farming, post-harvest as well as processing, is labor
Assessment intensive. According to unpublished BBS data for FY 2012–
13, the sector engaged 5,000 full-time equivalent jobs; with
the growth it can generate significant jobs along the value
chain.
Nutrition Journals and 10 8 Tomato is rich in vitamin C, vitamin A, vitamin B6, vitamin
Websites K, vitamin E, biotin, and molybdenum. Tomatoes are also a
great source of potassium, iron, and fiber. Tomatoes also
contain lycopene, a potent ingredient that fights against
cancer.
Environmental Expert 5 3.5 Tomato farming and post-harvest do not have any
Sustainability interview detrimental effect on environment. However, continuous
farming of tomato on same land can result in infestation of
pests and increased use of pesticide.

Potential for Key 10 9 Leadership exists in the sector
private sector Informant
leverage Interview,
Team
assessment
Can results be (Y/N) Y Tomato is less than a six month crop. The AVC project
achieved within expects to observe the outputs and outcomes of the
available interventions well within its life span.
resources and
timeframe?
Total 79

PORTER’S FIVE FORCES ANALYSIS FOR TOMATO
The AVC team considered below how Porter’s five factors—supplier power, buyer power, competitive
rivalry, threat of substitution, and threat of new entry—are at play for the tomato value chain.
Tomato is a popular cash crop. Approximately 96 percent of tomatoes are consumed fresh in salad or in
curries. The remaining 4 percent are industrial tomatoes, processed as tomato ketchup and sauce. Because of
their distinct taste and texture, tomatoes have no close substitutes. Changing food habits are driving growth
in the tomato market and affecting the tomato processing industry. For nonindustrial tomatoes, seasonality
and quantity production are the main determinants of market price. However, for processing (industrial)
tomatoes, the input suppliers, the producers, the processors, and the consumers all have a moderate degree of
bargaining power. A stronger value chain will benefit actors at all nodes of the chain, especially processors.

END MARKET ANALYSIS
GLOBAL MARKET
Global consumption of tomatoes was approximately 162 million tons in 2012. This represents a 3 percent
increase from previous years. According to FreshPlaza: Global Fresh Produce and Banana News, tomato
processing accounts for about 25 percent of the total tomato production, and it is growing faster than the
consumption of fresh tomatoes.32 China and India are the two major tomato producing countries in the world.
In 2012, China produced more than 50 million tons of tomatoes from more than 1 million hectares. South
Asian countries, together, produce 24 million tons of tomatoes, which accounts for more than 15 percent of
the world share. India, the leading producer in South Asia, produces approximately 72 percent share of the
region’s market and 10.8 percent share of the global market. The other South Asian countries have negligible
shares in the world market. The growth rate for fresh tomato production (with a low base) in Bangladesh
(10.8%) is higher than the world growth rate (3%) (See Table 2)
Table 2: Fresh Tomato Production in South Asia (2012)
Countries Production (in millions tons) Growth (%) World Share (%)
India 17.50 10 10.82
Bangladesh 0.255 10.8 0.16
Pakistan 0.56 4 0.35
South Asia 24.40 8 15.08
World 161.79 3 100.00
Source: AVC team compiled data from FAOSTAT (available at http://faostat.fao.org/site/535/default.aspx#ancor).
The global export market is also growing at 3 percent rate per year. Mexico and the Netherlandsre the leading
fresh tomato exporters, while China alone has about 35 percent share of the export market for tomato paste and
24 percent of total processed tomato items (Table 3). The surge in Chinese exports is attributed to increased
compliance with the United States pesticides residual level.
Table 3: World Export of Fresh and Processed Tomato

Fresh
Processed
Tomatoes % Share of World % Share of World
Countries Tomatoes
(in million Export (fresh) Export (processed)
(in million tons)
tons)
China 0.13 1.13 1.75 24.35
Mexico 1.49 0.01 20.05 0.29
Netherlands 1.04 0.01 13.96 0.29
Spain 0.96 0.35 12.94 7.50
World 7.45 4.65 100.00 100.00
Southern Asia 0.42 0.10 5.58 2.10
Global import (fresh tomatoes) quantities are 11 million tons. The figure is growing at more than 3 percent
rate per year. The United States is the leading importer with about a 14 percent share of imports. All Asian
countries together import approximately 15 percent of world production. In addition to the United States and
Russia, top importers are from European countries. South Asia has only 2 percent share of the global import
market; however, this is increasing at 38 percent rate annually, albeit from a low base (Table 4).
32
“Iringa Tomato Value Chain Analysis for Local (National) Market and Value Chain Development Investment Plan,” FreshPlaza
Global Fresh Produce and Banana News, September 10, 2009, p. 22.

Table 4: Top Fresh Tomato Importers (2012)
Import quantity (in million

Countries Share of world import (%) Growth (%)
tons)
USA 1.51 13.94 7.29
Germany 1.15 10.62 2.16
Russian Federation 0.90 8.271 1.28
Asia 1.68 15.44 8.52
South Asia 0.22 2.037 38.09
World 10.86 100.00 3.64
Bangladesh exports negligible quantities of tomatoes and processed tomato products, mainly to ethnic markets
in the Middle East. The total export value is approximately USD 230,000. The tomato processing industry is
relatively new and has just started to export processed tomato items. With few real mainstream export market
growth prospects besides occasional sales to Bangladeshi communities abroad, exports of tomatoes and tomato
products have not been retained as a major focus of this study.
NATIONAL MARKET
Overall market trends

Table 5 shows the total market value of fresh and processed tomatoes as approximately USD 156 million for
FY 2012–13. The market value of nationally produced fresh tomatoes is about USD 105 million. Total
market value of processed tomato items is about USD 33 million. Percentage share of fresh tomatoes is lower
(67 percent) in values than in quantity (86 percent), given the higher prices of processed products. Locally
produced tomato sauce has the highest share among processed tomato items. The market value of imported
tomato sauce and paste is USD 9.38 and USD 1.12 million, respectively.
Table 5: Quantity, Market Value, and Percentage Share by Uses of Tomato Products (FY 2012–13)
Percentage Market value

Demand of tomato and tomato Quantity MT (fresh Percentage
(in terms of (in
product tomato equivalent) (value)
quantity) USD millions)
Nationally produced fresh tomato 240,947 86.43 105.41 67.61
Imported Fresh Tomato 23,330 8.37 17.50 11.22
Industrial tomato produced 10,000 3.59 22.50 14.43
domestically (sauce and paste)
Imported sauce 3,000 1.08 9.38 6.01
Imported paste 1,496 0.54 1.12 0.72
Total 278,773 100.00 155.91 100.00
Note: AVC team developed the table from the unpublished report of BBS for FY 2012–13 and a market survey by AVC, conducted
from January to June 2014.
Fresh market segment

Production and import are both increasing in Bangladesh. In 2012, tomato production was 251,000 tons—
more than double Bangladesh tomato production for 2005 (Figure 2). From 2005 to 2012, tomato production
increased at an average rate of approximately 11 percent per year.

Import quantity has also increased sharply, although from a very low base. Import is growing at 37 percent
rate, catering mainly to the increasing demand during the summer season (March to July). National import
growth is more than three times higher than the national production growth rate. Hence, promoting summer
tomato cultivation is clearly an option to achieve import substitution.
Figure 2: Consumption Trend of Fresh Tomatoes, 2005–12 (in thousand tons)
Robust production and import growth in Bangladesh is driving increases in fresh tomato consumption. The
annual consumption growth rate of fresh tomatoes is approximately 13 percent.
These long-term trends of increasing fresh tomato consumption are coming in a context of gradually rising
prices. From 2006–07 to 2011–12, the price of fresh tomatoes increased at an average rate of 10 percent per
year. The overall growth in market demand seems to be quite strong, with volume rising despite the rising
prices.
Processed market segment

The leading processing companies (e.g., PRAN and VEGAN) estimate that the processed tomato market is
increasing at more than 25 percent per year. The demand for processed tomato items, such as sauce and
ketchup, is increasing with the rise in consumption of fast food items. PRAN, the leading tomato processing
company, has about 30 percent annual business growth in 2013. Satata Agro Product, a sauce supplying agent
of Golden Harvest and other companies, has achieved about 25–30 percent annual growth. According to its
owner, Satata Agro Products can supply only 20 percent of current demand.
To take advantage of the growing market opportunities, some private entrepreneurs are establishing tomato
paste plants. PRAN, the leading sauce producer in Bangladesh, used to rely on imported tomato paste from
China. PRAN has set up a captive tomato paste processing unit to support its sauce production operations.
Vegan and Chapai Agro have established paste plants in Kushtia (Vera Mara) and Chapainababganj
(Gomostapur). Satata Agro Product has started building a new plant in Narayanganj. The developments in
the processed tomato industry are indicative of a very rapid growth in the demand for processed tomato
products.
CHANGES IN CONSUMPTION
Bangladesh has achieved strong economic development in the last decade. Gross domestic product per capita
reached USD 829 in 2013, whereas it was only USD 598 in 2009. The total change in real GDP over this
time period is more than USD 6 billion (see Table 6). The rapid economic growth, which is driving
prolonged increases in household real income that is fueling increased fresh tomato consumption, has
exceeded population growth consistently over the last decade. This “income effect” on demand for fresh

tomatoes can be estimated precisely by calculating the marginal propensity to consume of Bangladeshi
consumers from household income and consumption data reported in the 2010 Household Income and
Expenditure Survey. Using the raw data shown in Figure 3, which shows how monthly spending on fresh
tomatoes increases with average household income, the AVC team calculated a marginal propensity to
consume (MPC) of 0.46 percent for tomatoes, meaning that for every taka of extra income, 0.0046 taka are
spent on fresh tomatoes. The net impact of this increase in income, given the 2013 growth rate in real GDP
of 4.7 percent per year, is shown in Table 6 shows an annual growth in demand of USD 28.41 million, which
represents a 23 percent annual growth rate.
The market can absorb 23 percent more tomato production subject to no change in price.
Figure 3: Income Effect on Tomato Consumption
Source: Household Income & Expenditure Survey (Dhaka, Bangladesh: BBS) (available at
Table 6: Annual Income Effect on Tomato Demand in Bangladesh

Annual Growth in Growth
GDP per ∆ in
Growth Population Total Increase in Summer (in USD
Capita RGDP/ MPC
RGDP/ 2014 RGDP/Cap Vegetable millions
2013 Capita )
capita Demand
$829 4.7% $38.96 158500000 $6,175,635,500 0.46% $28,407,923.30 $28.41
Total fresh tomato market = USD 123 million
Income effect on fresh tomato demand = 23 percent annual growth rate
Source: Household Income & Expenditure Survey (Dhaka, Bangladesh: BBS) (available at
http://www.bbs.gov.bd/PageReportLists.aspx?PARENTKEY=66);
http://www.factfish.com/statisticcountry/bangladesh/gross+domestic+product+per+capita; http://www.factfish.com/statistic-
comparison/psbd/gross%20domestic%20product%20per%20capita%20growth.
The data in Table 6 reflect changing consumption patterns led by the strong emergence of a middleclass
population and changes in dietary habits over the last two decades. New dietary habits include increasing
demand for fresh salad tomatoes as well as processed tomato products, as households consume more food
prepared away from the home, and households’ preference for time-saving tomato sauces. The emergence of
small, individually packaged tomato sauces and their use in cafés, restaurants, and fast-food shops is a major
phenomenon.
SEASONAL CONSUMPTION PATTERN

Tomato production is heavily skewed during the winter season. From December to the end of February, the
influx of winter tomato production reduces consumer prices. The seasonal glut decreases tomato prices and
increases consumption. Processing industries usually procure tomatoes during the high season to take

advantage of low prices. Seasonal price movement can be seen in Table 7, which shows weekly retail price
data for fresh tomatoes in Dhaka in 2008, 2010, and 2012.33 Early tomato varieties that come on stream at
the beginning of the harvest (September to October) still receive very high prices. Farmers who cultivate late
tomato varieties can secure higher prices at the end of their harvesting period if they can extend production
past the month of April, at which point prices start to rise. Generally, high-end consumers buy off-season
tomatoes, which are as much as twice the price of tomatoes in the high season.
Figure 4: Retail (weekly) Price Trend of Tomato
Note: AVC created chart with data provided by Department of Agricultural Marketing, Government of the People’s Republic of Bangladesh.
33
Even year data can reflect best price movement from year to year.

PRODUCTION IN THE FTF ZONE AND REST OF BANGLADESH
Tomatoes are produced all over Bangladesh and are almost exclusively a small farmer crop. The growth in
production shown in Figure 2 results from increases in yields and an expansion in new areas. From 2005 to
2012, tomato yield per hectare increased at a rate of 5 percent per year.34 For the same period, there was an
increase of more than 5 percent per year in areas planted with tomatoes, driven mainly by the high return for
tomato cultivation (see Table 7).
In 2012–13, the FTF zone accounted for 16.10 percent of the total tomato production, with the average growth
rate of 1.75 percent per year—well under the national growth rate. The total harvested area in the FTF zone
was approximately 5,000 hectares. In 2012–13, the total market value of fresh tomatoes produced in the FTF
districts was about USD 17.67 million, assuming a price of BDT 35 per kilogram for fresh tomatoes.
Table 7: Comparative Analysis of Bangladesh and the FTF Zone, 2012–13

Area (hectare) 4,936.55 26,325.41
Yield (tons/hectare) 8.18 9.53
Production (in tons) 40,403 250,947
Average production growth (%) 1.75 % 10.80 %
Market value (in USD million) 17.67 109.78
Note: AVC team prepared the table using unpublished data for 2012–13 provided by the Bangladesh Bureau of Statistics.
While the average yield per hectare in Bangladesh is 9.53 tons, the farmers in the FTF districts produce only
8.18 tons per hectare of land. Among the farmers in the twenty FTF districts, the farmers of Sariatpur and
Jessore are the most advanced in tomato cultivation. The average yields per unit of land in these two districts
are higher than the average national yield.
Table 8: Major Producing Hubs in the FTF Zone

Districts Area (hectare) Tons/Hectare Production (tons)
Faridpur 291.90 8.73 2549
Rajbari 281.78 7.31 2059
Sariatpur 493.93 11.53 5698
Bhola 310.93 8.68 2700
Jessore 565.99 9.67 5472
Jhenaidah 377.33 7.96 3005
Chuadanga 387.85 7.98 3095
Satkhira 305.67 8.58 2621
Bagerhut 281.78 8.55 2410
Note: AVC team prepared the table using unpublished data provided by the Bangladesh Bureau of Statistics.
For the FTF zone, the AVC team calculated the number of tomato farmers at about 37,000, using BBS data
that reports 4,940 hectares are under tomato cultivation and an assumption of 7.5 farmers per 1 hectare.
Tomato is a labor-intensive crop; approximately, 285 person days are required for producing tomatoes per
hectares of land. On the full cost basis (FCB means 100 percent hired labor), about 1,425,000 person days are
34
AVC team compiled data from FAOSTAT (available at http://faostat.fao.org/site/567/default.aspx#ancor).

required for farming and harvesting 5,000 hectares of land (tomato harvested area in the FTF zone), which can
be translated into 5,400 full-time equivalent jobs (considering 260 person days equal 1 full-time job).
TOMATO PRODUCTION MODELS

Tomato production in Bangladesh falls into three main categories based on the crop calendar and the
available technologies. These three types of tomato production are listed below:
Winter Tomatoes. Winter tomato production supplies the vast majority of fresh tomatoes in Bangladesh.
The tomatoes are generally open field tomatoes grown with some form of shallow irrigation drawing on
nearby surface water sources. Planting material from international seed companies is generally available
from local agricultural supply stores.
Summer Tomatoes. Summer tomatoes are grown under protective plastic greenhouses to protect plants
from the heavy rainfall of the summer monsoon season. They also require irrigation. Summer tomato
cultivation requires specific summer varieties, several of which have been developed by BARI. So far, BARI
has developed and released three hybrid tomato varieties—BARI hybrid tomato-
3, 4 and 8— that can be grown during summer and rainy seasons. The Department of Agriculture Extension
(DAE) launched the “Second Countrywide Crop Diversification Project” in 52 Upazillas in 2011. Under this
project, an initiative was undertaken to introduce summer tomato cultivation in many Upazillas as a high
value crop. There are an estimated 450 summer tomato farmers in the FTF zone.
Dike Tomatoes. In the past fifteen years farmers in several areas of the southern FTF zone (Jessore and
Bagerhat) have begun to produce tomatoes on the dikes between fishponds. One of the advantages of dike-
grown tomatoes is that farmers can use natural fertilizer from their fishponds, thereby reducing or
eliminating the use of chemical fertilizers. Dike tomatoes are early season tomatoes, coming to market
during the shoulder season in the fall before prices reach the peak season low point. Dike tomatoes require
some sort of greenhouse protection, as do summer tomatoes.
The cropping calendar for the main types of tomatoes is shown in Table 9. Producers can expand production
beyond the winter peak periods either by cultivating dike tomatoes in the early season (the red band in Table

9), or by growing late varieties of tomatoes (the yellow band in Table 9), or by growing summer tomatoes
(the green band). The practicality of growing these early and late varieties of tomatoes depends on local soil
and climate conditions. Early tomatoes are available in the market from the second week of October until
December. The trading of winter tomatoes first starts in December and continues until the second week of
February. Seasonal glut starts in November and goes into December and results in a free fall of prices.
Summer tomatoes are available from July through September.
Table 9: Production Schedule of Tomato Varieties and Seasonality Analysis

Tomato varieties
Early/Dike farming S/P*** HB HE

Winter tomatoes HE* S/P HB
Late tomato varieties HB** HE S/P
Summer tomatoes S/P HB HE
* HE = harvesting end. ** HB: harvesting begins. *** S/P = sowing and planting time.
TOMATO PRODUCTION COSTS AND PROFITABILITY
Table 10 presents the profitability estimates for summer and winter tomatoes calculated using responses from
AVC interviews with summer tomato35 and winter tomato36 farmers.
Table 10: Cost-Benefits of Producing Tomatoes
Summer Tomato Winter Tomato

Se Items Unit Quantity Unit Cost for Unit Cost for
ri Cost 100 Cost 100
al (BDT) decimal (BDT) decimal
Capital cost
1 Land lease value Decimal 100 300 30,000 200 20,000
2 Bamboo (Category 1) Piece 1400 66.66 93,333
3 Bamboo (Category 2) Piece 500 40 20,000
4 Bamboo (Category 3) Piece 900 26.66 24,000
5 Polythene Kg 400 82.5 33,000
6 Rope Kg 200 100 20,000
7 Net lump 1,600
Operational cost
35
Summer tomato farmers: Md. Jalal Uddin; father: Late Mojid Molla; village: Dadpur; union: Darazhat, Upazila, Bagharpara; district:
Jessore.
36
Winter tomato farmers: Goutam Kumar; father: Shamal Kumar; village: Kalarhat; union: Kashimnagar, Upazila, Monirampur; district:
Jessore.

8 Land preparation (plowing cost) Times 4 900 3,600 900 3,600
9 Seed Gram 200 25 5,000 25 5,000
10 Furrow preparation and seed Labor 24 250 6,000 200 5,000

sowing
Fertilizers:
11
A TSP Kg 200 25 5,000 25 2,500
B MOP Kg 150 16 2,400 16 1,600
C Urea Kg 100 17 1,700 17 1,700
D Gypsum Kg 70 6 420 6 450
E Zink Sulphate Kg 6 110 660 110 550
F Boron Kg 6 120 720 120 300
G Cow dung Kg 5000 0.5 2,500 0.5 2,000
12 Intercultural operation Labor 150 250 37,500 200 12,000
13 Irrigation Times 16(S)/ 300 4,800 300 1,500
5(W)
14 Insecticide File 50 100 5,000 100 5,000
15 Fungicide File 50 100 5,000 100 5,000
16 Hormone File 100 130 13,000 250 7,500
17 Harvesting and post-harvest Labor 100 200 20,000 200 10,000
management
18 Total Cost 335,233 83,700
19 Total production 15,000 24,000
20 Price per kg (Tk.) 40 10
21 Revenue Earned (BDT) 600,000 240,000
22 Profit 264,767 154,800
24 Benefit-Cost Ratio 1.78:1 2.86:1
Note: Profitability estimates calculated by AVC team using responses from interviews with farmers from January to June 2014.
Although summer tomatoes have a much higher level of net profit per unit of land, they have a somewhat
lower benefit-cost ratio (1.78:1) (see Table 10). The benefit-cost ratio reflects the higher level of investment
required for summer tomatoes, with more than BDT 220,000 in capital investment for greenhouse construction
and land lease per 100 decimals, as compared with only BDT 20,000 for land lease in the case of winter
tomatoes.
The mains steps in post-harvest handling of tomatoes are described below.
Harvesting: How the produce is used and the distance to the market determine the ideal harvesting time.
Tomatoes for processing are harvested when they are fully mature. Fruits to be transported long distance are
harvested at a less mature stage, while the crop for local markets is picked at a more mature stage. Tomatoes
for the fresh market are harvested by hand early in the morning. Harvesting is typically done with hired labor.
Grading: Farmers and traders will conduct sorting and grading of tomatoes at farm gate and at the collection
market. While there are no standard or official grading norms, traders and farmers divide the product mainly
by size and color. Retailers also may grade tomatoes before sale. Wholesaler and collection markets will
offer different prices for tomatoes based on grade and between graded and ungraded lots.

Packaging: Packing requires careful handling to protect the fruit from being crushed. Tomatoes usually are
packed in plastic sacks to be transported to the first collection point, where they are graded and put into
bamboo baskets or plastic milk crates for shipment to wholesale markets. Wholesalers commonly provide
plastic crates to the collection market traders who supply them with the product. Plastic crates can be
conveniently stacked atop one another to keep the products safe and allow sufficient air circulation.
Storage: The main objective in storage after harvest is to control the rate of ripening to extend the marketing
period. At present, there are no cold storage facilities to help control ripening. There is no specialized storage
system for paste processors. Paste processors purchase products during seasonal glut and process
immediately. They use no cold storage and basically produce only while there is sufficient fresh supply.
Transport: Tomatoes are highly perishable; hence, quick methods of transportation are necessary. Tomatoes
are transported by road primarily using tractors and trucks. Farmers sometimes use boats to transport their
products to local markets. They also use waterways for transporting to distant markets. Often farmers hire a
trawler and launch as a group and share the cost. Village produce is transported to the nearby towns and city
markets by locally made multi-haulers (i.e., hand-held machine tractors attached to wheeled platforms) or
rickshaw van
PROCESSING
Tomato sauce and ketchup are the main processing items in Bangladesh. Paste processors produce tomato
paste, which is then used as the main ingredient of tomato sauce. Sauce producers use water and other
flavoring ingredients with tomato paste. Producers use the recommended amounts of tomato paste to make
sauce (28 percent) and ketchup (17 to 20 percent). In Bangladesh, the conversion ratio for fresh tomato to
tomato paste is 3.5:1. Some Chinese and Turkish varieties have a much better conversion ratio of 2:1,
producing more tomato paste per kilogram.
PRAN, the largest tomato sauce producing company in Bangladesh, needs about 3,600 tons of tomatoes to
produce 1,000 tons of tomato paste. Vegan Agro Limited, a leading paste processing company, requires about
600 tons of tomato paste in each season (duration nine to eleven weeks). Vegan Only operates its business for
three to four months and sits idle for the remaining months of the year. PRAN shuffles its production set-up
from one product to another with the changing seasons. Another major sauce producer, Satata Agro Products,
shifts its operation from tomato sauce production to mango bars and other types of pickles after the end of the
peak tomato season. Thus, the tomato processing industry only produces processed tomato products for a few
months each year. The processors purchase fresh tomatoes during the winter peak season when prices are the
lowest.

TOMATO CHANNEL MAP AND VALUE CHAIN ACTORS
The value chain map (Figure 5) illustrates the operators and markets in the value chain. There are three
channels through which tomatoes move from the farm to the consumers as explained in the section bellow.
Figure 5: Tomato Channel Map
Note: AVC team developed map after numerous field visits and key informant interviews from January to August 2014.
Input suppliers
Input suppliers source seeds and agro-chemical products, such as fertilizers, pesticides, insecticides,
micronutrients, and hormones. Generally, each input seller sells all possible inputs. However, Syngenta
Bangladesh has established its own brand shops for selling pesticides. There are also few seed retailers who
sell only seeds, of which vegetable seeds are the most important. Input sellers sell products on credit and for
cash. They also provide some embedded services to producers, mainly extension advice. Agrochemical firms

provide training and workshops for input sellers to help them disseminate their product details. Sometimes
input sellers collectively purchase from companies and share the products among themselves. This horizontal
linkage is only limited for high-end input products.
Production
Farmers plow, plant, weed, harvest, grade, and sort the product. Family members assist farmers in almost all
phases. They also employ laborers mainly as casual workers. They hire transports to transfer the products
from farm-gate to nearer markets. Large farmers also sell their produce directly from their fields.
There are three types of tomato growers: winter tomato producers, dike farmers, and summer tomato
producers. Few winter tomato farmers produce early and late tomato varieties. Dike and summer tomato
farmers are more advanced in their farming practices, as the farming techniques that require higher levels of
investment in greenhouses are difficult for the smaller, less sophisticated farmers.
Farmers mostly sell their products to traders known as faria in local collection markets. For smaller batches,
farmers will transport tomatoes themselves to the collection markets, bypassing local faria. However, when
they have large production volumes, they will almost always contract with a faria who will take care of the
transport from the farm to the collection market. Generally, farmers sell on a cash basis. Farmers will buy
and sell tomato seedlings among themselves, as well as occasionally bulking their production and sharing
transport costs to the collection market.
Collection, commission, supply agents and wholesalers

Small and medium farmers sell their products either to collection faria at the farm or at a local buying point
or, as described above, to the nearer collection markets. The local faria are responsible for taking product
from the farmers and local buying stations to the collection market. In the collection market, long distance
traders procure products from large farmers as well as from faria. They supply to the commission agents
located in district vegetable markets or in Dhaka markets. Commission agents charge BDT 0.5 to 1.00 per
kilogram and sell the products to wholesalers. In addition, there are a few supply agents who procure
tomatoes for specific processing companies. They visit potential market hubs where they buy tomatoes from
long distance traders, local faria, and farmers. The commissioning agents in the wholesaler markets
generally supply plastic crates to long-distance traders to reduce post-harvest loss. All the traders employ
laborers for grading, sorting, loading, unloading, and then transport to targeted destinations. Long-distance
traders sell their products in the spot market and negotiate on prices daily. They sometime sell on credit and
use mobile banking to pay. Traders at different channels set a combined price and share transportation cost.
Paste and sauce processors and branded consumer product companies

Vegan Agro Limited, one of two companies that produce tomato paste as an independent activity and that
supply different sauce producers, supplies tomato paste to BD Foods, Square, and Ahmed. In addition, there
are a few sauce processing companies that have internalized paste-processing units. The most important of
these is PRAN, the largest tomato sauce producer in the country with about 50 percent share of the total sauce
market. Square (Brand name Radhuni), Golden Harvest, BD Foods, Sajeeb, and Aftab Foods also produce
processed tomato items and distribute their products in the mainstream market. There are other local brands,
such as Amrita and Tiger, which are expanding their businesses (e.g., Amrita supplies its products to Barisal,
Khulna, and some other districts of Dhaka and Sylhet).

Table 11: Leading Tomato Processing Companies
Local sauce & ketchup companies Imported sauce & ketchup companies
PRAN Aftab Herman

Square (Brand- Radhuni) Best Heinz
BD Foods Golden Harvest Kimball
Sajeeb (Brand Shezen) Amrita Campbell’s
Note: AVC created table from market survey of chain shops and local bazaar, from January to June 2014.
There are a few large food marketing companies that use their superior marketing channels and procure sauce
from non-branded sauce producers. Amrita is one of these, as it procures its sauce from Satata Food
Products. Amrita as a regional company has better market access in the Barisal and Khulna regions. It sells
and distributes tomato products to various retailers.
Distributors
All sauce producers sell their products to independent distributors. Negotiation between distributors and
processing companies depends mainly on investment capacity and product quality. Distributors maintain spot
market relations between wholesalers and retailers.
Importers
Imported fresh tomatoes enter the wholesale market directly through commission agents. Imported tomatoes
are high value products, typically not used in processing channels, which go to local bazaar, grocery, and
chain shops. Traders practice cash and credit as mode of transaction. Prices depend on product availability,
product quality, season, and demand. Few sauce processors use imported paste and produced final finished
products. There are few consumer product traders who import sauce and sell the product through distributors.
They usually specialize in a wide range of imported food products.
Retailers
The final finished product reaches to consumer through retailers. Grocery, bazaar and chain-shops are major
selling points in retailing markets. The fresh and processed both items are sold on spot markets. Fresh tomato
retailers jointly procure and share transport costs.
MARKET CHANNELS
There are two major channels in tomato value chain map: fresh and processed tomato.
CHANNEL 1: FRESH TOMATO MARKET

In Bangladesh, approximately 95 percent of tomatoes are consumed as fresh vegetable or salad, of which
about 86 percent are produced nationally and 8 percent are imported (see Figure 6).

Tomatoes in Quantity
Note: AVC staff prepared the graph with data from BBS and
from an AVC market survey conducted from January to June
2014.
Figure 6: Consumption of Fresh and Processed
Fresh tomatoes are produced nationally or imported. Imported tomatoes first enter wholesale markets
through commission agents. National markets, such as Karan Bazaar, Arabia, and Sham Bazar, are major
wholesaling markets for imported tomatoes. Winter, early and late winter, or summer tomatoes are first
collected by small or long distance traders who transport them to urban wholesale markets and then on to
local bazaars or groceries.
As a cash crop, fresh tomato production has been increasing in the last five years. The absorptive capacity of
this channel is strong.
CHANNEL 2: PROCESSED TOMATO MARKET

The processed tomato market absorbs approximately 5 percent of all tomatoes produced or imported to
Bangladesh. Tomato paste is produced or imported for preparing finished products. Total demand for sauce
and ketchups is approximately 14,500 tons. Out of this, 10,000 tons are produced locally, and 4,500 tons are
imported either directly as final products or as tomato paste. According to Mr. Atiqur Rahman, Marketing
Manager of Vegan Agro Limited who was interviewed for this study in April 2014, Bangladesh imported
3,000 tons of tomato sauce and 420 tons of tomato paste in 2012– 13.
Paste processors procure raw tomatoes from wholesaling markets mostly by employing supply agents.
Sauce producers procure tomato paste either from local companies or through importing channels.
The final finished products reach the retailing market after involving all support agents and actors. The key
actors in this channel are the processor supply agents, who are market movers.
DYNAMIC TREND
The tomato value chain is experiencing rapid growth and showing signs of important new product innovation
with a trend for the creation of new processing companies and products. Overall, the tomato market is
growing at a very rapid rate with no signs of a downturn. The fresh tomato market is growing at more than
13 percent a year with farmers expanding areas and developing new types of off-peak season production.
High profitability, especially for non-peak season tomatoes, continues to fuel interest on the part of
producers. In addition, the national tomato processing industry is growing at an even higher rate of

approximately 30 percent a year, with a number of new companies and sauce and paste plants opened in the
last five years. A few of the new sauce-producing companies have commenced their business by targeting
both national and regional markets. They are also launching innovative processed items. Some of the newly
developed sauce products in markets are shown in Table 12.
Table 12: Product Differentiation and Different Packaging

Local items: Product Differentiation Imported items: Product
Differences in packaging
Differentiation
Hot tomato sauce Pasta tomato sauce Packet tomato sauce
Premium tomato sauce French fried sauce Bottle tomato sauce
Chili tomato sauce Spring roll sauce Tomato sauce jar
Figure 7: Processed Tomato Items Available in Bangladesh
MARGIN ANALYSIS
The waterfall analysis in Figure 8 depicts how value is shared and distributed among the value chain actors.
It considers post-harvest losses incurred at different points of the value chain.37 Out of total revenue of BDT
26.5, the retailers’ share is the highest (BDT 8.33). The next larges margins are for traders and farmers.
Farmers sell at BDT 10 per kilogram, with a cost of inputs of about BDT 3, and a value addition of BDT 7.
Figure 8: Waterfall Analysis for Fresh Tomatoes (in BDT)
Source: AVC Market survey, January to June 2014.
37
Prices on the vertical axis are adjusted downward for losses by taking sales revenue at each level and dividing it by total volume of
fresh tomatoes purchased at each level, before losses.

Figure 9: Waterfall Analysis for Processed Tomatoes (in BDT)
Source: AVC market survey, January to June 2014.
PROCESSED TOMATO PRICE MOVEMENTS

Farmers have the highest share in the processed tomato channel, followed by the paste processors and
ketchup and sauce processors. The conversion ratio for local variety tomatoes to tomato paste is 28 percent.
Since the per kilogram tomato paste price is BDT 60, the price of 280 grams of tomato paste (the equivalent
of one kilogram of fresh tomatoes) is BDT 16.8. The value addition, at this stage, is BDT 6.8, given that the
paste processors purchase tomatoes at BDT 10. Sauce processors make about 25 percent markup after adding
all ingredients with tomato paste. The total revenue is BDT 21 and value addition for sauce processors is
BDT 4.2 (Figure 9).

The AVC study team has identified three main opportunities in the value chain. These are listed below with
the relevant constraints that are impeding realization of each opportunity.
Opportunity #1: Extremely rapid growth in consumer demand for processed tomato products, coupled with
new investments in tomato paste processing units, has created a rapidly growing market channel (Channel
2) that has the potential to relieve downward pressure on prices of fresh tomatoes during the peak winter
season. The low capacity use of tomato paste processors calculated on a yearly basis indicates that longer
purchasing periods, combined with some type of cold storage preservation strategy, could lead to large
increases in the total flow of fresh tomatoes into the processing segment of the value chain. Processors have
underused capacity and report that they are unable to meet the rising demand. There is potential to increase
production of the key intermediate paste products in Bangladesh if more processing tomatoes can be
produced and their availability prolonged over a longer time period. Specific constraints to this opportunity
include:
• The lack of industrial varieties of tomatoes that offer improved technical yield ratios of fresh to processed
product. Bangladeshi tomatoes have a very low technical transformation rate when used in paste processing.
The common ratio for normal Bangladeshi tomatoes that are not specifically processing tomatoes is 3.5:1.
The ratio stands in stark contrast to rates of 2:1 for some Turkish and Chinese varieties. The only variety of
processing tomato used in Bangladesh is the shafal variety, which is not a favorite with farmers because of
its vulnerability to disease. The lack of specific industrial use tomatoes with higher transformation rates
limits the price that paste processors are willing to pay for fresh tomatoes. This is a key factor that serves to
limit overall supply and shorten the seasonal buying window, as processors enter the market only during the

periods in which prices drop to their annual floor levels. This is an important factor in explaining low
capacity use rates for tomato paste processors. Processors such as Vegan Agro Food operate for only three to
four months and sit idle for the remaining months of the year, incurring huge opportunity costs.
• Farmers are not organized to interact with industrial buyers. Small, miniature, and disorganized farms lead
to diseconomies of scale and fail to attract large-scale processors and buyers. The proliferation of supply
agents creates an extra intermediary between the farmers and the tomato paste processors who are the main
industrial buyers. The FTF zone in general is not an attractive option for industrial buyers because of a lack
of effective and efficient farmer- and trader-based organizations that can sell tomatoes in large quantities.
• Absence of coordinated buying strategy linking farmers to processors on a longer-term basis that would
prolong buying periods. Paste processors have few vertical linkages to farmers and tend to rely only on their
supply agents who are pure spot market operators. They have not yet made more than a timid attempt to
promote the cultivation of processing tomatoes with higher technical rates of transformation.
Communications between processors and farmers are minimal to non-existent, which is not surprising given
the recent nature of most paste plant investments.
• Lack of business and financial planning capacity on the part of paste processors, with particular reference to
supply costing. Generally, tomato paste processors do not have a supply strategy for acquiring raw materials.
Few processors have any financial planning expertise that would allow them to identify trade-offs: buying at
higher prices during a longer time span would raise the cost of raw materials, but also provide processors
with more positive net margin to apply against their fixed cost overhead.
Opportunity #2: The large excess demand for tomatoes in summer creates a very significant opportunity for
tomato farmers to expand summer season tomatoes and reap large profits from serving the fresh market and
reducing high-priced seasonal imports. In addition to the market opportunity in Channel 2, the main market
for fresh tomatoes in Channel 1 presents some clear opportunities for farmers who can produce outside of the
three-month peal winter season (roughly January to March). The potential for realizing very high returns to
tomato cultivation outside of the peak period is already fuelling interest from farmers, but could be
significantly accelerated with some effort spent address several key constraints. These constraints are listed
below.
• Summer tomato farming requires special varieties and production techniques that are not familiar to winter
tomato farmers. The production of summer and off-season tomatoes requires production techniques that are
significantly different from those used by most farmers to produce winter tomatoes. Specialized varieties of
tomatoes need to be used, in addition to a different mix of inputs (including growth hormones) with the
construction of greenhouses. Unless farmers are exposed to these techniques and receive training in their
application, it will be quite difficult for them to enter into off-season tomato production. Unfortunately
extension support to diffuse knowledge of summer tomato production practices is not available from public
extension services. Problems such as early or late harvesting are likely to arise with farmers unaccustomed to
producing summer tomatoes, as they will be less familiar with the normal progression of fruit maturation.
• High capital costs for summer tomato production means that the pool of potential adopters may be limited
without access to credit. Off-season tomato production requires higher levels of investment in greenhouses
and inputs than winter tomatoes or other vegetable crops. With BDT 335,000 (roughly USD 4,200) in first
season summer tomato start-up costs required for 100 decimals of land, as opposed to BDT 83,000 (USD
1,000), many farmers will require financing in order to launch summer tomato production.

• Poor post-harvest handling and packaging during transport leads to high levels of losses that reduce returns
to actors at all levels of the value chain. Plastic crates are used only between collection and national
wholesale markets with plastic sacks being used at the farm to collection market stage as well as downstream
from wholesale markets. The use of different packaging materials, particularly sacks, leads to high levels of
losses. Losses at the farm level are estimated to be around 30 to 40 percent of post-harvest losses. It is
assumed that another ten percent loss occurs from farm-gate to the local market. An additional 20 percent
loss occurs when the products travel from the regional/local market to the national market. This high loss rate
detract from overall value and pushes all actors in the value chain to adjust prices downward in anticipation
of losses.
Opportunity #3: Improved product quality in winter tomatoes, as well as promotion of early and late winter
tomato cultivation, can create new value by reducing prices during peak supply period. In addition, the use
of dike farming techniques for tomatoes, which are not widely used in the FTF zone, have the potential to
yield a high-quality product, with low chemical input use, that has wider harvest windows than normal open-
field winter tomatoes. The presence of many suitable lowland areas in the FTF zone where dike farming is
viable in combination with fish ponds, combined with a small existing core of experienced dike farmers,
creates conditions in which dike farming can be expanded significantly. Besides expanding the supply of
early season tomatoes after the summer period, tomatoes produced through dike farming have the potential to
be marketed as a high-quality differentiated product based on the lower levels of chemical inputs they
require. This could form the core of a new product of differentiated “natural” tomatoes. Specific constraints
include the following:
• Dike farming is a fairly sophisticated technology that requires high levels of training for farmer to master it.
Dike farming requires simultaneous exploitation of fish ponds and a whole production protocol that differs
greatly from winter tomatoes. Like summer tomatoes, it requires some investment in greenhouse. Given the
small number of farmers practicing dike farming, the reservoir of existing trained farmers who could serve as
trainers and demonstration farms for new farmers in not extensive.
• No marketing platform exists to create value through promoting dike farming to consumers as a more
healthy productive technology compared with open field tomatoes. Any campaign to market dike tomatoes
as a differentiated product would need some sort of common marketing mechanism to coordinate sales,
organize promotion and product branding, and enforce standards. Currently no such entity of mechanism
exists. Possible candidates include farmer associations and traders.
• Poor post-harvest handling and packaging during transport leads to high levels of losses that reduce returns
to actors at all levels of the value chain. This constraint is essentially the same as for summer tomatoes
discussed above.

CHAPTER 7: GROUNDNUTS

INTRODUCTION
Groundnuts have traditionally been a popular snack in Bangladesh. With the steady growth in GDP and
household incomes, consumer demand for groundnuts has been increasing, particularly for groundnut based
readymade snacks. The demand is fueling the growth of the industrial processing sector, where increased
competition is driving local manufacturers to expand their product portfolio of brand name snacks and look
for a steady, high-volume supply sources of groundnuts.
Groundnuts are an increasingly attractive cash crop for smallholder farmers in Bangladesh because of low
capital investment and high profitability. Approximately 35 percent of the total groundnut production is
located in USAID’s Feed the Future target zone, which spans the Southern Delta. In the South, char areas are
particularly suitable for groundnut cultivation, and groundnut production has been increasing there at the rate
of 8.42 percent per year since 2006–07. Groundnut production is labor intensive at the farm, post-harvest,
and processing levels: 142,000 farmers are currently involved in groundnut cultivation in Bangladesh, with
an estimated 37,000 of them located in the South. The FTF target zone includes the leading groundnut
producing regions, such as Faridpur, which accounts for nearly 25 percent of the national groundnut
production.
Groundnut farmers in the South face multiple production and marketing constraints, such as poor production
practices, inferior varieties, low yields, weak market linkages, and lack of scale and aggregation. As a result,
most processors source groundnuts from the North, and producers in the South have yet to take advantage of
selling to this growing market channel. There are opportunities, however, for producers in the South to meet
the requirements of this market segment, as well as to improve their overall production practices and yields.
The rationale for selecting the groundnuts value chain for AVC project support, the ranking matrix, and the
Porter’s Five Forces analysis are in the following section.

SCORING MATRIX
In its overall ranking of value chains, the AVC team has given groundnuts a score of 72.5 out of 100, as
shown in Table 1.
Table 1: AVC Ranking of Groundnuts Value Chain
Groundnuts

Scale BBS 10 6 Approximately a USD 93 million industry. South
contributes about one third of the production.
Annual Market BBS 10 3 In the Southern Delta groundnut sector is growing at
Growth 8.42 percent per year, while the national growth rate is
1.36 percent. Primary data collected by AVC team show
that the national growth rate has picked up considerably
since 2000. Industrial consumption of groundnuts is
growing at 20–25 percent per year, with groundnuts
increasingly being used as raw material in various food
processing industries.
Scope of Value Key 10 9.5 About 50 percent of groundnut production is used as
Addition Informant industrial raw material to produce high value food
Interview products.
Export/ Trade Map 5 3 Groundnut oil has good demand internationally.
Import Chanachur has demand among the ethnic community of
Substitution subcontinent around the world. Has the potential to play
Potential a role in reducing imports of other more expensive nuts.
Agro Ecological Field recon 5 3.5 Temperature, humidity and altitude are suitable for
Suitability and Key groundnut farming. Majority area of Southern Delta,
Informant especially the char areas with sandy clay loam soils are
Interview suitable for groundnut farming. However the soil is
deficient in required organic matter content.
Income Potential Team 10 8 Attractive benefit-cost ratio at the farm level. Profit per
assessment hectare more than BDT 85,000 in six months. IRR more
than 100 percent.
Women and Reports and 10 6 Youth and women engaged in seed preparation, harvest,
Youth Inclusion databases post-harvest handling, sorting, grading, product
processing, and packaging. Women are involved in
roasting groundnuts for fresh consumption.
Outreach (# of Reports and 5 3 More than 6,000 hectares of land coverage.
households databases Approximately 37,000 farmers are involved in
impacted) groundnut cultivation in the South
Job Creation Team 10 8 Harvesting, post-harvest handling, and processing are
assessment labor intensive. Long value chain has significant scope
of job creation in each step of the chain.
Nutrition 10 9 Groundnuts are highly nutritious. Approximately 28
percent protein content; rich in vitamin E and niacin;
good source of minerals like calcium, iron, magnesium,
phosphorus, potassium, sodium, zinc, and manganese;
low GI index (13).

Environmental 5 4.5 Groundnuts enhance soil fertility by fixing nitrogen
Sustainability nodules in top soil
Potential for 10 9 Private sector enterprises do farming, processing,
Private Sector marketing.
Leverage
Can results be (Y/N) Y Groundnut is less than a six-month crop. Most
achieved with the interventions can bring changes in less than a year.
available
resources and
within
timeframe?
Total (100) 72.5

PORTER’S FIVE FORCES ANALYSIS FOR GROUNDNUTS
Groundnuts were the next value chain that the AVC team analyzed, using Porter’s Five Forces Analysis.
Groundnuts are a prominent industrial crop without any commercially viable substitutes. The sector is
growing, and the farmers are benefiting from increasing demand (and to some extent price) over the last few
years. Both suppliers and buyers share limited bargaining power, while supply and demand play the ultimate
role of determining price. Few large processors dominate the groundnut product market. They offer
differentiated products and develop their own brand image to reduce price-based competition. The growing
demand and the emergence of improved farming technology offer opportunity for all the players in the
groundnut value chain.

END MARKET ANALYSIS
GLOBAL MARKET
In 2012, approximately 40 million tons of groundnuts were produced globally (with 25.7 million tons
produced in Asia).38 World production of groundnuts remained fairly stable at about 38 to 40 million tons per
year since 2010. Global production statistics for 2000 to 2009 indicate that the annual production of
groundnuts marginally increased by 0.4 percent, cultivating area by 0.3 percent, and average yield by 0.1
percent.39 Less than 6 percent of world groundnut production is traded, with most production consumed
nationally. In 2012, a total of 1.5 million tons of groundnuts, valued at about USD 2.7 billion, were traded
worldwide (under HS Code 1202: Groundnuts, not roasted or otherwise cooked, whether or not shelled or
broken). The Netherlands, Indonesia, Germany, and the United Kingdom were among the largest importers;
Argentina, China, and the United States were the leading exporters of groundnuts globally.
Of the world’s groundnut production 48 percent is consumed fresh (e.g., salted, roasted), and 52 percent is
used in the production of oil and other food products, such as groundnut flour, butter, snacks, sweets, backed
goods, and food seasonings. Many food producers prefer groundnuts to other exotic nuts, such as cashew
nuts and walnuts, because they are more widely available and cost less. Groundnuts also have a variety of
industrial uses (e.g., paint, furniture polish, cosmetic products, and textile materials).
Developing countries in Asia, Africa, and South America together account for more than 97 percent of the
world’s total groundnut production area and 95 percent of production, mostly by smallholder farmers.
China, India, Nigeria, the United States, and Myanmar are the world’s leading groundnut producers.
Historically, China has dominated global production of groundnuts. In 2012, China had a 40 percent share
of world production, with 4.7 million hectares under cultivation and 16.8 million tons produced. India, the
second largest groundnut producer in the world, produced 5.7 million tons in 2012. China’s groundnut
production has been growing by about 5 percent per year since 1980. This is primarily because high-
yielding and stress-resistant groundnut varieties were introduced, and improved cultivation practices, such
as deep tillage, balanced fertilizer, close planting, chemical control, and polythene mulching, adopted. From
2006–07 to 2012–13, Myanmar and India also increased their production by 5.0 and 2.9 percent,
respectively.40 Bangladesh captures only a meager 0.13 percent of the world’s total groundnut production
and 0.2 percent of production by Asian countries.42 Bangladesh’s exports and imports of groundnuts are
negligible, at 10 and 103 tons in
2013, respectively, with most national production consumed in the national market.43
NATIONAL MARKET
Trends in demand for groundnuts

The AVC team interviewed snack processors, ice cream producing companies, hotels and restaurants, oil
processors, and retailers who sell for fresh consumption, as well as industry key informants. Based on the
38
2012: World Markets and Trade (USDA, Foreign Agricultural Service) (available at
http://apps.fas.usda.gov/psdonline/circulars/oilseeds.pdf).
39
ICRISAT, International Crop Research Institute for the Semi-Arid Tropics (available at http://www.icrisat.org/cropgroundnut.htm).
40
AVC staff calculated growth using FAOSTAT data (available at
http://faostat.fao.org/site/567/DesktopDefault.aspx?PageID=567#ancor). 42 AVC
staff calculated growth using FAOSTAT data (available at
http://faostat.fao.org/site/567/DesktopDefault.aspx?PageID=567#ancor). 43 Global
Trade Atlas (available at https://www.gtis.com/gta).
AVC END MARKET ANALYSIS 129

collected information AVC staff calculated the total national market value for groundnuts is USD 93.7
million per year. Households and restaurants, consume groundnuts fresh (roasted or raw), either as a snack or
as a cooking ingredient. Groundnuts also are used in the production of readymade snacks, such as
Chanachur, Badam Bhaja, Muri Bhaja, Chira Bhaja and Jhuri Bhaja, as well as in the production of
confections, such as groundnut brittle and trail mixes. Biscuit and ice cream producers use groundnuts as a
supplementary ingredient. A very small percentage of groundnuts, primarily those of substandard quality, are
used for the production of groundnut oil or as an ingredient in other oils.
In 2012–13, Bangladesh produced nearly 50,000 tons of groundnuts. Of this amount, approximately 35
percent were produced in the FTF targeted districts. Since Bangladesh exports and imports of groundnuts
are negligible, all national production is consumed locally. The AVC research team faced significant data
limitations in estimating the size of the national market for groundnuts. National consumption data for
groundnuts are not available, and there is significant discrepancy in production data available from BBS
and DAE.41 The team relied on available secondary data from BBS, end market interviews with processors
and other market actors, and visits to DAE offices in each of the FTF districts in the South to collect
relevant production data. Based on BBS data, from 2006–07 to 2012–13, groundnut production in
Bangladesh experienced a relatively flat growth rate of 1.36 percent per year. However, groundnut
cultivation has been increasing in the Southern Delta at a rate of 8.42 percent per year during the same
period. Farmers, especially in Gopalgonj and Faridpur, are showing increased interest in raising groundnuts
because of growing prices, low investment requirements, and high profitability.42
With the steady annual GDP growth of above 4.7 percent since 2004 and corresponding increases in
household discretionary income, consumer demand for groundnuts has been increasing, particularly for
readymade snacks. This trend is also evidenced by the continuous increase in groundnut price— the retail
price at harvest time increased by approximately 24 percent between the 2006–07 and 2012– 13 seasons,
based on BBS data.
END MARKET SEGMENTS

Although national consumption statistics for groundnuts are not available, the research team was able to
collect the following estimates (see Figure 2) for key end market segments from interviews with industry
actors:
• Fresh groundnuts, raw and roasted, are consumed directly by households, hotels, and restaurants and
account for approximately 45 percent of the total market for groundnuts. The value of this market segment is
estimated at USD 43.7 million.
• Groundnut based readymade snacks account for a 40 percent share of the market, which is valued at USD
37.5 million.
• Industrial use in the production of biscuits and ice cream, as well as other confections, such as groundnut
brittle and trail mix, account for 10 percent of the market. This segment is valued at USD 9.3 million.
• Groundnut oil production accounts for the remaining 5 percent of groundnut use, with an estimated value of
about USD 3.1 million.
Figure 2: Percentage of Uses of Groundnuts in Different Sectors
41
According to team interviews with DAE offices in the South, the total production for the South in 2012–13 was 40,000 tons,
compared with 17,467 tons reported by BBS, which may indicate that the BBS national production data are too low.
42
The Financial Express, May 19, 2013 (available at
http://www.thefinancialexpressbd.com/old/index.php?ref=MjBfMDVfMTlfMTM=)

Note: Chart by AVC using estimates for groundnut consumption collected from interviews with industry actors, January to June 2014.
Fresh groundnuts (raw and roasted)

Twenty-five percent of groundnut production in Bangladesh is consumed as roasted groundnuts (in shell or
shelled), and about 20 percent as raw groundnuts (shelled,
unroasted, with or without skin).
Roasted groundnuts have been a very popular snack item in
Bangladesh for generations and are a part of almost every social
gathering. Groundnuts are roasted, usually in sand, and traded
by hawkers on the street, many of them operating informally.
Vendors of roasted groundnuts can be seen in almost all public
areas in Bangladesh, such as markets, stadiums, bus stops, train
stations, and on ferries. The gradual increase in demand for
roasted groundnuts has encouraged many small businesses to
produce packaged roasted groundnuts and sell them through
retail stores all over the country under different brand names.
AVC surveys in large retail stores, such as Agora, Swapno,
Nandan, and Meena Bazar, reveal that three to four small and
Figure 3: Groundnuts sold in open
medium enterprise producers regularly supply packaged
market
groundnuts to each of the stores.
Raw groudnuts are usually sold in open markets (Figure 3) and are in high demand by consumers, as well as
restaurants, for use in cooking (e.g., to prepare different curries and sweet dishes, payesh and firni, consumed
during festivals). With the rise of incomes, demand for raw groundnuts has also increased. Large retail stores
such as Agora, Meena Bazar, Nandan, and Unimart have set up special sections selling nuts, where
groundnuts are showcased together with other exotic varieties of nuts. These retail stores now offer pre-
packaged raw groundnuts, as well as groundnuts sold in bulk.
While the demand for raw and roasted groundnuts has been growing, this market segment is getting saturated
and is projected to grow at a rate of 5 percent per year, lower than that of Channel #3 (see Market Channels

section). This market segment is also heavily informal and volatile, as it absorbs the production remaining in
the market after processors buy large volumes at harvest.
Groundnut based readymade snacks

The readymade snack segment is estimated to account for a 40 percent share of the overall market for
groundnuts. Approximately 23 percent of total groundnut production is used by processors to manufacture
chanachur, a popular snack that consists of a mixture of spicy dried ingredients (e.g., roasted lentils, green
peas, groundnuts, chickpea flour noodles, corn, vegetable oil, chickpeas, rice flakes, and curry leaves), which
are flavored with salt and a blend of spices. Groundnut is an essential ingredient in chanachur; however, the
ratio of ingredients varies significantly depending on the producer and characteristics of the target market.
Approximately 17 percent of production is used to manufacture other readymade snacks, such as Badam
Bhaja, Muri Bhaja, Chira Bhaja, and Jhuri Bhaja.
The demand for groundnut based readymade snacks increased significantly from 2009 to 2014 and has been
driving the growth of the industrial processing sector, which emerged in just the past several years,
according to key informant interviews. Interviews with processors indicate that domestic demand for
chanachur and other readymade snacks is growing at a rate of 20 to 25 percent per year. This is largely
attributed to an increase in disposable incomes and consumers choosing to purchase snacks they used to
make at home. Consumption of readymade snacks globally is known to increase as income increases and at
a relatively early stage of income growth because of the low per unit cost of snacks. Demand for snacks has
been particularly strong among rural consumers. With increased competition in the processing industry,
snack manufacturers are expanding their portfolio of brand name snacks and have introduced new products,
such as Badam Bhaja, Muri Bhaja, Chira Bhaja, and Jhuri Bhaja.
Three large processors—Bombay, Square, and PRAN— dominate 69 percent of the domestic snack and
confectionary market. About thirty medium processors, such as Partex and Lalmai, hold a 20 percent share of
the market, with the rest of the market held by more than 1,000 small, often homebased, producers.
Figure 4: Chanachur, produced by small businesses, is sold in various forms.
Some processors have been targeting low-income groups and school children with chanachur minipackets
that cost only 2 taka. Such a market strategy helps them earn substantial revenue by serving the low-earning
segments of the society who typically cannot afford pricier family-pack chanachurs offered by large
processors.
Increased competition among processors led to increased demand for better quality groundnuts. AVC staff
interviewed representatives of the confectionary industry from January to June of 2014. Using the data
collected, the AVC team calculated that in 2014, nearly 11,500 tons of groundnuts (8,000 tons of kernels,
based on a 70 percent groundnut to kernel conversion rate) were required by the chanachur industry per

year. An additional 8,500 tons of groundnuts (6,000 tons of kernels) were required per year to produce other
groundnut based snack items. Processors procure large volumes of groundnuts at harvest usually from
wholesale markets, such as Bhairab and Debiganj. However, all processors interviewed for this study
indicated that the current supply of groundnuts is falling short of meeting their current demand. For
example, if raw materials were available, Bombay Sweets could expand its production from 55 to 60 tons of
chanachur per day to 100 tons. In addition, groundnut kernels remaining after shelling vary signifcantly in
size, shape, and color, and on average only about 50 percent can be used in production. The remaining 50
percent are rejected because they are deformed, rotten, discolored, or broken, or Aflatoxin contamination,
resulting from high oil content of locally produced varieties and improper drying. Such lack in uniformity
and high oil content of kernels negatively impact the quality and shelf life of final products.
Demand from processors is expected to drive most of the growth and upgrading in the groundnuts value
chain over the coming years. For producers, this segment represents the most secure market because of its
stable and large volume procurement requirements. Producers in the South, however, have not yet been able
to benefit from growth in this market segment, as they have only a 10 percent share of production.
Industrial uses of groundnut and other confections

Industry actors estimate that the use of groundnuts in production of biscuits and ice cream, as well as in
production of confections, such as groundnut brittle and trail mix, account for about 10 percent of the market
for groundnuts. Small-scale producers dominate production of groundnut brittle and trail mix, which includes
groundnuts mixed with dates, cherries, raisins, and other nuts. The total number of small businesses
producing groundnut-based confections is difficult to estimate, as many go in and out of business each year.
This market segment is projected to grow at only 2 percent per year. The research team combined these
products into one market segment because of its relatively small market share and low growth rate.
Groundnut oil
The use of groundnuts for oil extraction accounts for only 5 percent of the groundnut production. Groundnut
oil is not very popular; consumers in Bangladesh prefer the taste of soybean, mustard, and sunflower oil.
Very few oil millers are engaged in production of groundnut oil on a regular basis. Occasionally, they seek
groundnuts when the production of other oilseeds is lower than expected and add groundnut oil to mustard
or linseed oil to meet the market demand. Oil millers buy low quality groundnut kernels that are rejected by
other buyers. Groundnut millers usually need to shell 25 tons of whole groundnuts to yield one truckload
(about 18 tons) of kernels. After shelling, there are significant amounts of rotten and deformed kernels that
cannot be used for any other purposes. They are called khich by traders and are sold to oil millers at BDT
20–30 per kilogram. Unfortunately, the Government of Bangladesh has classified groundnuts as an oilseed
crop, despite the low share of groundnut production used for extracting oil. As a result, research led by the
Bangladesh Agricultural Research Council (BARC) and the Bangladeshi Agricultural Research Institute
(BARI) is focused on developing better varieties of groundnuts for use in oil production, whereas the food
industry is demanding groundnut varieties with low oil content, a crucial feature to ensure consistency in
processing, taste, and improved shelf life of processed snack items.
SEASONALITY AND GROUNDNUT MARKET PRICE

The year-round demand for groundnuts remains fairly stable, with consumption and the wholesale market
price decreasing slightly only during Ramadan, a month-long fasting period observed by the Muslims. Figure
5 shows the monthly average wholesale price fluctuations within one year, based on the data for 2010–11.

Figure 5: Monthly Price Index in 2010–11 (BDT per ton)
Note: 2011 Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: BBS, 2011).
Production of groundnuts takes place from November through June or July, depending on the weather and
flooding conditions. The produce reaches the market in June or July when the price is lowest. Sowing takes
place from November to February, and harvesting starts in late April and goes through the end of May.
Post-harvest handing takes place on the farm through June and includes sun drying for about twenty to
twenty-two days. Interviews with farmers in the South from January to June of 2014 indicate that the farm
gate price at harvest was BDT 40 per kg in 2014.
The price of groundnuts has been steadily increasing over the past five years. According to BBS data, the
harvest time retail market price increased by approximately 24 percent between 2006–07 and 2012–13 (see
Figure 6).43
43
Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: BBS, 2005, 2008, 2011), 296–97, 312–13, 311–12
(respectively).

Figure 6: Growth in Harvest Time Retail Market Price for Groundnuts, from 2006–07 to 2012–13 (BDT
per ton)
Note: Harvest time retail market price data collected from Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh:
DEMAND PROJECTIONS
AVC staff conducted in depth interviews with farmers from January to June of 2014. Based on interviews,
the AVC team estimated that the total demand for groundnuts in 2017–18 could reach 100,000 tons if each
current market segment grows as projected and the GDP continues to grow.
Processors estimate that the 2013 demand for 39,000 tons of chanachur per year will increase to about
119,000 tons within next five years period (based on year-on-year growth rate of 25 percent).44
Consequently, the demand for groundnuts for the chanachur industry will also increase to 75,000 tons per
year from its current demand of 24,500 tons. If the growth of other segments continues as projected, the
demand for groundnuts will reach 29,206 tons in the next five years. At the 2012–13 rate of growth in
production, the gap would be substantial, with total production estimated at 53,000 tons in 2018.

GROUNDNUT PRODUCTION IN BANGLADESH
In 2012–13 Bangladesh produced approximately 50,000 tons of groundnuts, with approximately 35 percent
produced by the FTF districts. There are 142,000 farmers involved in groundnut cultivation, 37,000 of whom
are in the South. Groundnuts are widely cultivated in the Gangetic Delta, Noakhali, Faridpur, Kishoreganj,
Barisal, and greater Rangpur districts. Faridpur alone accounts for about 25 percent of the total production,
followed by Noakhali (greater than 15 percent), Chittagong ( less than 8 percent), Barisal (less than 6
percent), and Dhaka (less than 5 percent).45 Figure 7 shows the trend of groundnut production and cultivated
44
Interview with Bombay Sweets, Debiganj, Panchagarh, January to June, 2014.
45
AVC staff calculated estimates with data from 2011 Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: BBS,
2011).

area from 2006–07 to 2012–13. While groundnut production grew at a relatively flat growth rate of 1.36
percent per year46 from 2006–07 to 2012–13, flooding in char areas has caused the overall cultivation area to
shrink by 3 percent per year during the same period. However, productivity per hectare showed a continuous
growth within the same period and increased by 28 percent, from 1.36 tons per hectare in 2006–07 to 1.74
tons per hectare in 2012–13 (see Figure 7).
Figure 7: Change in Yield per Hectare, 2006–07 to 2012–13 (in tons)
Note: AVC staff generated graph with data from agricultural statistics provided by Bangladesh Bureau of Statistics for 2008, 2011,
2012–13.
Figure 8: Groundnut Farming Area and Production, 2006–07 to 2012–13
Note: AVC staff generated graph with data from agricultural statistics provided by Bangladesh Bureau of Statistics for 2008, 2011,
2012–13.
46
Based on BBS data for 2012–13.

Groundnut is a winter season crop. Although Spanish, Runner, Virginia, and Valencia are the most popular
groundnut cultivars worldwide, more than 95 percent of farmers in Bangladesh cultivate only the locally
available indigenous varieties of groundnuts, such as Dhaka-1 and Jhinga. The Bangladesh Agriculture
Research Institute (BARI) has introduced several high-yielding varieties (HYV) of groundnut seeds, called
BARI China badam-4, BARI China badam-5, and BARI China badam-6. However, BARI seeds are not
widely available in the market, and farmers are not aware of them. The Bangladesh Agricultural
Development Corporation (BADC) is the government agency responsible for promotion, marketing, and
distribution of the BARI seeds. Bangladesh’s total seed requirement for groundnut cultivation is 8,550 tons
per year, while BARI produces only 87 tons of seed per year. Private sector seed suppliers do not market
better quality groundnut seeds. Ninety percent of farmers use retained seed, often degenerated because of
prolonged use. The AVC team estimates that 50 percent of farmers use self-produced retained seeds and 50
percent purchase seeds on the market, out of which only 10 percent are quality seeds (the rest are farmer-
produced retained seeds). Ninety-five percent of the available seeds are poor quality and have much lower
yields than possible. As of 2014 farmers were not cultivating the industrial varieties demanded by
processors.
GROUNDNUT PRODUCTION IN THE FTF ZONE

Groundnut cultivation in the South has been increasing on average at 8.42 percent per year between 2006–07
and 2012–13, compared with the average national growth rate of 1.36 percent during the same period (Table
2).
Table 2: Groundnut Cultivation Area, Production and Yields in Bangladesh Overall and in Southern
Bangladesh
2006–07 2012–13
Area Production Yield Area Production Yield Annual
(Ha) (tons) (tons/Ha) (Ha) (tons) (tons/Ha) Production
Growth
Bangladesh 33,666 45,910 1.36 28,557 49,791 1.74 1.36%
Southern 8,939 10,755 1.20 7,153 17,467 2.35 8.42%
Bangladesh
Note: Table compiled by AVC staff with data from Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: BBS, 2008,
2011, 2012–13 [unpublished]).
Table 3 shows production of groundnuts in the Southern Delta from 2006–07 to 2012–13. Five districts
within the Faridpur region (Faridpur, Madaripur, Rajbari, Gopalgonj, Shariatpur) have historically been the
leaders in groundnut production in volume and cultivation area, accounting for nearly 25 percent of the
national production. In addition, the districts of Bhola in the Barisal region, Jhenaidah and Narail in the
Jessore region, and Patuakhali in the Patuakhali region are high performing areas. Annual fluctuations in
production and production area are common because of flooding and farmer migration. According to AVC
field interviews conducted from January to June of 2014, farmers, especially in Gopalgonj and Faridpur
districts in the Faridpur region, are increasing their investment in groundnuts.

Table 3: Groundnut Production in the Southern Agricultural Regions, 2006–07 to 2012–13 (in tons)
Regions 2006–07 2007– 08 2008– 09 2009–10 2010–11 2011–12 2012–13
Faridpur 5,420 6,279 5,176 10,125 10,490 14,738 12,526
Barisal 1,485 3,008 2,001 2,445 2,669 2,643 2,651
Jessore 2,670 1,085 1,021 1,749 1,622 1,572 1,574
Khulna 30 31 38 30 34 26 28
Kushtia* 405 441 414 452 458 500 402
Patuakhali 745 676 645 708 600 781 286
South Total 10,755 11,520 9,295 15,509 15,873 20,260 17,467
*Kushtia region is comprised of Chuadanga, Meherpur, and Kushtia districts; only Kushtia district is not in the FTF zone. SOURCE:
2011 Yearbook of Agricultural Statistics of Bangladesh and BBS Agricultural Statistics 2012–13 (BBS approved unpublished data).
The map in Figure 9 highlights the groundnut producing areas inside the FTF zone.
Figure 9: Groundnut Producing Districts in the FTF Zone
Note: AVC created map with data from interviews with DAE and BARC officials and primary interviews with farmers, traders, and local
NGOs from January to June 2014.
Farmers in the South commonly use the following cropping pattern to cultivate groundnuts (Table 4) and
grow groundnuts and rice while the land is fallow between March and June.

Table 4: Prevalent Cropping Pattern of Groundnut in the South
Groundnut
Transplanted Aman
Fallow
BBS reported average yield per hectare in the South as 2.35 tons in 2012–13, while the data collected by the
AVC team directly from DAE offices in the South indicate yields of 1.42 tons per hectare for the same year.
The AVC team’s focus group discussions and in-depth interviews with farmers across groundnut producing
areas in the South support the DAE yield data.
PRODUCTION COSTS AND PROFITABILITY

Groundnut cultivation is less capital intensive than other crops, which makes it an ideal crop for smallholder
farmers with low financing capacity. In the South, char areas (riverine islets) have potential for commercial
groundnut cultivation. Char farmers cultivate groundnuts in sandy loams and sandy soil, which are suitable
for groundnut cultivation and remain otherwise fallow. At the beginning of production, farmers plow the
land three to four times, which is followed by laddering to prepare the soil. About 125 kilograms of seeds are
required to cultivate one hectare of land. Southern farmers usually do not use any fertilizer, although a few
farmers have indicated applying small amounts of DAP (DiAmmonium Phosphate) and Urea, depending on
the condition of the soil. A single weeding is sometimes applied, if necessary. No irrigation is used in the
South. Groundnut harvesting is done manually. To harvest, farmers uproot the whole plant from the soil,
then separate the plant from its stem and sun-dry the stem. Farmers keep the stem with pods in their
households. The pods are then hand plucked by farmers, mainly by women, at households and sold in nearby
markets.
Production costs for groundnut cultivation mainly include human labor and seeds. Table 5 shows profitability
of groundnut cultivation for farmers.
Table 5: Cost of Groundnut Cultivation by Farmers in the FTF Zone (per hectare)
Type of Input Unit Rate Cost in Taka
(taka/unit)
Input
a. Tillage 10 person days 600 6000
b. Purchase Seed 125 kg 90 11,250
c. Labor – Harvest 27.5 person days 250 6,875
d. Labor – Post Harvest 1,800 kg 2.25 4,050
e. Carrying Cost (by boat) 1 time 1250 1250
f. Land Rental or Opportunity Cost 0
A. Total cost (A=a+b+c+d+e+f) 29,425
Output
g. Groundnut 1,800 kg 40 taka/kg 72,000
h. By-product 0 0 0
B. Total income (B= g+h) 72,000
C. Net return (C=B-A) 42,575
D. Benefit Cost Ratio 2.45:1
Note: AVC staff created table based on data from interviews with farmers from January to June 2014.

The benefit-cost ratio is 2.45:1, implying that 1 taka investment in groundnut production can generate 2.45
taka.

The mains steps in post-harvest handling of groundnuts are described below:
• Drying is performed by farmers and is usually done on the ground as sun drying.
• Cleaning and sorting is usually done by large traders who aggregate produce purchased directly from
farmers or from local small traders (farias).
• Shelling and grading is done by millers for a fee or before selling shelled groundnuts to downstream actors
in the value chain.
• Transport is usually performed by traders.
PROCESSING
Groundnuts sold in the fresh groundnuts market segment undergo basic processing, which includes roasting
of unshelled groundnuts done by hawkers using sand. Shelled groundnuts also are sold with or without skin,
and oftentimes women are engaged in peeling the skin off the groundnuts before selling. Industrial
processing in the groundnuts value chain includes production of readymade snacks and is performed by a
number of large, medium, and small processors.
GROUNDNUT CHANNEL MAP AND VALUE CHAIN ACTORS

Figure 10 shows the various actors and channels in the groundnut value chain. Each actor is described below.

Figure 10: Groundnut Channel Map
Note: AVC team developed map after numerous field visits and key informant interviews from January to August 2014.

Input Suppliers
Input suppliers include retailers active in the input services market throughout the major production areas.
Sometimes input suppliers also provide advice to producers on the use of agro-chemicals. Key inputs for
groundnut production include seed and power tiller rentals, while some farmers use fertilizer. Farmers who
don’t own any self-retained seeds purchase groundnut seeds from input suppliers or from neighboring
farmers. Inputs sellers in turn purchase retained seed from farmers who grow it commercially. Farmers in the
South do not grow groundnuts for seed production, so the percentage of farmers using self-retained seeds is
small. Input supply companies that distribute groundnut seeds countrywide include Nagarbari in the Pabna
district, Savar in Dhaka, and Chilamari in Kurigram. These seeds are of traditional variety and often
degenerated.
Producers
Farmers are directly involved in production—they grow, harvest, and dry groundnuts, and then sell their
produce, usually at the farm-gate, to various traders (local farias, local arathdars, and large traders). The
AVC team estimates that about 50 percent of farmer production is sold to large traders, 20 percent to local
farias, and 30 percent to local arathdars. Most groundnut farmers in Bangladesh and in the South are small
(less than 0.2 hectares) and medium-sized (0.2–0.4 hectares). No large farmers are engaged in groundnut
cultivation. The majority of the 37,000 groundnut farmers estimated in the South are small.
Farmers usually share farming knowledge, exchange seeds and also often bulk their harvest and share
transport costs from farm-gate to local markets.
Traders
There are several types of traders active in the groundnut value chain:
• Farias, small local traders, purchase groundnuts from farmers and sell in bulk to local arathdars, stockists,
and large traders at the regional level.
• Arathdars are large traders who operate on a commission basis. They procure groundnuts directly from
farmers, faria, and large traders and supply produce to downstream actors in the value chain. Arathdars
receive commission from both upstream and downstream actors and add no value to the product. Arathdars
operate at both the local and the regional and national level.
• Large traders usually operate at a regional level. They trade in large volumes and buy groundnuts from
farmers directly or from faria. They perform cleaning, grading, drying, and sacking, and then sell to regional
arathdar, national level wholesalers, and millers.
• Stockists are a type of trader that has large storage capacity. They keep supply for two to three months and
sell at the time when price increases.
Level of cooperation among traders and arathdar is quite high. They conduct joint procurement and
marketing, and often share transport costs.
Millers
Millers are entrepreneurs who own crushing facilities. They shell and grade groundnuts and sell to
processors either directly or through supply agents, and to arathdar and large traders. While some millers
shell groundnuts for a fee based on orders from large traders, arathdar, and processing companies, other
millers buy groundnuts from traders, store them, and sell after shelling against orders from buyers.
A groundnut shelling mill is equipped with very simple machinery. It costs a miller about USD 3,000 to set
up a new mill. The ability to invest a large sum of money to procure groundnuts during harvest and the
availability of space for shelling and storing are two critical requirements for a miller to operate profitably.

Millers often depend on loans to procure significant volumes of groundnuts at harvest. Year-round
functionality of the mills largely depends on the groundnuts that they can stock at a lower price during the
peak harvest period. On average, 8 to 10 tons of groundnuts can be shelled in a mill per day. Because of the
lack of a consistent supply of groundnuts, in 2014 more than 80 percent of mills operated at far below their
optimum capacity or remained fully idle when orders dropped down. The AVC team estimates there were
about 100 millers in Bangladesh in 2014; none were located in the FTF zone.
Processors
As of September 2014, there were 3 large processing companies (PRAN, Bombay Sweets, and Square), 30
medium-sized processors, and about 1,000 small processors engaged in production of chanachur and other
groundnut based snacks. Their suppliers or agents purchase shelled groundnuts from mills, large traders, and
arathdar on behalf of processors. These agents are usually independent businesses and supply a number of
processors, while a few may work for one processor exclusively. Some processors procure unshelled
groundnuts and shell them at mills for a fee.
There are a number of small and medium chanachur processors inside the FTF districts. In the Faridpur
region, Takerhat in the Gopalganj district has been the abode of many small home-based chanachur
producers. In the Barisal region, a reputed medium-sized company, Amrita, produces 1,200 tons of
chanachur per year and requires about 240 tons of groundnnut kernels for production. There are about
twenty-five small and medium chanachur factories inside the Jessore region that supply local markets,
among them are Sohel Food and S.B. Food products Ltd.
There is a high level of rivalry and low level of cooperation among processors as they try to capture a larger
market share. Processors are usually members of associations and cooperate with each other in advocacy.
Wholesalers
Wholesalers are large national level traders that occupy fixed space in urban wholesale markets, such as
stalls, or open ground space. Wholesalers supply directly to retailers.
Retailers
Retailers are the last link of the market channel. They get their supply from wholesalers or from distributors
of packaged foods. Different types of retailers that sell groundnuts include large chain shops, such as Agora
and Meena Bazar; urban and semi-urban grocery stores; small village level shops; open retail markets;
hawkers; and tea stalls.

MARKET CHANNELS
As illustrated in the value chain map in Figure 10, the market for groundnuts can be divided into three main
channels. Channel 1 represents the market for fresh groundnuts. Channel 2 is the market for readymade
snacks, such as chanachur. Channel 3 includes industrial use of groundnuts in ice cream and biscuits and
production of groundnut brittle and trail mix. The use of groundnuts for production of oil represents a small
share of the market and is not shown on the map, but it can be distinguished as a separate fourth channel.
While nationwide approximately 45, 40, and 10 percent of production flows into Channels 1, 2, and 3,
respectively, producers from the South mainly participate in Channel 1, with 90 percent of production sold
into this channel and only 10 percent estimated to be going into Channel 2. National and regional
processors depend on the produce that comes from the northern districts of Bangladesh. Lack of economies
of scale and transportation difficulties prevent them from procuring groundnuts from the southern districts.
CHANNEL 1: FRESH GROUNDNUTS (RAW AND ROASTED)

This channel accounts for about 45 percent of the market (25 percent of the market is roasted and 20
percent raw groundnuts). Roasted groundnuts are sold to consumers unshelled by hawkers, many of whom
operate informally. Hawkers procure groundnuts from large traders, roast them usually in sand, and sell
them to consumers on the streets. Raw groundnuts are sold shelled (either peeled or with skin) to
consumers directly and to hotels and restaurants. Consumers can buy them in small urban or rural stores
and in large chain shops in big cities, which usually procure them from traders in regional and local
markets. Small businesses buy groundnuts from both large traders and retailers and after packaging sell
them to consumers through small stores and large retail shops.
CHANNEL 2: GROUNDNUT BASED READY-MADE SNACKS

This channel accounts for 40 percent of the market. Large processors supply chanachur and other snacks to
chain shops and retail stores across the country through their own distributors. Some medium processors
have their own distributors, while others use third-party distributors or sell to large traders. Consumers buy
snacks at village level small shops and at urban or semi-urban grocery stores. Chanachurs are often sold by
hawkers at roadsides and bus stops, and in train stations. Small home-based producers of snacks lack the
capacity to participate in large markets—they either sell to local traders or directly to small grocery shops
and tea stalls at the village level and local markets.
CHANNEL 3: INDUSTRIAL USES AND OTHER CONFECTIONS

This channel accounts for 10 percent of the market. Biscuits and ice cream factories and small processors
procure shelled groundnuts from arathdar or directly from mills as an ingredient to add extra flavor to their
products or to produce confection items, such as groundnut brittle and trail mix. A large number of SMEs are
involved in production of confections, and it is difficult to precisely estimate their number as many go in and
out of business each year. Overall, the size of this market channel is small.
MARGIN ANALYSIS
The waterfall chart in Figure 10 describes how value is distributed among the groundnut value chain actors
and considers losses incurred at different points along the value chain. Farmers get the same price for
groundnuts, regardless of which channel they sell into. However, Channel 2 offers a more secure market
because of large volume procurements at harvest.

CHANNEL 1: FRESH GROUNDNUTS (ROASTED)
Farmers need BDT 5 of inputs to grow 1 kilogram of groundnuts. They receive approximately BDT 40 from
selling these groundnuts to local traders (faria). Traders sort and grade the groundnuts and sell them at BDT
45 to distributers (arathdar, or large traders). Wholesalers procure these groundnuts from distributers for
BDT 50. Fresh groundnut hawkers buy groundnuts from wholesalers at about BDT 56 per kilogram. They
roast and clean groundnuts and then sell them to consumers usually at about BDT 160 per kilogram. A
hawker usually sells 3 to 5 kilograms of groundnuts per day. In this channel, hawkers receive the highest
gross margin (BDT 104 out of 160), followed by the farmers (BDT 35) (see Figure 11).
Figure 11: Gross Margin of Fresh Groundnuts (in BDT)
104
160
6 5 5
Gross margin
35
5
Note: AVC staff developed the gross margin waterfall analysis based on data collected through interviews with each of
the market players from January to June 2014.
Figure 12: Gross Margin of Processed Groundnuts (in BDT)
16
10
3
69
35
5 Gross margin
Note: AVC staff developed the gross margin waterfall analysis based on data collected through interviews with each of
the market players from January to June 2014.

CHANNEL 2: READYMADE SNACKS (CHANACHUR)
The estimated revenue from the final products processed from 1 kilogram of fresh groundnuts is
approximately BDT 69. Farmers use BDT 5 of inputs to grow 1 kilogram of groundnuts. Traders procure
these groundnuts from the farmers at about BDT 40 per kilogram. Traders sell to millers usually at BDT 43,
and millers sell outputs (kernels) from 1 kilogram of groundnuts to processors at about BDT 53. Processors
use these groundnuts as an ingredient to produce chanachur and other snacks and sell at a mark-up for BDT
16. In Channel 2, the farmer’s gross margin (BDT 35) is the highest followed by that of the processor (see
Figure 12).
WHOLESALE MARKETS FOR GROUNDNUTS

Groundnuts are traded in almost every district in Bangladesh. However, two wholesale markets— Bhairab
market in the Kishoreganj district and Debiganj market in the Panchagarh district—dominate nationwide
trading. These two markets account for 40 and 50 percent of all groundnut trade, respectively. Industrial
processors are the main customers at these markets. Other regional markets that play an important role in the
wholesaling and retailing of groundnuts include Swarighat in Dhaka, Nagarbari in Pabna, Bara Bazar in
Jessore, Daulatpur in Khulna, and Piazkhali in Faridpur. These markets supply groundnuts to regional
arathdar, traders, retailers, and hawkers.
Bhairab is the oldest hub for groundnut trading in Bangladesh because of its connectivity with other districts
by roads and rivers, and supplies groundnuts to other markets in Dhaka, Jessore, Khulna, Barisal, and Sylhet.
In September 2014, there were about fifteen traders and six crushing mills operating in Bhairab. However,
over the past decade, the Bhairab market has been losing its share of trade to the Debiganj market.
Debiganj has evolved to be the largest hub of groundnut trading in Bangladesh. Previously, all crushing mills
and subsequent trading activities were centered in the Bhairab and Nagarbari areas. Over time, several of the
leading traders from Bhairab shifted to Debiganj and established shelling mills there because of improved
road connectivity between the North and other districts after the establishment of the Jamuna Bridge; suitable
soil for groundnut cultivation; and availability of cheap labor in Nilphamari and Panchagarh districts. There
are seven large shelling mills in Debiganj, Shantirhat and Lakhirhat areas in the Panchagarh district. They
supply shelled groundnuts directly to the factories or to other large markets in Dhaka, Khulna, and
Chittagong. In addition, there are more than fifty smaller mills. These mills shell small volumes of
groundnuts upon receipt of confirmed orders from local buyers from adjacent districts such as Bogra,
Dinajpur, and Rangpur. In interviews in Debiganj and Bhairab from January to June of 2014, traders and
processors reported that as trade in Debiganj is increasing, the volume of groundnut production in nearby
Upazillas has also increased dramatically. As a result, Debiganj gained popularity among traders and
processors, replacing other markets. The geographic area of groundnut trading is still expanding beyond the
boundaries of Panchagarh to other neighboring districts; in late 2013, five new crushing mills started
operations in the Lalmonirhat district.

DYNAMIC TRENDS
The AVC team identified two key dynamic trends in the market for groundnuts.
• Dynamic Trend #1: As disposable incomes are increasing, consumer demand is increasing for groundnuts,
especially for groundnut-based readymade snacks. The demand has been driving the national and regional
processors to expand their product portfolio of groundnut-based snack items, such as chanachur and other
snacks. Processors anticipate a 20 to 25 percent growth in the local market for these products over the next
few years.
• Dynamic Trend #2: Strong market demand and high per hectare profitability are encouraging farmers to
expand groundnuts production. Groundnuts offer a relatively high return per hectare, and cultivation is
especially attractive for resource poor farmers. Smallholder farmers can cultivate groundnuts in less fertile
fallow lands in the char areas and earn extra incomes.

In this section, the AVC team provides a discussion of opportunities for upgrading identified within the
groundnuts value chain, as well as the main constraints that are impeding realization of each opportunity.
Opportunity #1: Capitalize on rapid growth of demand for groundnuts from the processing industry.
Industrial demand for groundnuts is projected to almost double within five years.
Major constraints to this opportunity include the following:
• Processors limited access to suitable varieties of groundnuts increases susceptibility of Aflatoxin attack and
reduces the shelf life of processed snack products. A high oil content in local groundnut varieties results in
shorter shelf life and infestation of Aflatoxin within seventy-two hours of shelling. Processors prefer
industrial varieties of groundnuts, which have more filled chambers and low oil contents. Farmers do not
cultivate industrial varieties.
• Poor shelling machines lead to significant losses at during processing. Millers use primitive machinery to
shell groundnuts, which makes the shelling process inefficient, laborious, and time consuming. Most millers
in Bhairab and Debiganj use sprinkle water to wet groundnuts before shelling, which increases the
probability of Aflatoxin contamination. In some shelling facilities, as much as 80 percent of the product is
ultimately lost because of Aflatoxin growth and spoilage introduced by rudimentary handling and processing.
Some processors (e.g., Bombay Sweets) do not use water in the pre-crushing stage to reduce the
susceptibility to fungal growth. However, the rate of broken kernels in this process is higher. Use of efficient,
modern machineries by mills can significantly improve the shelling process and productivity.
• Limited drying facilities result in improper drying and shorten the shelf life of groundnuts. Groundnut curing
refers to the process by which the moisture content of groundnut is reduced to a safe level for the
preservation of groundnut quality. Groundnut harvesting should be carried out in bright sunshine so that the
pods and vines can be dried thoroughly. Farmers usually lack knowledge of the importance of drying the
harvest and do not properly dry their products in part because they fear that the weight lost in the drying
process will reduce the value of product. They also do not have access, especially in the southern districts, to

any commercial drying facilities (called Chatal in Bangla). Oftentimes they sell groundnuts in wet or half-
dried condition at a much lower price.
Opportunity #2: Capitalize on creating sustainable market linkages exclusively between the processors and
the groundnut traders and producers to enable groundnut sourcing from the FTF zone, which is largely
absent. Groundnuts produced in the FTF zone largely fail to attract institutional buyers or processors, who
depend on procurements from the northern districts of Bangladesh. Lack of economies of scale and
transportation difficulties prevents them from procuring groundnuts from the South. Improving current
marketing and distribution channels will create better market access for producers in the South.
Specific constraints to seizing this opportunity include the following:
• Difficult transport leads to limited access for southern groundnut producers to national markets. Growth of
processed food manufacturers, such as PRAN, SQUARE, and Bombay Sweets, has increased the demand of
groundnuts in end markets. However, groundnuts produced in the southern districts have very weak and
irregular access to the high value markets, mainly because of the poor transportation network. Geographic
isolation of chars limits linkages with agents who supply processing companies.
• Disorganized and micro plot farming lead to diseconomies of scale. Farmers and traders in the southern
districts fail to attract the premium buyers because of fragmented production and lack of aggregation.
Industrial buyers prefer to procure large volumes of groundnuts from fewer sales points to keep their
transaction costs low. There are very few collection centers for groundnuts in the South.
Opportunity #3: Capitalize on the scopes for enhancing yield and quality of groundnuts produced in the
FTF region. Promoting high-yielding varieties of groundnuts and disseminating knowledge on good crop
management practices will help increase yield per hectare, improve quality, and increase demand for the
southern produce in national markets.
Specific constraints to seizing this opportunity include the following:
• Knowledge of good groundnut production practices among producers is weak; traditional farming practices
lead to poor yields. Most of the groundnut farmers do not use any fertilizer and tend to follow rudimentary
methods of cultivation.
• Weak extension system impedes the flow of knowledge along the value chain. The agricultural extension
department often overlooks groundnuts as a minor crop, while the private sector seed companies have not yet
included groundnuts in their business portfolio. In addition, no donor or NGO-led interventions have
supported the groundnuts value chain. As a result, farmers have almost no access to improved cultivation
knowledge and other extension services.
• Use of retained seeds results in poor production per hectare. The supply of quality seed is limited, and
farmers use degenerated local varieties of seeds, often preserved from previous years.

CHAPTER 8: NATURAL FIBERS

INTRODUCTION
Natural fibers are produced by plants and animals and can be spun into filament, thread, or rope and then
woven, knitted, matted, or bound. The availability and consistent quality of a wide range of fibers and their
environmental friendliness have increased the popularity of bio-composites or natural fiber composites
(NFCs). The most common plant fibers are abaca, cotton, flax, hemp, ramie, sisal, jute, coconut coir, and
sea grass.
JUTE
Jute has entered many diverse sectors of the industry, where natural fibers are gradually becoming better
substitutes for synthetics. Jute is second only to cotton in world’s production of textile fibers. Bangladesh
and India together grow more than 98 percent of the world’s jute. A growing awareness of environmental
issues in recent years is bringing new market opportunities to this sector.
Because of its favorable climate and soil conditions, Bangladesh once was known as the “land of golden
fiber,” For centuries, jute has been an integral part of the culture of Bengal, throughout the southwest of
Bangladesh, and some portions of West Bengal (India). The first jute mills were established in the 1800s and
exported heavily by colonists. By the 1950s, one of the primary sources of foreign exchange earnings for the
United Pakistan was the export of jute products grown in East Bengal, modern-day Bangladesh. As the use
of polythene and other synthetic materials grew, the jute industry in general experienced a decline. During
the 1980s, farmers in Bangladesh burned their jute crops when an adequate price could not be obtained.
Many jute exporters stepped back from jute to focus on other commodities. Jute-related organizations and
government bodies were forced to close, change, or downsize. The long declining demand forced the largest
jute mill in the world—Adamjee Jute Mills, located in Bangladesh—to close down, and Bangladesh’s second
largest mill—Latif Bawany—to be nationalized by the government. However, national demand for jute
prevented the sector from completely collapsing, and by 2004, the jute market began to recover and prices of
raw jute increase slightly.
The Government of Bangladesh is trying to rejuvenate the jute sector through various activities and
policies—Introduction of High Yielding Variety (HYV), mainstreaming the use of good agricultural
practices, encouraging cultivation of good quality fiber, and promotion of jute diversified products (JDPs)
are the major areas of intervention of the Government of Bangladesh. A huge demand for various diversified
jute products, including shopping bags, shoes, composite materials, geo-textiles, home textiles, handicrafts,
gift items, pulp, and paper is fueling growth in local and foreign markets.
The future prospects for this eco-friendly natural fiber are expected to increase, especially as governments
enact regulations and environmentally friendly policies, such as the banning of synthetic packaging
materials.
The jute value chain differs from the other major AVC value chains in that it has a very significant export
orientation and extensive value-added processing. Thus, constraints related to end-market information,
market penetration, and manufactured product quality play a larger role. Major problems include the
unfamiliarity of manufacturers with market requirements for the many newly emerging jute products, a lack
of collaborative institutions and networks among the many smaller exporters, a lack of high-quality raw jute,
and the absence of specialized loans for jute farmers.
SCORING MATRIX
The AVC team ranked the jute value chain as part of its collective value chain scoring exercise and gave jute
a total score of 71.5. Table 1 provides the rankings of jute on the different selection criteria.

Table 1: AVC Ranking of Natural Fibers Value Chain
Natural Fibers

Scale EPB 10 10 Jute is approximately a USD 1.03 billion industry.
South contributes a major portion of it.
Annual Market Trade Map, 10 7 Jute industry has an attractive growth rate. Its national
Growth FAOSTAT, growth is 12.94 percent and the growth in Southern
and BBS Delta is 9.7 percent. Its growth fluctuates from year to
year. However the forecast regarding the future growth
is very positive.
Scope of Value Key 10 9 Jute is a versatile fiber. It can be used to produce many
Addition Informant high end products (carpet, bag, curtains and clothing).
Interview
Export/ Trade Map 5 4.5 Bangladesh exports over a billion dollar jute products
Import Substitution and jute per annum. It also has the potential to substitutes some
Potential exporters cotton based products.
association
Agro-Ecological Field recon 5 3.5 Bangladesh is the second highest producer of jute in
Suitability and Key the world. Majority areas of the FtF zone, especially
Informant Khulna and Dhaka division are suitable for jute
Interview production.
Income Potential Team 10 5.5 Net profit per hectare is approximately USD 400(if
assessment farmer owns the land and use family labor he/she can
make about USD 1,300 from one hectare).
Women and Youth Reports 10 7.5 Involvement in post-harvest activities such as retting,
Inclusion and separating the fiber from the stick, drying and further
databases processing(especially in handicraft production)
Outreach (# of Reports 5 5 1800000 farmers in Southern Delta are involved in jute
households and farming. About 330 thousand hectares of land are used
impacted) databases for jute production.
Job Creation Team 10 8 Labor intensive sector. The long value chain and the
assessment large scale can involve large number of population in
the chain.
Environmental Team 5 3.5 Jute plant by shedding every third leaves enhances
Sustainability assessment organic matter in the soil. Jute farming also increases
the productivity of the other crops in the crop cycle. However, jute retting has detrimental effect on water quality (of the
water bodies used for retting).
Potential for Private 10 8 Jute value chain is quite long and the involvement of
Sector Leverage the privet sector is pre dominant.
Can results be (Y/N) Y Jute value chain has been facing many constraints.
achieved with the Addressing these constraints could bring rapid changes
available resources in productivity and profitability in every step of the
and within chain.
timeframe?
Total (90) 71.5

PORTER’S FIVE FORCES ANALYSIS FOR JUTE
The End Market Analysis for jute first utilizes Porter’s Five Forces to focus on: supplier power, buyer power,
competitive rivalry, threat of substitution, and threat of new entry and how these forces are at play for the
jute value chain.
Jute is a versatile fiber with diversified and specialized uses. While Bangladesh supplies more than 40
percent of raw jute traded globally, the market for jute and jute products has experienced slow growth.
However, because jute is a natural and fully biodegradable fiber, the jute industry is growing more rapidly in
response to global environmental concerns and is increasingly preferred to synthetic substitutes. There is
significant opportunity to enhance the efficiency at each node of the jute value chain (especially in
production, post-harvest, and processing) and make it competitive with the other natural fibers. Jute value
chain actors need to synthesize end market information and use the findings to design jute products that
would enhance customer satisfaction.

END MARKET ANALYSIS
GLOBAL MARKET
A very versatile fiber, jute is approximately a USD 12 billion industry worldwide. India and
Bangladesh are the largest producers of jute and jointly account for 98 percent of global production.
While production of jute plateaued in about 2005, the recent trend is positive since 2008, as shown in
Figure 2. Moreover, the Bangladesh Jute Association Report, confirms production continues to increase,
with world production in 2013 totaling 3.58 million tons and valued at USD 1.737 billion.
Figure 2: World Jute Production and Area Coverage Trend, 2002–11 (in tons)
World Jute Production and Area Coverage Trend

2002‐2011
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000 Area(Ha)
1,500,000
1,000,000 Production(m.t)
500,000
0
Note: AVC team developed this graph with the data from FAOSTAT (available at http://faostat3.fao.org/home/).
TRENDS OF WORLD TRADE FOR JUTE GOODS AND FIBER

Jute trade consists of trade in raw fibers and trade in manufactured goods. Manufactured items range
from rope and twine to fashion accessories and home décor to erosion control fabric (geo-textiles) and
roofing.
Worldwide, more than 120 countries import one or more types of raw or manufactured jute products. Of
these, forty to fifty countries import on a regular basis. The major importing countries are members of
the European Union (Germany, Netherlands, France, Italy, Turkey, Sweden, and Switzerland), United
States, Africa, Australia, Canada, India, Pakistan, Nepal China, Egypt, Indonesia, Spain, Korea, United
Arab Emirates, Iran, and Iraq.
Globally, the trade of manufactured jute products, valued at USD 1.67 billion in 2012–13, dwarfs the
trade of raw jute valued at USD 200 million. Figure 3 shows the world exports trend for manufactured
and raw jute since 2007–08. Despite the decline in export volume in FY 2012–13, the longer-term trend
is positive for both.

Figure 3: Export Trend of Jute Fiber and Goods Worldwide
Note: AVC developed graph with data from Bangladesh Jute Mills Association (BJMA).
GROWTH POTENTIAL OF SELECTED JUTE PRODUCTS

Projections by the Common Fund for Commodities (CFC) in 2006, although somewhat dated, show a
huge potential for jute and jute products globally. Table 2 presents the market demand of jute products in
2006 and demand projected for 2016, based on CFC estimations. Notably, while low growth is projected
for most traditional sectors (e.g., sacks, hessians, tarpaulins, and jute canvas), yarns and spun fibers are
different from the other traditional products in that they are projected to grow significantly, which is
important especially since they are one of the higher volume products. Additionally, non-traditional
products (e.g., carpet backing, webbing, other jute textiles, geo-tex, and a new group of products
including shopping bags and backing for plastic reinforcement) show very significant growth.
Table 2: CFC 2006 Analysis and Projections of Global Consumption of Jute Goods
Actual in 2006
Item Projections for 2016 (tons/annum)
(tons/annum)
Sacking 1,400,000 1,400,000
CBC secondary backing 25,000 60,000
Yarn-jute relevant 322,000 450,000
Hessian 483,000 473,000
Carpets-jute relevant 10,000 30,000
Decorations and household 500 20,000
furnishings
Other textiles 10 30,000
Geo-textiles 10,000 20,000
Felt 2,000 6,000
Tarpaulin 38,000 40,000
Canvas 50,000 48,000
Webbing 600 2,000
Twine 100,000 120,000
Shopping bags -- 60,000
Plastic reinforcement -- 60,000
Market garden products 3,000 10,000
Total metric tons 2,444,110 2,829,000
The “green” concept that is emerging in the international markets is the main factor driving the emergence
of new jute products. The increase in environmental awareness and eco-friendly and organic products is
increasing consumer demand for green products in the international market. Jute bags, geo-textile, pulp

and paper, home textiles, floor covering, and non-woven textiles—all jute products—fall into this “green”
category.
The International Jute Study Group (IJSG)47 has appraised the potential demand of jute products in the
global market. A summary of potential export prospects drawing from the IJSG’s work follows.
Bio-Composite: The world consumption of bio-composite products is increasing at an attractive rate. In

2010 its market size was USD 2.1 billion, and the forecasted market size in
2016 is USD 3.8 billion. A survey conducted by Canadian Agri-Food Research Council (CARC) in 2003
found that the European automotive industry was in the lead, using approximately 22,000 tons of natural
plant fibers in low-stress applications in cars. In 2005, 19,000 tons of natural fibers were used in
Germany for automotive composite. Door panels, seat backs, headliners, dashboards, trunk liners,
flooring, ceiling, seats, and backrests are made with natural fibers, including jute. Bio-composite of jute
is being used in the building and furniture industries. Jute fiber is found to be more cost-effective and
lighter weight, and has better physical properties.
Food Grade Jute Bags: Food grade jute bags are used in packaging cocoa and coffee beans. According
to the International Cocoa Organization (ICCO), in 2013 the demand for food grade jute bags for cocoa
was increasing. In 2013, the coffee industry produced more than 100 million tons of beans, most of
which are packed in 60 kg bags, which equals a demand of 1.6 billion bags. With Bangladesh and India
currently supplying just 12 million bags per year, the opportunity for growth is almost unlimited.
Jute Shopping Bags: According to the IJSG, the world demand for shopping bags is approximately 500
billion pieces. In FY 2012–13 India exported more than 70 million jute shopping bags, whereas
Bangladesh exported a mere 1 million jute shopping bags. The opportunity for growth is almost
unlimited.48
Jute Geo-Textiles: Jute geo-textiles offer ideal solutions for erosion control, separation, and filtration
and drainage required in civil engineering and agriculture. Geo-textiles are abundantly available, easily
installed, biodegradable, and retain more moisture and cost less than synthetic geotextiles. In FY 2012–
13, India exported 10,000 tons of geo jute, and Bangladesh exported 7,500 tons. The prospect for geo-
jute is enormous, especially in Japan, the United States, Australia, and European countries.
Jute Pulp and Paper: The world demand for paper and paper board has grown rapidly over the years
and reached a record level of 359 million tons in 2004 from 300 million tons in 1999.49 Demand is
estimated to grow by 2.1 percent annually in the long term, reaching an estimated 490 million tons by the
year 2020. Jute-based paper products could potentially replace wood- and bamboo-based paper products
in the near future, because jute costs less, grows faster, and requires fewer chemicals and less energy in
processing.
Home Decoration and Household Products: The AVC team’s market research and interviews with
entrepreneurs show that in the United States alone, there is a huge demand for natural fiber home
decoration items that is worth an estimated USD 270 billion (Interview with Mr. Rashedul Karim
Munna, Managing Director, Creation (Private) Limited, April 20, 2014). Home decoration items include
kitchen textile, house wears, furniture, home textile, apparel, outdoor living, wall hangers, curtains, table
cloths, runners, place mats, cushion covers, laundry baskets, fruit baskets, storage products, door mats,
and various kinds of floor covering. In 2013, Bangladesh exported a mere USD 4 million50 of home
47
IJSG, World Jute & Kenaf Statistics: At a Glance 2012 (Dhaka: International Jute Study Group, 2012) (available at
http://jute.org/IJSG%20Publications/Jute%20&%20kenaf%20Stat%20at%20a%20glance_ijsg.pdf)
48
Arafat Ara, “The Untapped Export Potential of Jute Goods,” The Financial Express 30 December 2013 (available at
http://www.thefinancialexpress-bd.com/2013/12/30/11341).
49
http://jute.org/IJSG%20Publications/Jute%20&%20kenaf%20Stat%20at%20a%20glance_ijsg.pdf, page no. 19).
50
Data from interviews with Shahidul Islam Helal, the president of BJDMEA.

decoration and household products. Jute products made in Bangladesh to meet demand for home
decoration items could considerably increase market share.
TRENDS IN BANGLADESHI JUTE EXPORTS

Bangladesh is a leading exporter of jute and jute products. In fiscal year 2012–13, Bangladesh earned
about USD 1.03 billion by exporting 842,000 tons of jute goods (including raw jute) to international
markets. Bangladesh is the world’s largest exporter of raw jute, with more than 90 percent of world
exports, followed by India. Since India has superior milling capacity, product development, and
manufacturing capacity, it imports high volumes of Bangladesh jute fiber, which India uses for
manufactured products to sell to end consumers. To capture a larger share of the market for
manufactured, value-added products, Bangladesh must adopt modern practices and technology in milling
and manufacturing.
Evaluating trends in jute exports from Bangladesh is not an easy task. Data on jute products in
international data bases is inconsistent. The COMTRADE data base has the best supply of data but with
many gaps after 2011, rendering trend analysis next to impossible after that date. The AVC study team
was able to find data on Bangladeshi jute exports for a selection of HS codes that covered raw jute and
most of the main manufactured jute products. The codes are shown in Table 3 in two main categories:
traditional jute products that have been in existence for a long time and the newer manufactured products
that are known as “Jute Diversified Products,” or JDP.51
Table 3: Harmonized System (HS) Codes for Jute Products

HS Code Description
Traditional Jute Products

5307 Yarns of jute and other fibers
560710 Twine, cordage, ropes and cables
56089020 Knotted netting of twine, cordage or rope of jute
630510 Sacks and bags for packing goods
63062910 Tarpaulins, awnings, sails of jute
Jute Diversified Products (JDP)

39259092 Jute composite
42022230 Jute hand bags and shopping bags
42023910 Jute jewelry boxes
44103511 Jute particle board
53101011 Jute carpet backing
53101012 Jute sacking fabric
53101013 Jute hessian fabric
51
Sometimes JDP is used to mean only “handicrafts.” The AVC team is not adopting this meaning since the list of JDP items in
Table 2 includes many that are produced using industrial processes. This usage is broadly consistent with the usage of the
International Jute Study Group.

53101014 Jute canvas
53101015 Jute geotex/soil saver
53109010 Jute wove fabrics (bleached)
53109011 Decorative jute fabrics
53109019 Other jute fabrics
560110 Wadding of jute
56022910 Felt of jute not impregnated, coated or laminates
57032020 Tufted Carpet mat with jute backing
57033020 Non-tufted Carpet mats with jute backing
59039029 Textile fabrics coated, covered or laminated with

plastics (Laminated jute fabric)
59051060 Jute wall coverings
59113140 Jute fabrics and articles used in machinery
59113240 Jute fabrics used in furnishing
Note: Table created by the AVC team with data compiled from UN COMTRADE in June 2014
Using the classification system in Table 3 and raw jute export data, the AVC team charted the evolution
of Bangladeshi jute exports from 2007 to 2011 (see Table 4). Table 4 shows the healthy and steady
growth of raw jute and traditional jute exports, which consist mostly of spun yarn and twine. For
nontraditional JDP, there was basically stagnant growth with a sharp drop in 2008 and 2009, followed by
rapid recovery, which may have been linked to the financial crisis in the Western economies at this
time.52 Data show a total value of jute exports for 2012–13 at USD 1.03 billion, an increase of 10 percent
over 2011 levels.
Table 4: Value of Raw and Processed Jute Exports from Bangladesh, 2007–11 (in USD)
Annual
Growth
Rate of
2007 2008 2009 2010 2011
Bangladesh
Exporters,
2007–11
Yarns, Fibers
$260,902,936 $313,559,182 $322,492,630 $539,723,386 $595,552,460 22.90%
& Food Sacks
Raw Jute $145,702,274 $159,275,368 $166,692,604 $222,184,169 $284,504,844 18.20%
Nontraditional
$ 42,899,497 $39,468,897 $28,884,494 $51,709,052 $48,621,840 3.20%
JDP
Total $449,504,707 $512,303,447 $518,069,728 $813,616,607 $928,679,144 19.90%
Note: AVC compiled data for table with data from UN COMTRADE Database (available at http://comtrade.un.org/db).
52
The figures for nontraditional JDP drawn from mirror data in the UN COMTRADE database in Table 4 are significantly lower
than the expert estimate of 70 million in 2013 given by the Secretary General of the BJDMEA. This may be because of growth
in exports between 2011 and 2013, as well as differences in the definition of what are JDP and what are traditional jute products,
since there is no official definition.

Figure 4: Value of Raw and Processed Jute Exports from Bangladesh (in USD)
$700
$600
$500 Yarns, Fibers,& Food
Sacks
$400
Raw Jute
$300
$200 Non‐TraditionalJDP
$100
$‐
2007 2008 2009 2010 2011
Note: AVC drew figures for nontraditional JDP from mirror data in the UN COMTRADE Database.
Raw jute from Bangladesh is exported almost exclusively to the region, with the main buyers being
India, Pakistan, and China. Yarns, fibers, and food sacks are exported mainly to Turkey, India, Belgium,
and most recently Iran. Nontraditional JDP are exported to India and a widely diverse group of developed
economies, including Japan, Germany, Australia, the United States, and China. These countries use jute
products in automobiles, super market sacks, household products, and packaging for food and non-food
items. There is also significant demand for diversified products and advanced materials like geotextiles
and composites. (See Table 4 for a list of select exported jute products from Bangladesh in FY 2012–13.)
Table 5: Destination and Use of Jute Exports from Bangladesh (2012–13)

Product Name Major Importing Country Main Use
Yarn, Twine Turkey: 42 percent; China: 12 percent; Except India and China, importing
India:11 percent; Iran:10 percent; countries use yarn for making high quality
Egypt: 7 percent; Indonesia:4 percent; carpets for international market. India and
Belgium: 3 percent; Russia: 2.25 China use this yarn as the raw material of
percent; USA: 1.52 percent; KSA: 1.5 hessian and sacking. Demand in China is
percent; Syria: 1.38 percent increasing.
Woven Geotextile USA: 40 percent; EU: 30 percent; Use for soil erosion control
Australia: 30 percent
Sacks, Bags Sudan: 50 percent; India, Kenya, Use for food grains preservation
Uganda, Thailand, Indonesia, Ivory
Coast: 50 percent
Hessian Iran and China: 50 percent; India: 20 Use to make bags and carpets
percent; Egypt: 20 percent; Kenya and
others: 10 percent
CBC India: 60 percent; Australia: 30 Use to make carpets and shopping bags
percent; Japan and Korea: 10 percent
Nonwoven Geo Textile Australia: 99 percent; Italy and Use for soil erosion control and
Germany: 2 percent horticultural
Processed Fiber China: 50 percent; USA: 45 percent; For automotive industry
South Korea: 5 percent
Linoleum Fabrics (FJF: EU: 60 percent; USA: 30 percent; Using for making shopping bags, curtain,
Fine Jute Fabrics), (LBC: Australia: 10 percent cushion cover, life style products and floor
Linoleum Backing Cloth) covering
Retail Products EU: 80 percent; Japan: 20 percent Use for nursery and gardening, home
decoration, and soft toys
Other JDP EU: 70 percent; USA, UK, Australia, Use for home decoration, gardening, life
Japan, Korea: 30 percent style use, daily use.
Raw Jute India: 43 percent; Pakistan: 27 percent, Use for different yarn, fabrics, hessians,
China: 13 percent; rest of the world: 16 and other products
percent
Note: AVC team compiled data from interviews with BJMA, BJSA, and BJMC.

Export of jute products is highly influenced by regional countries’ trade policies and tariff rates. As part
of its commitment to the South Asia Free Trade Area (SAFTA), India maintains a relatively open market
for jute products from Bangladesh, with a zero tariff rate for raw jute and jute carpeting material, and
only 4 percent on yarn, woven fabric, and sacks. However, members of the South Asian Association for
Regional Cooperation have the option of publishing “sensitive” lists of products for which import duties
are allowed as a protectionist measure in support of national production. Pakistan included sacks and
bags of jute on a sensitive list and imposed a 25 percent MFN (Most Favored Nation) tariff. Nepal
included woven fabrics of jute or other textile based fibers of jute and imposed a 15 percent tariff. Sri
Lanka included twine and ropes of jute and had a 25.4 percent MFN tariff. Such trade policies hinder the
penetration of processed jute products elsewhere in the region beyond India. In contrast, in the open
Indian market, Bangladesh was able to attain growth rates of 43 percent for jute yarns, 25 percent for
woven fabrics, and 43 percent for sacks and bags from 2005–09 (see Table 5).

NATIONAL MARKET
The national market for jute products is small. Only 117,000 tons out of 1.37 million tons of raw jute
were consumed in the local market in 2013 (see Figure 5 for trends in national consumption of jute
goods). The majority of Bangladeshis are not aware of the benefits of using jute products. However,
various corporations, NGOs, pharmaceuticals, department stores, and government offices have begun to
use jute handicraft products as decoration, floor covering, and commercial gift items. Institutional buyers
of jute goods account for about 54 percent of national consumption. The major institutional buyers
include the Ministry of Food, BADC, private seed companies, the post office, fertilizer companies, and
sugar mills.
The remaining 46 percent of national jute consumption (54,000 tons) is for household purposes. As their
awareness about global warming increases, many middle-class consumers in Bangladesh with rising
incomes have become interested in consuming biodegradable and natural fiber made products, especially
jute. All this is leading to gradual, rather than spectacular growth in the use jute products.
Figure 5: Five-Year National Market Consumption Scenario of Jute Products, 2008–9 to 2012–
13
NATIONAL LEVEL CONSUMPTION OF JUTE PRODUCTS

150,000
100,000
50,000
‐
2008‐09 2009‐10 2010‐11 2011‐12 2012‐13
National Consumption
Source: BJMA, BJSA, BJMC
The slow growth in local consumption could change dramatically if the packaging law against plastic
sacks were effectively enforced. Such a law would increase local demand for raw jute by 370,000 tons—
almost tripling total consumption. The law would require the manufacturing of an additional 550 to 600
million jute sacks for packing food items—for a total value of USD 500 million. Organizations such as
the Department of Planners and Consultants, Ministry of Jute, Banglacraft, and the milling association
Bangladesh Jute Diversified Product Manufacturer and Exporters Association (BJDMEA) are now trying
to increase the national consumption of jute and jute products by organizing various trade fairs and
workshops.

PRODUCTION
From 2000 to 2010, production of jute in Bangladesh was relatively constant in terms of volume
produced and area cultivated. However, in 2011 there was a sharp increase in production (see Figure 5),
which was a reaction to a price spike in 2010 when demand exceeded supply as countries like the United
Arab Emirates banned plastic bags.
Figure 5: Jute Production and Area Coverage, 2003–13
Source: Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: BBS, 2003–2010 and 2011–2013), 88– 91.
The Southern Delta is particularly well suited for jute cultivation and accounts for 49 percent of total
national production. Moreover, yields are more favorable in the Southern Delta than elsewhere in the
country, as the southern districts that comprise the FTF zone produced 2.06 tons per hectare compared
with the rest of the country’s 1.96 tons per hectare in 2013.
As shown on the map in Figure 6, the center of jute production and trade in the Southern Delta is
Faridpur. Faridpur has the following natural advantages in jute cultivation:
Water availability: The Faridpur region contains many rivulets and water bodies, required for jute
cultivation and good quality retting. A shortage of water in Jessore, Magura, Jhenaidah, Chuadanga, and
Meherpur is causing problems with retting.
Favorable soil conditions: Soil of the Faridpur region is well suited for jute cultivation and produces a
higher quality jute fiber compared with other regions of Bangladesh.
The presence of many important traditional jute markets: Because of the long jute production history of
the Faridpur region, the local jute markets are well established. Renowned, large jute hat, or bazaars, in
this area include Char Muguria, Zazira, Shibchar, Satoir, Kazirhat, and Kanaipur. Large-scale national
jute traders, private jute mills, agents, and representatives of raw jute exporters all establish connections
to Faridpur markets.
Despite favorable conditions for jute production in the South, since 2008–09 growth rates in both
production and planted areas in the Southern Delta have lagged behind the rest of Bangladesh (see Table
6). The slower growth rate is likely because production levels are already quite high in the Southern
Delta and there is limited room for expansion (see map in Figure 6).

Table 6: Growth Rates for Planted Areas and Production, 2008–09 to 2012–13
Growth in Growth in
Planted Area Production Volume
Rest of Bangladesh 12.8% 12.9 %
Southern Delta 5.8% 9.7%
Note: AVC team compiled data from the BBS and a field survey conducted by AVC staff.
Farmers in the Southern Delta told the AVC study team that about 70 percent of jute fields are planted
with the JRO (Jute Research Organization) 524 variety (jute variety introduced by the JRO), which is
imported from India because of its comparatively short life cycle and higher yield. The variety also fit
into the triple cropping pattern in Bangladesh.
While the peak season for raw jute trading is July to October, quality affects pricing more than
seasonality. There are two varieties of jute: white jute and golden, or “Tossa,” jute. Prices for Tossa are
slightly higher than prices for white jute, but both varieties exhibit wide price spreads between high and
low qualities. The top grade jute is classified as “Special” jute and comes in five quality grades (A to E).
Special A grade white jute is sold to mills or for export at a price of 12,800 BTD per bale (182 kg),
while Special A grade Tossa jute sells for 13,100 BTD per bale. Special E grades for white and Tossa,
respectively, are 9,200 and 9,500 BTD per bale. Lower classifications of both varieties of jute that do
not meet requirements for “Special” jute are
bought at the mill level for between 8,300 and Table 7: Harvest Calendar
6,300 BTD per bale.
Months Jute Production Cycle
The main determinants of quality are fiber length,
good pure color (golden or white), silky texture, March–May Seed sowing and cultivation
softness, fiber strength, and absence of any
July–August Harvest and retting
remnants of cuttings (the hard woody portion of
the jute plant). The main factors that influence July–October Peak season for trading
quality include good production practices (timely
plantation, good quality seed with pure varietal characteristics, proper fertilization, good weed
management and thinning, and pest control) and post-harvest handling (retting with sufficient clean
water, and use of ribbon retting53 where water is scarce, along with proper washing and drying).
53
Ribbon retting is a technology not widely used in Bangladesh, but with the potential to address the water scarcity problems.
However, both manual and power ribbon retting limit the how the jute can be used, which disincentivizes farmers from using
this technique. The Bangladesh Jute Research Institute and Bangladesh Agriculture Research Department are examining ways
to improve the technology for broader uptake.

Figure 6: District-Wide Jute Production, 2012–13
Note: AVC team developed this map with data collected from Department of Agriculture Extension (DAE) and Bangladesh Jute
Research Institute (BJRI).
Jute is a moderatly profitable crop. The costs and revenues for a one hectare jute farm are given in Table
8, which shows a profit of about 30,000 BTD per hectare and a benefit-cost ratio of 1.35:1. Jute, with its
six-month production cycle, compares unfavorably with higher value vegetables, such as tomatoes that
have a benefit-cost ratio of 2.86:1 and a slightly shorter production season (five months). The potential to
increase profitability is linked to the farmer’s ability to produce higher quality jute that would correspond
to the higher grades of special jute.
Table 8: Average Cost Benefit Analysis of the Southern Delta
Cost items Expenditure and

Revenue Per
Hectare (in BDT)
Tillage Cost 5000
Input Cost (fertilizer, seed, pesticide) 5769
Irrigation Cost 2500
Labor Cost 28747
Lease Value 18750
Total cost BDT 60766
Production (kg) 2300
Price/kg 33
Revenue Earned from Fiber 75900
Revenue Earned from Jute Stick 15000
Total Revenue (fiber and stick) 90900
Profit 30134
Note: AVC staff collected data from interviews with farmers in the Southern Delta from January to June 2014.

The majority of farmers in the Southern Delta use traditional methods of retting and drying. Retting
involves submerging jute in water. In areas outside of Faridpur, where water is scarce, farmers frequently
overuse the limited water resource, which pollutes the water, creates a bad smell in the surrounding area,
and reduces the quality of jute fibers by introducing black spots and hardening the fiber. Moreover,
because often the full length of the jute stick cannot be fully submerged in small ponds, the exposed end
is not used, leading to higher waste in areas where water is scarce. The BJRI is investigating innovative
technologies, such as ribbon retting machines, as alternatives to water retting. The technology has not
been widely adopted, in part because fibers from ribbon retting have fewer potential uses than water
retted fibers. More research is required to improve technology and find alternative retting methods.
The traditional methods of sun drying the fiber over fences or on the street are the most common.
However, farmers lack knowledge of the potential risks of storing fibers with slight levels of moisture.
Too often preventable post-harvest losses occur because the fiber is not completely dry, which reduces
quality or spoils fiber, or both.
PROCESSING AND MANUFACTURING

There are more than 200 jute mills in Bangladesh, 60 of which are located in the Southern Delta (FTF
zone). The main concentrations of the mills are in the Faridpur, Jessore, and Khulna districts. Mills use
two distinct processes with separate types of machines:
1. Jute yarn spinning: In this process, raw jute is treated and spun into long spools of yarn, thread, or twine
for use mainly in industries that need high-quality natural fiber thread. The biggest of these are carpet
manufacturers in Turkey, Iran, China, and India.
2. Jute milling: Jute milling produces woven type jute products and the whole range of different JDP items
as a function of different milling and treatment processes.
The quality of the raw jute fiber has a significant impact on the quality of the manufactured products
made by the mills. Certain products require high-quality raw jute, including the following:
• Decorator jute fabrics and wall hangings

• Artisanal jute handicrafts
• Yarns destined for use in high-quality carpets produced in Iran and in Turkey,
• Hessians
• Carpet backing cloth (CBC)
Lower quality jute is used mainly for the following types of products:
• Geo-textile soil saving cloth

• Yarns destined for use in lower quality carpets, mainly by Chinese carpet manufacturers,
• Food sacks
JUTE CHANNEL MAP AND VALUE CHAIN ACTORS

In this section, the AVC team describes the major categories of actors in the jute value chain map (Figure
7). The value chain engages almost 4.5 million people, 4 million of who are farmers. The estimate for
number of actors at each node in the value chain is presented in Table 9.

Figure 7: Jute Channel Map
Note: AVC team developed this map after conducting field visits and key informant interviews with jute value chain actors from
January–August 2014.

Table 9: Number of Value Chain Actors Involved With Jute Sector
Value Chain Actors/Workforce Unit
Farmer 4,000,000
Input Importers 200
Dealers 8,000
Traders/Intermediaries 200,000
BJMC, BJMA, BJSA workforce 156,549
JDP workers 40,000
Retailer 500
Processor 10
Exporter 30
Total 4,405,289
Note: AVC team compiled data from interviews with BJMA and BJA.
Input supplier: Approximately 200 seed importers and 8,000 dealers and retailers are engaged in
supplying jute seeds to the farmers in Bangladesh. More than 85 percent of the jute seeds are sold by the
seed importers and dealers and retailers, and the rest are supplied by the Bangladesh Agriculture
Development Corporation (BADC). The dealers and retailers usually procure seeds from importers. A
few dealers and retailers directly import seeds from India. Other than these permanent seed dealers and
retailers, hawkers and mobile seed vendors also sell jute seeds to farmers. The quality of the seeds sold
by these mobile vendors is often very low. The same dealers and retailers also supply fertilizers and
pesticides to farmers. Input sellers share market information and buy or sell inventories from and to one
another.
54
Jute growers: About 4 million growers are involved in jute cultivation; about 1,800,000 of these
farmers are located in the Sothern Delta. Approximately 90 percent of farmers sell jute to traders in
nearby village markets, and the remaining 10 percent sell from their households. Farmers usually share
market information, seeds, transport costs, and water for retting the fibers
Faria (Traders) and Intermediaries: Nearly 200,000 faria, or traders, and intermediaries, are involved
in the jute value chain. Usually three levels of traders are involved in the chain: (1) small traders, who
operate at the village level and procure raw jute directly from the farmers, sell to the (2) medium traders,
who usually operate at the sub-district level, and (3) millers’ agents, who usually operate at the district
and regional level. The large traders’ trade volume is more than 800 tons per year, and small and medium
traders’ trade volume is 300 to 400 tons per year. Traders have storage facilities to stock large volumes
of raw jute for several months. They supply raw jute to government and private mills and to raw jute
exporters. Small and medium traders share market information and transport cost and help each other
with short-term finances. The large traders usually buy from small and medium traders and supply the
fibers to jute mills.
54
Sohel Parvez, “Jute Packaging Law Gathers Momentum,” The Daily Star 17 August 2014 (available at
http://thedailystar.net/jute-packaging-law-gathers-momentum-37406).

BJSA Affiliate Mills: The Bangladesh Jute Spinners Association (BJSA) was established in 1979 and
represents the jute spinning sector of Bangladesh. The association has a total membership of eightyone
jute-spinning mills. The member mills produce a wide variety of jute yarn and twine from raw jute. Yarn
and twine produced by spinning is then either sold or used by the mills to produce other jute products,
such as hessians, woven wall coverings, shopping bag fabrics, JDP, decorative fabrics, laminated cloth,
safety fuses for explosives, and other products. The BJSA mills export almost 97 percent of their
production. The remaining 3 percent is consumed by the national market. A high level of business rivalry
exists among the spinning mill owners. They closely hold information as business secrets and often
undercut each other, especially in case of exports. Many established millers report having high debt asset
ratios, which limits their ability to invest in the latest technology and to update machines.
BJMA Affiliate Mills: The Bangladesh Jute Mills Association (BJMA) is representing 97 jute mills in
Bangladesh. All the mills under this association are privately owned. The main products of BJMA are
hessian, sacking, carpet backing cloth, twine, and jute geotextile. Some members are also involved in
producing JDP products. The mills also produce hessian and sacking materials. These mills also spin
yarns that are then processed into fabrics, cut and sewn according to the required sizes and shapes. Such
products, as well as yarn or twine and different types of fabrics, are supplied to the downstream JDP
Manufacturers. Janata Jute Mill and Sonali Ansh Jute Mill are the pioneer sin providing fabrics to the
JDP producers. High debt asset ratios are characteristic of these BJMA Affiliate Mills.
BJMC Mills: The Bangladesh Jute Mills Corporation (BJMC) is a state owned corporation managed by a
board of directors headed by a chairman. The organization operates twenty-seven jute mills. Among
these mills, nine are located in the FTF zone. BJMC has two offices for supervising and coordinating the
activities of regional mills. BJMC buys raw jute for the mills through 182 purchasing centers located in
the jute growing areas of the country. As the largest manufacturer in the jute sector, BJMC produces
mainly sacking bags, hessian, CBC, different types of yarn, FJF, geo-jute, blanket and jute canvas. Like
the other mills, BJMC mill owners report that it is challenging to access finance for updating machines
and investing in new technology.
Raw Jute Exporters: There are about 150 active raw jute exporters as of 2012–13. Exporters purchase
raw jute from the jute growers and bring it to regional terminal markets, where there are hydraulic
presses installed for making bales. Jute exporters play a major role in regulating the jute market in both
national and international arenas by trading and exporting raw jute. During the last decade, the raw jute
sector grew considerably. The raw jute exporters procure jute according to buyers’ specifications. Raw
jute is sorted and bailed. Before shipping, jute bales are inspected by third-party quality assurance
authorities. All jute exporters must register with the exporters’ association, the Bangladesh Jute
Association (BJA). There are more than 500 members of the BJA, but only 150 are active.
Artisanal JDP Manufacturers: There are clusters of small JDP manufacturers at the rural level who
specialize mainly in handicraft type products. These enterprises can be SMEs, farmers’ clubs, or local
NGOs. Products produced at this level include items like sikka (garden basket hangers), shoulder bags,
household items, toys, and a few more traditional products. These companies thrive on the skills of the
artisans. The products are sold both in the national and in the international markets, sharing and
upholding the unique century old traditions of Bangladesh. The products used to be sold in the
international markets only through participation in events like export fairs or trade fairs. Some companies
are trying to be commercially competitive. They have trained the artisans to develop or diversify their
artistic skills. According to the JDPC, there are about 400 JDP producers in Bangladesh engaging 40,000
artisans; 85 percent are women (34,000) involved in production. Although the JDP producers have an
association (BJDMEA), it is not active. Occasionally, members share market information, jointly fill
large supply orders, and help each other with new technology.

SME JDP Manufacturers: This cluster of SMEs applies a semi-industrial approach by combining
handmade and machine-made processes. They make JDP products, such as handbags, promotional bags,
cushion covers, table runners, and clothes. Some of these companies sell their products directly to
international markets, but most sell their products in the national market, fulfilling orders to institutional
buyers and through retail outlets. Some enterprises are not directly involved in retailing but do supply
products to exporters and traders and local fashion houses or general retailers. These entrepreneurs
sometimes come together to fill large orders.
Yarn Processors: The yarn processors actually add value to raw jute and yarn or fiber by several
processes including dyeing, lamination, and printing. There are ten processors in the country, and they
are supplying fabrics to the JDP producers. The BJSA and BJMA Affiliate Mills have facilities to supply
special jute fabric for JDP producers, but their charges are higher than these specialized small processors.
Typically the jute mills are not interested in expanding into wet-processes, like dyeing, lamination, and
printing facilities because of the higher overhead costs.
Institutional Buyers: A number of public bodies and companies are major buyers of processed jute
products: Ministry of Food, the BADC, private seed companies, the Post Office, fertilizer companies,
and various sugar mills.
Retailers: About 500 retailers are involved in selling jute products in the national market. Most of the
retailers are small and medium sized and enjoy some amount of popularity with the customer. Aarong
(BRAC-outlet in BD), Kay-craft, Shetuli, Karuponya, Annomela, Narimela, Anjans, and some other
prominent shops have attractive jute product displays in their handicraft section. The retailers usually
maintain good relationships and share market information with one another.
Exporters: According to the Jute Diversified Promotion Center (JDPC), there are about thirty to thirty-
five exporters directly engaged in JDP export. The exporters collect processed jute products from various
jute mills in Bangladesh and export those through multiple channels. The exporters act as commission
agents. They collect products from jute mills and JDP producers and sell in the international markets.
These exporters established a vital market linkage between the international buyers and the local
producers.
MARKET CHANNELS
The main channels in the jute value chain are as follows:
CHANNEL 1: TRADITIONAL JUTE PRODUCT EXPORTS

Products consist mainly of yarn exports, food sacks, hessians. The value of exports in this channel is
estimated to be USD 600 to 700 million.
CHANNEL 2: NONTRADITIONAL JDP EXPORTS

Products in this channel consist of a wide variety of industrial type products and handicrafts. The main
markets are in developed countries and India. Value of products here is estimated to be about USD 70
million.
CHANNEL 3: RAW JUTE EXPORTS

Most of raw jute is exported to regional countries, mainly India. The value of this channel is estimated to
be about USD 300 million.
CHANNEL 4: NATIONAL MARKETS FOR JUTE PRODUCTS

The AVC study team was unable to make a viable dollar value estimate of national sales of the wide
variety of jute products consumed in the local market. With 117,000 tons consumed out of 1.37 million
tons of raw jute produced, in quantitative terms, this market accounts for about 9 percent of total volume.

MARGIN ANALYSIS
Figure 8 shows the gross margins for the main actors in the jute value chain. Farmers’ cost of inputs and
services is BDT 12,800/ton, and farmers sell to intermediaries at BDT 33,000/ton, making a gross
margin of BDT 20,200/ton. Intermediaries perform sort, grade, package, and transport the commodity to
jute mills to sell at BDT 36,050/ton. The jute mills sell the products to the processors at BDT 43,260/ton.
After processing, the processors sell the processed products to the SME JDP manufacturer at BDT
51,900/ton. After value addition of 6,500/ton, the artisan JDP manufacturers sell to the institutional buyer
at BDT 58,400. Small and medium enterprise JDP manufacturers sell the products to exporters at BDT
67,500/ton. The exporters then sell the products to the international buyers at BDT 81,760/ton.
Figure 8: Gross Margins of the Value Chain Actors in Jute Value Chain
Note: AVC team built analysis on the basis of collected secondary information (interviews with each of the market actors). *An
estimated 30 percent of the time, the product passes sequentially from the artisan JDP manufacturer to the SME JDP manufacturer
for further improvement and value addition. Seventy percent of the time the product passes through just one or the other, and
continues on to JDP retailers. In this case, the estimated gross margin of the manufacturer is BDT 1559.
CROSS-CUTTING ISSUES
GENDER INTEGRATION
The jute value chain provides income generation opportunities for vulnerable women. Such opportunities
impact women’s income, improve their living conditions, and reduce poverty. Upgrading of the jute
value chain will lead to increased employment opportunities for women. Women farmers take part in all
the different stages of jute production through drying. Women laborers work in jute mills and in the
processing units, and make diversified jute-based products. According to interviews in January of 2014
with Mokhelsur Rahmna, the executive director of the JDPC, approximately 34,000 women are involved
in the JDP sector in the rural areas. Table 10 shows rural women’s participation in the jute value chain in
2014.

Table 10: Estimates of Women Involvement in the Jute Workforce, (2014)
Percent of Workforce Who Are Women

Stages/Areas
(approximate)
Growers/Farmers 1. Agricultural production/cultivation – 20
to 25 percent
2. Collection of jute stalks – 20 to 25 percent
3. Retting – 25 to 30 percent
4. Fiber extraction – 20 to 25 percent
5. Drying raw jute – 50 to 60 percent
Jute Mills Working in different stages in the production
process – 40 to 50 percent
Processors Working in different stages in the production
process – 20 percent
JDP Producers (semi- Working in different stages in the production
industrial approach) process – 50 to 60 percent
JDP Producers 1. Handloom – 70 percent

(cluster approach) 2. Handicrafts – 95 percent
3. Handmade Yarn – 80 percent
Retailers At the village market level it is not profitable to
have retail outlets, and thus the opportunity for
women to run retail shops is limited. However,
women have begun very slowly to migrate to the
cities and are taking jobs in retail outlets.
Exporters The opportunity for women to become exporters is
limited, but occasionally there are reports of women
who are creating opportunities to show their
products to various international development
workers in retail shops at the rural level, and having
export orders.

ENVIRONMENTAL AND COMPLIANCE ISSUES
Environmental and compliance issues exist for natural fibers. Traditional retting, which is most
commonly practiced by farmers in the Southern Delta, involves retting jute in open water bodies like
ponds, ditches, and canals. The process not only pollutes water but also creates a bad smell in the
surrounding area. The water quality of local water bodies seriously deteriorates during the jute retting
period.
Jute also has a positive effect on the environment. Because jute is a deep-rooted plant it collects
necessary nutrients and water from deeper soil. Thus, it maintains the soil fertility for a long time. Jute
leaves help to increase the soil biomass when they decompose, which increases soil fertility.
At the industrial level, there are inherent compliance issues, which increase the risk of environmental
harm and workplace accidents. Safety guidelines are not strictly followed or enforced in mills and
processing plants. Workers wear loose clothes while operating heavy machinery, do not wear protective
eyewear or masks, and do not consistently following basic safety guidelines.Some of the industries
visited also appeared to be lax in enforcing child labor codes.
FOOD SECURITY AND NUTRITION ISSUE

Although jute is a non-food product without nutritional benefits, the employment generated through this
large sector improves household income for millions of families in the Southern Delta, which improves
their access to nutritious foods. As AVC support of the value chain upgrades and adds greater value,
more job opportunities will be created and farmers will receive better prices for higher quality jute fiber.
The income of employees and the profits of investors will alleviate poverty in the rural southern part of
Bangladesh. The earning potential of women involved in natural fiber value chains will improve, and
entire households will benefit.
ACCESS TO FINANCE
Commercial banks offer agricultural loans to jute producers both for cultivation and for purchase of farm
machinery. However, the farmers are reluctant to approach the banks for financing because of the
complex system of loan processing, the time required to secure a loan, and the fear of unethical lending
practices. Farmers generally prefer to take loans from local micro finance institutions.
Public and private banks provide short- and long-term loans to the jute mill owners to purchase jute as
raw material of diversified and traditional products. Older jute mills report being overloaded with bank
liabilities. Mill owners explained that while they are generating revenue, the profit earned is not
sufficient to pay large outstanding debts on existing loans. Moreover, progressive owners who desire to
modernize their factories to improve efficiency are hesitant because of financing; they do not intend to
overburden themselves with new bank loans. Owners of old jute mills are working through associations
like BJMC, BJSA, and BJMA to collectively advocate for government intervention in the form of a
waiver of bank interest due on outstanding loans, and the rescheduling of these loans.

ENABLING ENVIRONMENT
The most important public policy affecting the jute sector is the government’s providing subsidies for
jute exports, which motivate exporters to export jute. The subsidies are as follows: 7.5 percent for jute
yarn and twine; 10 percent for fabrics/hessians; and 20 percent for hand made products.
The government’s establishment of the Bangladesh Jute Research Institute (BJRI) in 1951 further
evidences their commitment to the jute sector. The objective of BJRI is to carry out research to improve
the productivity of jute crops and enhance the quality of the fiber. BJRI is the sole provider of Breeder
Seed (BS) for jute in Bangladesh. This agency provides jute BS to BADC for multiplying the seed with
contract growers. Every year the BADC produces 1,000 to 1,200 tons of jute certified seed for marketing
throughout the country. In addition to providing BS for the production of jute seed, BJRI focuses on
agricultural and technological research on jute, economic analysis and market research with respect to
jute, and jute textile product development. BJRI developed fourteen jute varieties (Olitorius-6 and
Capsularies-8), among them, the “O 72” and “O 9897” varieties are the most popular in the Faridpur
region. BJRI developed ribbon retting methods for areas of Bangladesh where water is scarce.

Opportunity # 1: High quality jute fiber and jute products fetch higher prices internationally. Jute is
increasingly being used in higher value textiles for furnishings and composites, particularly as a wood
fiber. Although high-quality jute products are a small percentage of total consumption, this segment is
highly profitable. Bangladesh could improve its competitiveness in higher quality products with further
investment in modern production, retting, processing techniques, and technology and workforce
development.
Constraints to this opportunity include:
• Lack of access to quality jute seeds, modern cultivation techniques, and modern retting technology lead
to low quality jute fibers. Bangladesh’s production of high-quality jute fiber is insufficient in large part
because of the quality of its planting material. According to representatives of the Bangladesh Sees
Association, since 2000, seed companies import jute seeds from India, but farmers do not always get
seeds in time for planting because of inefficient import policies. Seeds received are not consistently high
quality. Low-quality seeds reduce the quality and quantity of jute production. Furthermore, Bangladeshi
jute farmers follow traditional retting processes, which reduced the quality of jute fibers.
• Farmers’ and entrepreneurs’ limited access to appropriate loan products lead to loss in production and
profitability. There is a lack of access to finance in the sector. There are no custom-made loan products
for jute farming that could support improved jute farming methods. However, loans are available for
purchasing processing machinery. The jute processing units are capital intensive, and generally most
factories have high debt-equity ratios. The JDP producers also do not have any special loan facilities.
Opportunity # 2: Demand for diversified jute products, both nationally and internationally, is
increasing. Global demand for processed jute products is expected to increase in the next five years.
However, with heavy competition from India and China, product diversification will be key to gaining
market share, as will improving the quality of Bangladeshi products overall. India is benefitting from jute
product diversification. With quality mills and professionals and designers to produce diversified
products, India is investing in new mills and research and development in line with global demand, trend,
and culture.
Constraints to this opportunity include:
• Entrepreneurs’ inadequate knowledge of end market requirements for jute diversified products (JDP)
lead to low market penetration by Bangladeshi exporters of JDP. While Bangladeshi designers have
demonstrated that they can make attractive products that appeal to European and American consumers,
they are not familiar with evolving tastes in the different markets for high-end handicrafts and
decorations. Most Bengali entrepreneurs do not have knowledge of international end market
requirements and quality specifications. SME JDP manufacturers and artisanal JDP manufacturers
primarily employ an unskilled workforce and use traditional manufacturing methods. Workers lack the
skill to consistently achieve quality and designs standards and hence lose the interest of buyers. As a
result, Bangladesh products do not always fetch the best prices.
• Collaboration and cooperation among the entrepreneurs is inadequate. Exporters and entrepreneurs
often undercut one another when dealing with international buyers, resulting in reduced profitability and
participation in competitive markets. Most entrepreneurs avoid business rules, norms, and ethics. The
Jute Diversified Product Manufacturer and Exporters Association (BJDMEA), an association of JDP
entrepreneurs and exporters established in 2013, is not functioning well, and members are not realizing
benefits from membership.
• JDP producers’ lack of access to good quality raw materials leads to increased costs of doing business.
In India and China, entrepreneurs have established a single center providing multiple services for jute

production, including spinning, weaving, dying, printing fabric, and lamination. The service center
reduces production time and cost of JDP, and improves competitiveness of Indian and Chinese products.
In Bangladesh, no such centralized service center existed until 2014, when a mill owner replicated this
model in Narshingdi. Although Narshingdi is outside of the FTF zone, JDP manufacturers from the zone
could reduce costs and time by outsourcing to this centralized location. The raw materials supply center
for jute services in Narshingdi can be a model service center that investors and entrepreneurs in the FTF
zone replicate. The AVC team will identify interested investors and support them in establishing this
kind of service center, where JDP producers will get good quality raw materials.

COIR
Coconut coir is another environmentally friendly natural fiber that is strong, durable, and less expensive
than jute. Coir has unique properties— it is oil absorbent and saline resistant—which make it well suited
for nautical and industrial uses. Given that its uses are more specialized than jute, the global market for
coir is much smaller ($5 billion versus $12 billion), although it can be a substitute for jute in some
product lines, such as geotextiles and landscaping. Fifteen Asia-Pacific countries produce 86 percent of
the world’s coconut from which coir fibers are produced. India leads coir production and exports, having
earned international recognition for its superior value-added coir floor coverings and geotextiles. Since
2006, the global export market has skyrocketed for coir fiber and diversified products in response to the
same drivers of growth that has sustained and bolstered the jute industry.
In Bangladesh, the coir industry is valued at USD 9.82 million and employs more than 25,500 workers,
the majority of which are women. Forty-two percent of coconut is grown in the FTF zone where women
have passed down the art of making rope and coir-related products for generations. The most demanded
products nationally include traditional mattresses made of course fiber (91 percent of national market),
door mats (4 percent), rope (2 percent), and diversified products ranging from felt to upholstery for
rickshaw seats to rubberized mattresses sold to wealthy consumers (about 3 percent).
Only two companies are exporting coir products, both in negligible quantities. They operate
undercapacity and turn away international buyers because of supply constraints. Both export
nontraditional products, the most promising market segment for export growth.
Although trend data for production volume of coir since 2002 reveals Bangladesh’s market is in decline,
the AVC team considers the increasing global demand for natural fibers (and coir specifically) sufficient
to make targeted investments in revitalizing Bangladesh’s coir industry.
Additionally, promoting coir will indirectly benefit other AVC value chains because coir is
Figure 9: Exports of Coir Fiber, 2006–11 (in thousand tons)
Note: AVC team developed chart with data from FAOSTAT (http://faostat.fao.org/site/567/default.aspx#ancor).
an ideal medium for growing seedlings. Improving the quality of seedling is a universal need across
AVC value chains. Further, coir pith (a byproduct of coir processing) is a substitute for peat moss, and
can become an inexpensive source of fertilizer or compost for flower and most horticulture crops in the
FTF zone. A final justification for supporting coir is related to its workforce. More than half of the
workforce producing coir-diversified products is female, thus supporting the coir industry will advance
AVC’s gender equity objectives.

Given the state of decline of the coir market, AVC’s investment in coir would be admittedly
experimental and expected outcomes less certain than for other AVC-supported products. Thus, the AVC
team proposes a two-year timeframe for coir interventions, after which staff will re-assess whether
further investment is warranted based on traction and whether expected outcomes are being realized.
Three of the five interventions proposed for coir build on jute interventions, thereby multiplying the
scope of potential returns for the natural fibers value chain. This is a cost-efficient approach to work in
coir since it requires little additional investment from AVC.

Opportunity # 1: Demand for natural fibers and diversified coir products are increasing internationally.
As demonstrated in the jute end market analysis and coir overview in this chapter, eco-friendly natural
fiber products are in high demand globally. Although India and Sri Lanka dominate the coir export
market and are more advanced than Bangladesh in technology and product development, the increase in
global demand makes coir attractive for new entrants. For Bangladesh entrepreneurs, maintaining or
increasing market share in the national market will be a prudent platform for growth as they make entrées
into the more competitive global market. While Bangladesh has an ample supply of raw materials (i.e.,
coconuts) to revitalize the national market and become an international player, certain constraints must
be effectively addressed.
• Inadequate access to information on modern coir-based end products. Entrepreneurs are primarily
engaged in making traditional products for domestic consumption and lack knowledge of the diversified
products in demand internationally. As a result, they are unable to produce and provide more modern
products for export.
• Lack of skilled workforce for diversified coir products results in low quality products and low
profitability. Most of the coir workforce is producing traditional products, including door mats, hand-
made rope, and mattresses using techniques from past generations. The workers lack knowledge of
modern production techniques and the skills required to produce international standard products. In some
cases, processing units have closed their doors because of the lack of skilled workers.
• Traders, manufacturers, and exporters do not have access to appropriate loan products for coir industry.
There is no suitable loan product available for the coir industry. Most processors are not in a bankable
state.
• Lack of access to modern production technology, equipment, and machines leads to low productivity.
Not only are the required machines to produce coir diversified products not readily available, often
processors lack knowledge of which machines are best suited to meet their needs. Processors who have
started exploring the world market report difficulty sourcing appropriate machinery and technology to
produce competitive, diversified high-quality products.
• Inefficient raw materials procurement and management system leads to shortage of raw materials
resulting in idle capacity in the production plants. Raw materials are grown in Bangladesh, but are not
readily available when processors need them, leading to difficulty filling orders and, ultimately, factory
closures. Although mobile vendors (selling coconuts for drinks and meat) may be aware that husks have
high value potential, there is no system for aggregation and collection, so husks are often wasted or used
as cooking fuel. Furthermore, collecting husks is less efficient than collecting fibers (saving transport
costs), and will require organization among downstream actors to ret husks before processors collect
them. While it would be easier to source fiber from oil producing facilities than mobile vendors, there are
no oil producing facilities in the vicinity of the FTF zones’ coir processing cluster. Thus, the processors
incur great expense collecting supply from great distances.

• Government’s failure to recognize coir as a priority sector results in processors prioritizing other
product lines. There is no government initiative for the growth and expansion of the coir industry.
Exporters currently export their coir products under the HS code used for handcraft products to take
advantage of subsidies and preferential tax incentives, or simply choose not to produce coir products.

CHAPTER 9: FLORICULTURE

INTRODUCTION
The floriculture value chain in Bangladesh differs from floriculture value chains in other countries. In
Bangladesh, floriculture, which is dominated by cut flowers (90 percent of total market value) compared
with foliage (9 percent of market value) and ornamental (one percent of market value), is an “infant
industry,” with a short history of flower production or consumption. Twenty years ago, flower
consumption was limited to ritual uses by the Hindu minority, along with a very small pool of highincome
consumers in Dhaka. Today, flowers are bought mainly by urban dwellers in cities and towns all over
Bangladesh and are a key component of marriage celebrations for all socio-economic classes. This rapid
growth in demand for flowers is being driven by a spread in consumption beyond the Hindu minority and
by key demographic changes, notably the rise of the middle class in urban areas.
Flowers have become an attractive crop, and farmers are responding by rapidly increasing areas under
flower cultivation. More than 150,000 people are involved in the flower value chain, including its
production and trade with more than 3,000 hectares of land under cultivation. Bangladesh is without an
indigenous “high-tech” cluster of production, similar to what exists in nearby centers of flower cultivation
in India, China, Thailand, and Malaysia. Bangladesh farmers use very simple and rudimentary production
techniques—with open field cultivation of the traditional main cut flower varieties such as marigolds and
tuberoses. In contrast to floriculture value chains in other countries, floriculture in Bangladesh is a value
chain with a plethora of small farmers using relatively simple technology, which is in many respects
similar to what farmers use for food crops. For some flower crops, such as gerbera and roses, more
advanced technologies (e.g., the use of greenhouses for protection from sunlight and rain) are either
desirable (for roses) or necessary (for gerbera). There is a certain stratification of flower farmers between
those who are able to make some investments in higher cost technologies to producer roses and gerbera
and those who concentrate more on open-field flower crops that have more modest investment needs.
Approximately, 67 percent of the total flower production occurs in USAID’s Feed the Future target areas,
which spans the Southern Delta. However, other areas such as Gazipur, Savar, Manikgonj, Narayangonj,
Chokoria have also shown prospective for growing flowers, foliage and ornamental plants commercially.
Main constraints in the flower value chain include the difficulty of obtaining high-quality planting
material, virtually all of which is imported from India, and the simple fact that Bangladeshi farmers are
unfamiliar with good agricultural practices in flower cultivation. The highly concentrated pattern of flower
cultivation also makes it difficult to expand knowledge of flower production practices beyond the main
existing production nodes. There is also a substantial lack of improved post-harvest infrastructure,
including cold storage, which makes it hard for local flower producers to match import quality—which is
important in the higher priced luxury segment of the market.
In its overall ranking of value chains, the AVC team has given flowers a score of 69.5 out of 90, as shown
below in Table 1.
AVC END MARKET ANALYSIS: FLORICULTURE 180

Table 1: Value Chain Selection Ranking
Floriculture
Criteria Data Weightage Score Explanation
source

Scale BFS 10 8 Over USD 63 million
domestic market (in 2012-
13). USD 42 million in
Southern Delta.
Annual Primary 10 10 High growth rate (26
Market source percent) in domestic
Growth market. Similar growth rate
in Southern Delta.
Scope of Key 10 6 Post-harvest, storing and
Value Informant transportation can
Addition Interview significantly enhance the
value of the end product.
Export/ Trade map 5 3 Scope to export in Middle-
Import and others East in near future. With
substitution the introduction of the new
potential varieties import
substitution will increase.
Agro Field recon 5 3 Soil structure and climate
Ecological and KII are well suited for varieties
suitability like gerbera, rose,
gladiolas, tube rose and
marigold. However certain
varieties like carnation and
chrysanthemum are very
difficult to grow at the
present condition.
Income Team 10 10 Per hectare annual profit is
potential assessment approximately BDT
150,000 for gerberas (IRR
61 percent), considering
full land rent and hired
labor. Rose and gladiolas
farmers also enjoy very
high rate of return.
Women and Reports 10 8.5 Women are highly
Youth and involved in most steps
Inclusion databases (flower plucking, seed
sorting, seed treatment,
sorting, grading and
packaging) of the value
chain.
Outreach(no Reports 5 2 Can reach more than 9
of households and thousand farmers in
impacted databases Southern Delta.
Job Creation Team 10 9 Floriculture is highly labor
assessment intensive industry.
Environmental Team 5 3 Green-house emissions,
Sustainability assessment chemicals and pests pose a
great challenge to the

future of the flower
industry. Use of chemicals
can contaminate nearby
water bodies.
Potential for Team 10 7 Floral industry is run by
private sector Assessmen mostly micro and small
leverage t privet sector entrepreneurs.
Can results be (Y/N) Y Flower is a seasonal crop.
achieved Appropriate interventions
within the can bring desired changes
available in fairly short span of time.
resources and
timeframe?
Total (90) 69.5

PORTER’S FIVE FORCES ANALYSIS FOR FLOWERS
As a relatively new value chain in Bangladesh, it was important to utilize a framework such as Michael
Porter’s to identify those factors critical for an industry to become and remain competitive
Flowers are a unique commodity with virtually no substitute. The demand for flowers is growing both
nationally and internationally. While the suppliers have moderate bargaining power mainly because of a
limited supply of quality planting materials, the buyers are largely price takers as the majority of flower
consumers are not price sensitive. A large cluster dominates the industry, but the rapid growth in demand
opens up opportunities for more players to enter the market at every link of the value chain. New players
will make the flower market more competitive.

END MARKET ANALYSIS
Global Floriculture Market
The global floriculture market has been steadily expanding for the past fifteen years, driven by growing
demand in rapidly developing parts of the world. Worldwide floriculture consumption is estimated at USD
109 billion in 201255 and is growing at an estimated 15 percent per year. Global floriculture sales are
expected to reach USD 166 billion in 2015. The floriculture sector comprises a number of different product
categories classified by HS codes. The main ones are 0601, 0602, 0603, and 0604, which account, in order,
for bulbs, live plants, cut flowers, and foliage. Floriculture producers typically produce or use (as inputs)
products from all four HS code categories. Figure 1 shows the growth in global floriculture trade. After a
brief decline in the crisis year of 2008, the world trade in floriculture rebounded and has been steady at just
under USD 20 million between 2011 and 2013.56 The main drivers of this growth have been expansion in
the trade of cut flower and live plants.
Figure 1: World Floriculture Exports, 2002 – 2013
Chart Title
25,000,000
20,000,000
15,000,000 Live Plants & Cuttings

In USD
Foliage
10,000,000
Cut Flowers
5,000,000 Bulbs
-
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Note: AVC created chart with data collected from Trade Map (available at
http://www.trademap.org/AdvancedProductSearch.aspx).
Much of the increase in cut flower exports is coming from developing countries. Besides the traditional
growers, which includes the Netherlands, US, Japan, Italy and Colombia, recent times have witnessed the
emergence of new producers from developing countries. Major dynamic new exporters emerging in the
last decade include: Ecuador, Zimbabwe, Kenya, China, Korea, Malawi, Malaysia, Mexico, Peru,
Palestine, Zambia, and South Africa.
The Asian region in particular has been marked by the growth of dynamic new flower exporting hubs over
the past ten years in China and Malaysia, which have joined more established flower export hubs in
Thailand and India. Floriculture exporters in these countries have made investments in new production
technology and cold storage that allow them to serve international markets that demand high-quality
product.
55
“Pakistan to Capture $180b World Horticulture Market,” The Nation, August 28, 2013 (available at http://nation.com.pk/business/28-Aug-
2013/pakistan-to-capture-180b-world-horticulture-market).
56
Data in Figure 1 are gleaned from global customs data and probably underrepresent the true value of world exports. Sector specialists cite
a figure of USD 25 million in 2012 (Floriculture Today, available at http://www.floriculturetoday.in/).

A key facet of the international flower market is the existence of synergies from the close geographic
concentration of floriculture producers and service providers. The concentrations of flower producers and
related companies in a single area are known as clusters. To achieve efficiencies of scale and streamline
logistics, clusters are populated with firms that span the full value chain from genetic material breeding to
production, export, and wholesaling. Clusters are often comprised of multiple companies that are vertically
integrated and located within close proximity of one another—which favors the emergence of specialized
service providers such as flower packaging providers and export market consultancies specialized in
floriculture. In many cases, such clusters receive support from the host country government in the form of
investment incentives or agricultural research focused on floriculture. Cluster development in floriculture
has enabled a few countries to produce high volumes of high-quality production at competitive prices. The
existence of at least four regional flower clusters in near Bangladesh (India, China, Thailand, and
Malaysia) is an important phenomenon, as it places Bangladeshi producers close to some of the most
productive flower exporters in the world market.
National Market
Long term trends in flower demand
It is estimated that national flower market value is around USD 80 million per year (BDT 6,400 million).
The major types of cut flowers in descending order of production quantities are: marigolds, roses,
tuberoses, gladiolus, and gerbera in addition to other types of flowers. Foliage production is around 10
percent of cut flower production values, or around USD 8 million. The size of the ornamental plant market
is around USD 1.5 million. Thus the total value of floriculture sales is around USD 90 million—with cut
flowers by far the dominant crop. Much of the flower market is concentrated in Dhaka, which is estimated
about 45 percent of the total national market. The retail price of flower in Dhaka is also higher than that of
other districts.
Although time series statistics on national production and consumption are not available, the study team
was able to assemble estimates of production for the five years from 2009/10 through 2013/14 from the
Bangladesh Flower Society (BFS). As shown in Table 2 below, there has been a steady and strong
increase in both production and areas planted with cut flowers. With a total growth of more than 26
percent a year in production values, it is clear that many more flowers are arriving in the national
marketplace and that it is undergoing a phase of major structural change.
Table 2: Flower Areas and Total Production, 2009/10 to 2013/14
Annual
2009-10 2010-11 2011-12 2012-13 2013-14 growth
(%)
Area(HA) 1,774 2,040 2,326 2,651 3,054 14.55
Production in MT 23,720 34,658 37,938 42,726 49,877 20.42
Quantity sold in MT 18,050 21,800 26,100 31,400 37,668 20.19
(Retail)
Value in USD 31,506,749 39,955,097 50,227,955 63,448,877 79,920,124 26.20
Note: AVC team compiled data from interviews with market actors at all levels in Bangladesh and the Bangladesh Flower
Society.
One key facet of the changes in the market is the rising importance of non-traditional varieties of flowers.
Ten years ago, virtually the only types of flowers grown in Bangladesh were tube roses and marigolds.
Since then, new varieties such as gladiolus, roses and most recently gerbera have been introduced into the
mix and are gaining in popularity. Current production and market share of top six cut flower varieties are
shown in table 3 below.

Table 3: Production and the market share of the top six varieties, 20013/14
Production at the Revenue at the

Revenue at the
Flower farm gate level retail Market share
farm gate (USD)
before wastage level(USD)
Tube-rose (Single) 1,186 370,500 1,296,750 1.62%
Tube-rose (Double) 9,880 3,705,000 13,893,750 17.38%
Rose 10,165 4,320,000 19,440,000 24.32%
Gladiolus 8,854 8,964,844 24,862,500 31.11%
Marigold 11,250 3,375,000 6,328,125 7.92%
Gerbera 63 228,445 512,578 0.64%
other flower 8,479 4,293,788 13,586,421 17.00%
Total 49,877 25,257,577 79,920,124 100.00%
Note: AVC team compiled data from interviews with market actors at all levels in Bangladesh and the Bangladesh Flower
Society.
Gladiolus with 31 percent market share has emerged as the top commercial variety in Bangladesh. Roses
are the close second with 24 percent market share followed by the tuberoses. The latter two varieties are
still the most popular varieties among the middleclass Bangladeshis.
Flower sector has been growing very rapidly. Over last five year time horizon particularly strong growth
has occurred for roses and gerbera, albeit the latter starting from a very small base. Much of the growth in
roses is for the Merinda variety which is slightly larger than the older Lincoln variety and fetches a higher
price. The growth in other flowers is difficult to interpret, since this category includes both the traditional
cut beli (Bangla name) flower and other varieties that are the popular as imports, but which are only
produced on an experimental basis. By far the largest volume component of this increase is no doubt from
cut beli, but it is not possible to provide a precise breakdown. Nevertheless, it does no doubt comprise
small volumes of orchids, lilies, carnations and chrysanthemums. Table 4 below tells us the growth story.

Table 4: Variety wise production growth in five years
Variety wise
Flower 2009-10 2010-11 2011-12 2012-13 2013-2014 average growth
in 5 years
Rose 5,371 6,446 7,735 9,282 10,165 17.29

Gerbera 10 18 31 55 63 57.56
Marigold 5,521 6,736 8,218 10,026 11,250 19.48
Tube rose 6,311 7,384 8,639 10,107 11,066 15.07
Gladiolus 5,536 6,366 7,321 8,419 8,854 12.46
Others 971 1,845 3,505 6,660 8,479 71.9
Total 23,720 28,794 35,449 44,549 49,877 20.19
Source: above table has been generated by AVC technical team interviewing BFS members using
calculation and extrapolation
Despite the growth in new varieties, marigolds with more than eight percent market share and over 19
percent annual growth still maintains an important place in the flower sector of Bangladesh. Prized by the
Hindu population (8.2 percent of total population) for use in ceremonial offerings, there is a steady year-
long demand with peaks at major holidays and the lunar calendar Hindu Puja holiday. But the impressive
growth in marigold production also indicates their growing consumption among the Muslim majority
population.
The popularity of new varieties is confirmed by interviews with retailers and wholesale traders—who note
that consumers in richer Dhaka neighborhoods such as New Town, Gulshan and Banani are particularly
fond of flowers that they or family members may have seen abroad. This trend is part of a much larger
demographic transformation in Bangladeshi consumption patterns that is reflective of the rising middle
class. For the past 10 years, economic growth in Bangladesh has considerably outpaced population growth
and inflation, leading to a clear pattern of sustained growth in real per capita income. This is shown below
in Figure 2.
Figure 2: Real GDP Per Capita, 1998 - 2013
(Constant 2000 USD)

700
600
500
400
In USD
300
200
100
Note: AVC compiled data from factfish (available at http://www.factfish.com/statistic-


Growth was particularly strong beginning in the period beginning in 2006, as witnessed by the three
consecutive years with real per capita growth rates in excess of 5 percent with continued growth
above the 4.7 percent level in every year since as shown below in Table 5. This steady growth
resulted in a total increase in real GDP per capita of 86 percentages between 2000 and 2013.
Table 5: Annual Rates of Growth of Real GDP Per Capita, 2000 - 2013
2000
2000 2001 2002 2003 2004 2005 2006 2006 2008 2009 2010 2011 2012 2013
7
4.0 3.4 2.7 3.6 4.7 4.5 5.4 5.3% 5.1 4.7 4.9 5.5 5.0 4.9 4.7
% % % % % % % % % % % % % %
Note: AVC compiled data from factfish (available at http://www.factfish.com/statistic-

This strong growth in per capita real GDP has fueled a phenomenon that is widely recognized in the
Bangladeshi press as the “rise of the middle class.” Although it is hard to document precisely the extent of
this phenomenon, the scope of this change can be inferred from several pieces of evidence. One of these
is the impressive reduction in poverty rates with decreases in severe poverty (defined as households with
expenditure budgets for food and non-food items that is below the minimum required food consumption
budget) between the dates of the last two national household income surveys in 2010 and 2005. Between
these dates, severe poverty dropped from 25.1 percent to 17.6 percent nationally and, more impressively
from 14.6 percent to 7.7 percent in urban areas—an almost 50percent drop. Moderate poverty (defined as
households with expenditure budgets under both the minimum food and non-food requirements) also
declined between 2010 and 2005, with decreases from 40.0 percent to 31.5 percent nationally and from
28.4 percent to 21.1 percent in urban areas. Compared to the earlier urban moderate poverty rate from the
prior income survey of 35.2 percent in 2000, moderate urban poverty in 2010 had decreased by 40 percent.
Coupled with population growth of 24.2 million people between 2000 and 2013, these poverty reduction
rates represent a virtual explosion in the number of consumers with income to spend after meeting
minimum consumption needs, particularly in urban areas.
Without detailed consumer spending surveys touching the flower sector it is difficult to measure the
precise impact of this large scale demographic shift. However the existence of the phenomenon is clear.
Data from Table 4 show that over 15 million more urban consumers with money to spend after meeting
basic food and non-food needs in 2013 relative to 2000. This represents a 4.4 percent annual growth rate
in the population category most likely to be the one purchasing cut flowers.
Table 6: Urban Poverty, 2000 and 2013
2000 2013
Total Urban Population 31,777,000 45,414,000
Urban moderate poverty rate 35.2% 21.1%
Urban population above moderate 20,591,496 35,831,646

poverty line
Source: World Bank, Bangladesh - Household Income and Expenditure Survey: Key Findings and Results 2010. (Washington, DC:
World Bank); Yearbook of Agricultural Statistics of Bangladesh (Dhaka, Bangladesh: 2012–13, unpublished).

Table 7: Flower Consumption Rate per Capita in the World
Per Capita Flower consumption

Country
in USD
Japan $129
USA $108
EU $95
Rest Of World (ROW) $1.80
Bangladesh $0.47
SOURCE: AVC staff collected data on international consumption from the Asian and Pacific Seed Association website
(available at www. apsaseed.org/).
However, even with the recent growth in the Bangladeshi flower market by world standards, Bangladesh
consumers are still at the extreme low end of the spectrum in terms of flower consumption. Table 6
shows that not only are consumption rates per capita lower than in high-income countries such as the US,
Europe and Japan, but that even compared to countries outside of the high-income bracket, Bangladeshi
consumption is quite low.
Thus there are grounds for believing that even among current consumers and without further population
and income growth (which will also certainly continue to occur), there is still room for growth in the
demand for flowers. A wealth of anecdotal evidence confirms the picture of a rapidly expanding market in
terms of both demand and supply.
Valentine Day Purchases
Mr. Delwar Hossain, a flower grower and trader in Gazipur, said that women garment workers buy
rose sticks at BDT 65.00 (USD 0.80) on the Valentine’s Day as the demand was extremely high on
that day.
Mr. Roni Ahmed, a flower trader of Jessore, opined that only 10 percent buyer ask for price on the
Valentine’s Day and try to buy high priced flowers for their beloved ones with smiling face. It is a
different smiling face which we cannot see on any other day.
Key informants confirm a great change in the flower buying behavior of Bangladeshi people in the last
decade. Increased purchasing power has been accompanied by an evolving aesthetic sense, ample supply,
affordable price and promotions. Nowadays, people from upper and middle classes want to buy flowers for
various occasions, for example Valentine’s Day, New Year, Bangla New Year, celebration of autumn
(Falgun) and other National days of the country. Flowers are also an important fashion accessory for
women’s clothing. The consumers of lower income group also buy flowers in various capacities, just in
smaller units like single stems and bouquets. For example, the female garment workers in Dhaka spend a
sizeable amount of money to buy roses as gift item during the Valentine’s Day. So, even among more
modest segments of the population there is a good prospect of domestic flower demand.57 (4 million
garment workers in Bangladesh).
57
There are an estimated 4 million garment workers.

Upper income consumers in Gulshan now will often spend USD 1,200 on weddings and can go as high as
USD 125,000. Ten years ago there was only one wholesale market in Dhaka where flowers arrived in bulk
from the Districts. Now there are two major ones (Shahbagh and Agargaon markets) and three smaller
ones.
Outside of Dhaka, District-level consumers have very little idea about exotic flowers or of new varieties.
However, there is a positive trend of flower sales at district level in recent years particularly during national
and social events. District consumers purchase mainly rose, marigold, gladiolus, cut beli and tube roses.
Very few consumers ask for gerbera or imported varieties of flowers. Retailers interviewed estimate that
demand for flowers in the Districts is growing every year by 10-20 percent fueled mainly by the growth in
demand beyond the traditional Hindu (Puja) market. Demand for wedding ceremonies in the Districts is a
new phenomenon with modest families paying an average of USD 60 to 70 per wedding and rich ones over
USD 200. District people now cannot think of an important social event without flowers. District
consumption is now estimated to 55 percent of total national consumption—surpassing that of Dhaka.
SEASONAL CONSUMPTION PATTERNS

Demand for cut flowers in Bangladesh is marked by very strong seasonality. There is a high winter season
followed by a low summer season. A key factor in this seasonal pattern is the effect of the various holidays
with a large array of holidays coming in the December to March time period. (See Annex Table 1 for a list
of all the major holidays in Bangladesh that contribute to peaks in demand for cut flowers.) Figure 3
below shows the estimated main holiday-related demand by month in USD with the inclusion of the two
important lunar holidays Eid and Puja. During Ramadan, flower sales drops by 50 percent and during Puja,
the demand for rose and marigold goes up by 20 percent. Consumer demand from these last two holidays
cycles through the year with changes according to the lunar calendar. It can thus reinforce the demand from
the fixed-date holidays or it can counter-balance its low periods depending on the year. In any case, the
schedule is known in advance and can be factored into producer planting decisions and retailer orders. It
is estimated that approximately USD 30 million of total market demand (roughly 40-45 percent) is related
to holiday consumption, the rest being weddings, standing orders from restaurants and hotels, walk-in trade
and events—mainly promotions and family gatherings but also increasingly events such as seminars.

Figure 3: The Demand for Flowers on Holidays
Flower Consumption
14
12
10
In Million USD
Note: The AVC Bangladesh from non-food team collected data from interviews with market actors at all levels in Bangladesh,
members of the Bangladesh Flower Society (BFS), a flower association made up of farmers, traders, exporters, and importers.
Without monthly price statistics, it is hard to be very clear about price movements which do not just rise
and fall automatically with demand because the production season is heavily skewed to the main winter
months. However, generally prices tend to be higher in winter than in summer as shown in Figure 4 which
gives the “normal” price movement in the market based on the high price obtained during the February
peak as an index value of 100 and percentage changes based on the National Flower Association
President’s perception of average market price movement.
Fig. 4: Estimated Monthly Price Index
(Maximum month = 100)

Percentage of peak
price captured
Note: AVC non-food team collected data from interviews with market actors at all levels in Bangladesh, members of the
Bangladesh Flower Society (BFS), a flower association made up of farmers, traders, exporters, and importers.
A picture of seasonal price differentials for various flowers emerges from Table 6 below, which was drawn
from interviews with five wholesalers who were each asked to estimate the average season prices for the
winter and summer periods from the most recent seasons. As can be expected winter prices are generally
higher with the exception of gladiolus, which is an extremely fragile flower both at the production and
post-harvest levels and is quite scarce in summer. Thus for the main types of flowers in the market, the
higher prices in the high season both in the Figure 4 and in Table 7 seem to indicate that despite increased

winter production, market demand is not being saturated leading to decreases in price. The smallest
seasonal price differential is for marigolds, which according to informants has the biggest increase in
seasonal production in winter. This is an indication that, of all the flowers, it seems to be the closest to
reaching the point of declining prices in winter due to higher production. Also of note is the virtual collapse
of the average quality rose price in summer. This is most likely an indication of the poor quality of much of
the summer rose production.
Table 8: Average Winter and Summer Flower Prices, Agargaon Market, Dhaka
Summer Prices
Winter Prices(BDT)
(BTD)
Flower Price Unit High Quality Average High Quality Average Annual
Quality Quality average
price
Gerbera stem 21 15.5 14 10.4 18
Roses stem 5.5 3.2 3 1 6
Gladiolus stem 10 7 13 8 16
Tube roses stem 3.5 2.2 2.4 2 8
Marigolds bundle(1000) 215 150 210 135 0.3
Note: AVC team collected data from interviews with wholesalers in market in August 2014 at the local market actors and Dhaka
wholesale market.
EXPORT AND IMPORTS

Bangladesh’s international trade in flowers remains but a small fraction of the overall market. As could be
predicted from Bangladesh’s late start in flower production and its close proximity to major highly
competitive Asian flower clusters, exports are virtually non-existent. A small volume of cut flower
exports does appear in the international trade data bases, but it is rarely more than USD 40,000 per year
and exhibits no clear trends. According to leading importers and retailers, these transactions are mainly
arranged as one-time operations through family connections to provide occasional supply to Bangladeshi
migrant workers in the Middle East. There are no steady commercial exports, as Bangladeshi production
technology and logistical infrastructure are not at world market levels.
Recently, import have been from around USD 400,000 to USD 600,000 per year in FOB (Free on Board)
value---which with standard commercial mark-up rates still means they would be around two percent of
total market value. Despite these comparatively small values, imports are an important element of the local
market supply and demand equation. This is because imports play a key role in revealing demand
preferences of high-end consumers which then spread to other consumers. This clearly was the case as
shown with the newest variety of the long stemmed rose (“China rose” is the market name) which began to
be imported into Bangladesh in the 2000s by retailer/importers serving clients in the richest neighborhoods
of Dhaka, but which now can be found all over town and even in the Districts and have been produced
locally on an experimental basis. This is also the case more recently with gerbera, which was virtually
unknown five years ago, but which was first imported by the same Dhaka retailers/importers and has
become popular with women for its use as a fashion accessory and is now present in markets all over
Bangladesh.58 Distribution channels reaching all levels of Bangladeshi consumers have now been
established, thus they are not a pure luxury item. Imports are also highly seasonal, as they occur mainly in
the summer months when local production is scarcer and of lower quality. In the winter months imports
largely cease, except for certain types of cut flowers with a strong demand that either cannot be or are not
58
Gerbera no doubt consists of much of the volume of the “other flowers” in Figure 5.

produced locally (orchids) or for which local production is as of yet unable to meet the demand (gerbera
and China roses mainly).
As shown in Figure 5, imports rose rapidly after 2006---coinciding with the period in which Bangladesh
began to experience real GDP per capita growth of over 05 percent per year. The decline in import values
after 2011 is somewhat misleading, since it is driven mainly by a decline in chrysanthemum imports,
following a decision by the Government of Bangladesh to place additional quarantine controls on
chrysanthemums in response to fears that they could be used as a front for the import of opium poppy
flowers for drug use.59 Without this development, there would be no overall decline in flower imports
since 2011.
Figure 5: Imports of Fresh Cut Flowers, 2003 – 2013 (USD 000)
700
600
500 Other Cut Flowers

Orchids
400 Lilies
Roses
300
Chrysanthemums
200 Carnations
100
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Note: The AVC team collected data from flower importers (Pushpa Neer, A.B Flowers, Three Star) from January to
June of 2014.
Market Analysis: Key Points
There is very strong demand growth for cut flowers as a whole fueled by recent economic and
demographic transformations. This trend is being driven by the emergence of a middle class with
new spending priorities and consumption patterns. This is a phenomenon is strongest in Dhaka
but has also emerged in urban areas in the Districts which is fueling increasing trade flows from
production areas to all of Bangladesh.
Consumer preferences for new varieties is clear and will be a continuing trend. Although the
varietal preferences in market demand are highly influenced by short term trends, the recent
growth in new import varieties such as gerbera, chrysanthemums, carnations and lilies show that
there is an advantage to producer able to meet this emerging demand.
Little realistic possibility for short-term export of cut flowers. Bangladesh has rudimentary
floriculture production infrastructure with no national capacity to produce and maintain planting
material, and no cold storage facilities at any point in the value chain. Furthermore it is
surrounded by a number of highly competitive regional floriculture production clusters. All these
reasons combine to limited short term export opportunities. In contrast, import substitution for the
relatively low values of imported flowers is certainly possible.
59
The rationale is that chrysanthemums resemble opium poppies.

Production and Post-harvest Handling
The flower industry in Bangladesh has begun to expand in the late seventies and initially started with
modest production of tuberose. In the mid-eighties, larger-scale commercial production began by small
farmers in the Jhikargacha upazila of the Jessore district. Later it has expanded to other areas of Jessore,
Savar, Jhenaidah, Chuandanga, Narayangonj, Mymensingh, Chokoria and Gazipur. Today, more than
12,000 farmers of the country are growing flowers, foliage and ornamental plants.
The heart of the flower growing zone is located in the Southern FTF zone that supplies approximately 67
percent of national production. This is shown in the attached map in Figure 6 on the following page. The
Southern Delta possesses many advantages for the commercial production of flowers. These are detailed in
Table 7 below.
Figure 6: Flower Production by District, FTF Zone and all Bangladesh
Note: The AVC team developed map with data collected from flower market actors from January to June of 2014.

Table 9: Comparative advantages of the Southern Delta
Savar, Manikgonj,
Competitive issues Southern Delta Narayangonj, Gazipur,
Cokoria and other area
Environment/ The climate condition, especially Still not suitable for all
geographic location temperature, RH, PH, soil topography categories of flowers
is suitable for flowers cultivation.
Proximity of Indian boarder is an
advantage for access to inputs.
Skill farmers and Farmer are skilled to cultivate most of The farmers are not skilled to
labor the varieties of flowers which are cultivate all types of flowers
produced in Bangladesh
Input supply Planting materials available such as, Input supply system is
propagation materials, seeds, growing
seedlings, fertilizers, pesticides
Packaging/size/trans Private transportation system is Not yet developed
portation supportive to reach the end consumers.
Packaging has not yet reached to
standard level, but packaging materials
are available in the area
Seasonal variation Farmers are advanced in knowledge Have seasonal limitations
and adaptation and are capable of producing all
types of flowers round the year
Traders and Very strong association for flower Not yet established
association growers and traders with 200 members
who can advocate on any issue for the
betterment of the industry
Note: The AVC team collected data directly from different market actors, such as farmers, traders, importers, retailers, and
dealers.
The farmers of the Southern region mainly produce rose, tuberose, gladiolus, gerbera and marigold in
200 villages under 15 Upazila of 7 districts. More than 9,600 farmers of these areas are now engaged
in commercial flower cultivation, foliage and ornamental plants. These farmers are now maintaining
their livelihoods by selling their products. The study team also observed that 5 percent (450) of
flower farmers are female. Women are also the main actors in post-harvest activities. According to
the Jessore flower association (Gothkhali Fulchashi and Fulbabosayee Kallyan Samity-GFFKS), 20
percent of cut flower producers are large farmers (with over 0.4 hectares), 30 percent are medium
farmers (with land holdings from 0.2 ha to 0.4 ha), and 50 percent are small farmers with land
holdings of under 0.2 hectares. On other hand, the land holding size of the flower farmers of
Gazipur, Savar, Manikgonj and Naryangonj are relatively small compared to the flower farmers in
the Southern Delta.
The technology used by flower farmers in Bangladesh is very rudimentary by international standards.
Historically, flowers (mainly marigolds) were introduced into small farmer cropping systems as a
replacement for certain vegetables because of their superior profitability. Thus techniques applied by
farmers were essentially carried over from vegetables, with the use of raised beds and furrow
irrigation when it is required (mainly in winter). Farmers obtained planting material across the
border in India and shared or sold cuttings among themselves. Other inputs are widely available
locally. The use of plastic greenhouses with shade and rain protection is common only among the
more advanced farmers who grow roses and gerbera. All other flowers are grown in open fields. The

most common production and post-harvest problems arising with flower producers as well as
possible solutions are shown below in Table 9. More information on production techniques appears
in Annex 2.
Table 10: Common Production Problems in Small Farmer Flower Cultivation
Typical Small/Medium Farmer

Flower Critical solution to improve yields/quality
problems
Gerbera Improper or insufficient shading Use of poly-vinyl sheeting or shade nets

Use of expensive plastic roofing Training on input use and production
Incorrect dosage of fertilizer Use of drip irrigation for most advanced farmers
Flat irrigation furrows Use of flower cap needs to be generalized
Limited access to planting material of Organization and planning for procurement new
different colors types of planting material
High cost of investment to start farm Support with financing new farm investments
through grants/loan packages
Roses Limited access to genetic material of Organization and planning for procurement new
most demanded varieties (merinda, China types of planting material
rose) Training on input use and production practices
Non-renewal of plants after five years Grouping orders in advance for nutrient packs for
Insufficient pruning of buds leads to China roses
small flowers Training on sorting and grading and establishment
Over use of pesticides of quality protocols
Lack of nutrient packs for China roses Support with financing new farm investments
Poor grading and sorting at the farm level through grants/loan packages
High cost of investment to start farm
Gladiolus Limited access to genetic material for Organization and planning for procurement new
new colors types of planting material
Early harvest of immature flowers Training, financing and marketing arrangements to
High levels of post-harvest deterioration discourage immature harvesting
Improved post-harvest infrastructure with trials of
new cooling/packaging systems
Note: The AVC team collected data from primary sources, such as farmers, traders, importers, retailers, and dealers.
Flower harvesting is done by hand with 50 percent of the labor coming from women. Cut flowers are
usually transported by farmers after on-farm grading, using shoulder loads, rickshaws, and motorized
tricycles to local collection points where they are sold to traders. Traders then usually offer prices based on
quality and purchase the whole loads after which they may sort and grade again at the collection point.
Traders then pack flowers in material which varies according to the flower. Gerbera is either transported in
bamboo boxes or corrugated fiber board cartons, replacing the prior practice of using old newspapers.
Other flowers are bundled and transport most often in sacks. Marigolds, which generate heat when tightly
packed, are packed with small plastic bags of ice to keep them cool. Shipments are sent via public
transport buses or, in the high-season, sometimes by rented truck at night so that they arrive in urban
markets in the morning and avoid prolonged exposure to daylight heat.
The profitability and financing needs of flower farmers vary significantly according to the type of flowers
they grow. The profitability analysis conducted by the study team and presented in Annex 3 reveals that
there are three main categories of flowers:
Highly profitable flower with high capital costs. Currently the only such flower is gerbera which yields
almost 3.7 million BDT per hectare in one year. However this high profitability comes with a significant
capital cost with required investment of 8.6 million BDT and a total first year cash outlay of 11.85 million
BDT (including first year operating costs). With a payback period of 1.2 years and an amortization period

for most capital costs over 5 years, gerbera offers very attractive financial returns and a very high profit per
unit of land, but due to its high entry ticket price, it is not a crop for farmers of modest means.
Profitable flowers with modest capital costs. Like gerbera, roses require investment in planting material
that has a life span of five years as well as irrigation equipment. Unlike gerbera they do not require shade
and rain protection (although they can benefit from it). Therefore, they have much more modest capital
costs of 1,000,350 BDT per hectare and total first year cash costs of 2,143,960 BDT. With an annual profit
of 802,750 BDT per hectare, roses have a payback period of 1.1 years. Thus while annual profitability is
lower, they also have a much lower capital investment entry requirement compared to gerbera.
Modestly profitable flowers with only operating costs. The only costs for annual flowers such as marigolds
and gladiolus are direct operating costs of seasonal production. They have no capital costs that need to be
spread over a number of seasons. Using gladiolus as an example, total operating costs for a six month
production period are only 1,590,680 BDT with a profit of 484,120 BDT per hectare.
These results are hardly surprising as they show a clear correlation between the size of capital investment
and the per-hectare profitability. It also needs to be recognized that an added advantage of the annual low-
investment crops is that the land they occupy can be used for other crops during the summer season. These
factors explain much of the popularity of flowers such as marigolds and gladiolus.

Value Chain Map

FLOWER VALUE CHAIN ACTORS
Input Suppliers
Input suppliers include both local retailers of the main inputs required by floriculture producers: fertilizers,
pesticides, irrigation equipment and plastic sheeting and shade netting for the basic greenhouses providing
shade and rain protection for gerbera and roses. These retailers are present throughout the major production
areas. They also provide extension advice to producers on the use of agro-chemicals. The other key type of
input supplier is the commercial floriculture firms operating in India. Most of these are located in the Pune
floriculture cluster. These are commercial nurseries that provide seedlings and bulbs on advance orders in
large quantities to Bangladeshi farmers. They are critical sources of planting material without which the
entire flower industry in Bangladesh could not function. Producers typically will group together to place
large orders. An association of flower producers and traders in Jessore provides this function to its
members. Oftentimes larger farmers who purchase large numbers of seedlings from India will cultivate
them and sell cuttings or seedlings ready for transplantation to neighboring small farmers.
Producers
Flower producers in Bangladesh are rarely specialists. Virtually all producers cultivate a mix of rice,
pulses, jute and vegetable crops in addition to flowers. Open field flower beds will often be inserted in a
multi-year rotation with pulses in order to help manage soil fertility. Usually flowers represent the biggest
component of farm revenue, often 30 to 50 percent. Also, farmers usually cultivate more than one type of
flower, with a general exception for marigold; many farmers only produce marigolds.
The value chain map divides producers between small/medium and large farmers with the cut-off point
between the two being 0.4 hectare. The differences in production technologies employed by each category
are not very pronounced or corrleated strictly with farm size. However, large farmers tend to be those who
possess the greater technical ability and financing needed to adopt the more advanced production
techniques required for gerbera or rose cultiavtion. In addition large farmers produce volumes such that it
is often in their interest to sell directly to the urban wholesale markets, by passing the faria traders in the
local collection markets. This stratetgy entails, however, significant costs as they must package, ship and
arrange sales through their own connections in the wholesale market. In contrast, small/medium farmers
almost always sell to traders in the local collection markets.
Flower producers make decisions on how much land to plant in flowers and which flowers to plant on an
annual basis, except for gerbera and roses—that are perrenials with production periods lasting five years.
Usually these decisions are done on the basis of the prior season’s results. Thus a good year for marigolds
will likely be followed with an increase in marigold plantings. Many farmers may also choose to remove
annual flower crops from production in the summer months, allocating land to vegetable crops during the
low season.
Traders
The local collection traders or “farias” are the most important actors in the flower marketing chain. They
purchase directly from farmers, almost always on a cash basis or at most with one or two days delay. They
regroup output from different farmers in the local collection markets, sort it and pack it before arranging
transport on a daily basis to one or more of the urban wholesale markets in Bangladesh. Farias pay a
volume-based fee as well as a small entry fee in order to access the regional collection markets. They
maintain connections with the wholesalers, also called “commission agents” in various markets and
expedite shipments via public transport or occasionally rented trucks to specific wholesalers based on
educated guesses on what prices the wholesaler will obtain in the market the next day. They incur packing,
transport and labor costs in the collection markets as well as assuming the risk of product losses in transit.
They are remunerated from wholesale market sales after the wholesalers take out their fixed commission—
usually 10 percent of the wholesale market price to retailers. Sales revenues from wholesale transactions
are usually transmitted through b-Kash accounts or regular bank accounts to faria on a daily basis. Farias

send cut flowers from collection market with specific labels for reception by wholesaler employees in the
public transport terminals who then oversee unloading and supervise local transport from the terminal to
the wholesale market. As farmers are paid a fixed cash price and since the wholesalers are paid on a fixed
percentage basis, most of the commercial risk in the flower marketing chain is assumed by these faria.
Wholesalers or commission
Wholesalers or commission agents occupy fixed space which may be stalls or simply open ground space in
the urban wholesale markets in exchange. They are responsible for the product from arrival in the public
transport terminal to the wholesale market, where they arrange sales to retailers on a daily basis.
Wholesalers will hold informal auctions with retailers in the market arrivals to fix prices each day. They
also fulfill advance purchase orders from retailers who place orders for weddings or for special flower
demand. They are based in the main Dhaka flower markets and the various District flower wholesale
markets. They have virtually no fixed costs or infrastructure as they seek to liquidate their entire stock on a
daily basis. Wholesalers tend to have a definite regional identity and tendency to deal mainly with flowers
from ‘their’ region. In many cases they have installed themselves in urban markets as specific agents of
groups of farmers in the production zones—hence the commonly used term “commission agent.”
Retailers and Importers

There are a number of very different types of actors at this level of the value chain. Retailer/Importers are
essentially limited to a four actors in Dhaka who each maintain retail shops that serve mainly high income
consumers and hotels. They started as pure retailers and wedding planners but gradually began to import
flowers to serve a clientele that demanded high quality and new types of flowers. Given the growth in the
market and the limited supply of high quality and exotic flowers, they have now also started to distribute
imported flowers to other retailers as well as wholesaler in the Dhaka and District flower markets—which
is represented by the red lines going to these actors in the value chain map. These are also important actors
since they are the lead firms in the floriculture chain in terms of defining the upper limits of product quality
and new flower demand. Still they have very rudimentary infrastructure with no cold storage or refrigerated
transport.
Other types of retailers include shops or stalls near the wholesale sections of the flower markets and
ambulant flower sellers. Retailers with fixed location prepare bouquets and flower arrangements in
addition to providing wedding flower arrangements. They are active in urban areas in the District as well as
in Dhaka. Ambulant flower vendors circulate selling small quantities of flowers, often single stems. Sales
between these actors and wholesalers are on a cash basis or at most with one or two days of delays in
payments for particularly large orders.

HORIZONTAL COOPERATION
As mentioned above in the actors section, there is a significant degree of horizontal cooperation among
farmers. The Jessore GFFKS Association groups 300 farmers in the zone. It is funded through volume-
based fees on members selling in the Gothkhali market. It uses its proceeds to fund social funds for farmer
families (payments to member’s families upon their death or incapacity, income support to poorer
families), insurance payments, losses due to transport failure, and promotional expenses for the sector. It
also organizes grouped orders in advance for planting material from Indian nurseries in Pune, although
these are funded directly by farmers not by the Association. Farmers will also share planting material
among themselves. The GFFKS has recently expanded to link with farmers in other producing areas to
form the national-level Bangladesh Flower Society (BFS) which represents the sector as a whole.
The GFFKS and the BFS have been pushing for a long time to lobby the public authorities for a permanent
market in Dhaka. They have recently obtained temporary use of the parcel of land, on which the Agargaon
market is located, which marks the first flower market established at an off-street location in Dhaka. Yet
even this is very rudimentary in its set up, lacking any sort of shelter or hard surfaced ground covering—
much less cold storage and lighting.
MARKET CHANNELS
The value chain map for floriculture contains three specific market channels:
Channel 1: Local market in production zone. Product in this channel is sold directly in the zone of
production as faria in the collection markets supply generally second quality product directly to local
sellers in District retail markets. Farmers may also occasionally sell to retailers. In general this chain offers
farmers and faria, an alternative to the national market which is most interesting for second quality product
in high season or for first quality product when volumes are low and it is not worth their while to send
flowers to the urban wholesale markets. Also since they are selling further up in the value chain, prices in
this channel are often quite competitive with the prices in the national wholesale markets. However the
absorptive capacity of this channel is weak.
Channel 2: Mass urban market. Although it is by far the largest channel in the floriculture value chain,
the mass urban market channel is relatively simple. With only three levels between the farm and the
consumer and a large number of actors at all levels there are little opportunities for actors to exert market
power, nor are there significant asymmetries that come when small number of actors in the chain have
privileged access to finance or an exclusive ability to store product—which is non-existent all throughout
the chain. The key actors in the chain, as discussed above are the collector faria traders who are the market
movers.
Channel 3: Luxury market. This is a small volume market in which the main players are the four
retailer/importers who supply mainly imported flowers to high-end consumers. However, as with the
other channels, there is little opportunity for players in this channel to profit from their privileged position
since, of the four retailer/importers, none has an estimated share of total imports above 35 percent.
Thus overall, all of the channels of the value chain map have a healthy degree of competition which should
be a positive factor in encouraging actors to be willing to innovate and adopt new practices, as the rapidity
with which new flower varieties are introduced would seem to confirm.
MARGIN ANALYSIS
To calculate the gross margins for each actor in the value chain, our team focused on the expenditures and
revenues required to move 100 stems of Gladiolus from Jessore to the Dhaka market. For this example,
farmers’ purchased input costs are approximately BDT 302 for 100 stems of gladiolus. Postharvest loss at
the farm gate is eight percent and the farmer sells 92 stem to the Gothkali traders at the rate of BDT 4.5 and
earns a revenue of BDT 414; yielding a gross margin of BTD 112. At the trader’s level, there are additional
costs including transportation and packaging, and at the same time they are incurring wastage equivalent to
7 stems. At eight BDT per stem, the traders are selling 85 stems to wholesalers for BDT 680. At

wholesalers level approximately three stems are wasted and the wholesalers are selling these 82 stems to
retailers at BDT 10 per stem (total revenue BDT 820). Retailers sell 78 stems (four stems are wasted at the
retailer stage) at BDT 16 per stem for BDT 1248 to ultimate consumers. Gross margins at each step in this
process are shown in Figure 6 below.
Figure 6: Waterfall Analysis of Gross Margins
Gladiolus Gross Margins
1400
1200
1000 428
800 140
600 1248
266
400 112
Gross margin
200 302
0
Note: Waterfall analysis was done by AVC staff based on interviews with each of the market actors done from January to June
2014.

CROSS CUTTING ISSUES
GENDER INTEGRATION
Overall, women are involved more closely in floriculture than in most other agriculture sectors. Women are
greatly represented in the production, assembly stage of the sector, as well as in the high end retail market.
Their absence is quite noticeable in trading and mass retail segments of the market. The table shows
women’s involvement in the steps of the floriculture value chain.
Table 110: Women involvement in floriculture

Activities in farming Women percent Men percent
Flower plucking 50 50
Seed sorting 100 0
Seed treatment 100 0
Aggregation and sacking 0 100
Seed sowing 0 100
Watering 0 100
Carrying to household 50 50
Sorting, grading 50 50
Packaging 50 50
Grading and Sampling for 100 0
export
Seed storing (in household 100 0
level)
Note: AVC team collected data from different FGD (Focus Group Discussions) and KII (Key Informant Interview) held in flower
growing areas of Southern districts from January to June 2014.
During flower cultivation, women are involved in seedling transplanting, weeding, irrigation and flower
plucking. At the collection level where flowers are packed and marigolds stringed into bundles, almost 100
percent of workers are female. At the retailing level, most shops are managed by men with women
supporting by preparing floral bouquets, flower ornaments and circlets. Some destitute girls are also
involved in selling flower to customers along city roads.
Women ownership of land is quite rare. They have only very limited control over productive resources.
Though they are involved in farming activities, quite often they are not the shareholders. However,
sometimes they play an active role in decision making processes.
Wage disparity is present between men and women. Women usually receive 40 percent less wages
compared to their male counterparts. Farmers/employers reasoned that male laboreers are more efficient.
Women usually take part in election process and exercise their voting rights in their associations.
In Jessore, there is a women’s flower association named ‘Panishara mohila phul utpadon o biponon
shomobay shomiti limited.’ Founded in June 2011, this association currently has more than 200 members.
Their main focus is to build members’ capacity to implement improved methods of packaging, grading,
and sorting and providing business development services to help small farmers reach financial
independence/have a sustainable business model.
ENVIRONMENTAL COMPLIANCE
The flower industry of Bangladesh is still in a very informal level. Without the presence of an export
business, the GOB has no incentive to enforce effective regulation on the use of pesticides or any sort of
export code or standards. Site visits to large markets in Jessore and Dhaka found that
medicines/insecticides like Vertimax, Ridomil Gold MZ, Dithane M-45 and other major groups have been
used while growing Gladiolus, Rose and Gerbera. Sometimes hormones are used in nurseries, but no

hormones are used in the varieties selected for the project. While transporting, the amount of wastage
ranges between 5 percent - 10 percent. Wastage flower is generally thrown away in the waste dumps. Ice
with polythene bag is used for keeping marigolds fresh during transport.
ACCESS TO FINANCE
The farmers frequently access trade credit facilities to purchase of fertilizer and seed. For fertilizer they can
purchase at 50 percent credit which they generally have to pay after the harvest time (i.e., 4 months)
whereas in case of seed only 30 percent of the total purchase is offered at credit, which is also paid after
harvest. In case of farmers selling cut flowers up the value chain, they generally take cash payments for all
our most of their sales with any remaining amounts being remitted within 3 days. The mobile cash system
is extensively used for payments.
Floriculture farmers usually take-out loans from traditional micro credit NGOs with high interest rates and
weekly payments. There are NGOs like RRF and Jagoroni Chokro Foundation that offer crop specific
agricultural loans with cash flow based re-payment schedules. However, many floriculture farmers are not
aware of the availability of these specialty loan products. Besides this, a limited number of farmers have
access to value chain financing for inputs (fertilizer, pesticides) procurement; albeit they have to pay 5-10
percent higher prices. While statutory banks offer agricultural loans, farmers rarely can avail themselves of
those because of lengthy and complex processing of loan applications and the requirement of collateral and
speed money. This is an issue for the flowers requiring more capital investment, such as gerbera and roses.
PUBLIC POLICIES AND PUBLIC SECTOR

A number of public polices and agencies affect the floriculture sector. The most important of these
are as follows:
• Agricultural research. The Bangladesh Agricultural Research Institute (BARI) is an autonomous

organization under the Ministry of Agriculture. BARI has seven crop research centers in the country
through which it conducts research on vegetables, fruits, tubers, cereals, pulses, oilseeds, spices and
flowers. For flowers, so far BARI developed varieties of gladiolus, chrysanthemums, gerbera and lilies.
All these flower developed varieties have been released in 2009 but are not in use by farmers, as no cases
of farmers using any BARI materials were discovered during the research for this report. When asked
about this, farmers and the officers of the Jessore flower association all confirm that the BARI-produced
material is inferior to commercial planting material they can order from India in terms of color, size and
yield.
• Trade policies. Bangladesh maintains a tariff on imported cut flowers of 25 percent. This provides a
substantial degree of protection for Bangladeshi flower producers. In addition, there is an export subsidy
in place for vegetable products. According to both key informants and mirror customs data from the ITC
Trademap site60, there are occasional exports of betel leaves that are occasionally miscoded as foliage in
order to qualify for this subsidy. (In reality betel leaves are spices and should not be eligible for this
subsidy). Mirror customs data from 201261 show annual exports of USD 3 million of foliage to Saudi
Arabia, all of which is likely to be betel leaves.
• Policies regarding public markets. Local governments in Bangladesh maintain authority over public
markets. They lease access to such markets to users on a yearly basis, often with private intermediaries
who advance the rental payments to the local government and then are charged with collecting regular
60
AVC team compiled data from UN COMTRADE Database (available at http://comtrade.un.org/db).
61
Customs data provided by 2013–14 report of Export Promotion Bureau, Bangladesh
(http://www.epb.gov.bd/).

rents from actual market users based on access or volume-based fees. The lack of suitable markets in
Dhaka is a long standing issue and a source of contention between producers and traders and the public
authorities, as noted above.
DYNAMIC TRENDS
The study team identified two essential dynamic trends as follows:
• Dynamic Trend #1: Strong market demand and high per hectare profitability are encouraging farmers to
expand flower production. It is clear that flowers offer returns per hectare that are superior to most
vegetable crops. This has spawned a massive increase in production over the past five years. In absolute
value terms, most of this increase is coming in the two traditional flower crops—marigolds and tuberoses.
This is because both crops have low initial cash outlays and can be replaced in one year or even a six
month period. Other flowers are expanding too, but from a much lower base. This expansion comes hand-
in-hand with increasing horizontal cooperation and organization of flower farmers in the BFS and GFFKS
to address common problems such as market infrastructure, access to planting material and market
promotion. The dynamism of flower farmers with a core of highly motivated organized individuals is a
highly significant development in the value chain.
• Dynamic Trend #2: Consumer demand is increasing especially strong for non-traditional flowers and
flowers that meet import standards. This is driving expanded imports and sparking the interest of the more
advanced flower farmers in adopting new technology and new flower varieties such as gerbera, China
roses, chrysanthemums, carnations and lilies.

The section below provides a discussion of opportunities for upgrading identified within the floriculture
value chain as well as the main constraints that serve to impede their realization. Constraints are given
below under each opportunity.
Opportunity #1: Capitalize on increasing demand for cut flowers in the market generally, by expanding
the production base, with particular attention to the newer varieties whose production feasibility has
already been demonstrated in Bangladesh (gerbera, merinda variety roses and China roses). As shown in
the discussion of farmer profitability, gerbera and roses are very profitable. There is little danger of market
saturation for gerbera or for China or merinda roses. The former rose type has only been cultivated on an
experimental basis and the latter has not yet spread to the main production area in the Southern FTF zone.
Considerable potential exists to leverage expertise from experienced farmers in the Jessore District to
spread knowledge of correct flower production practices to farmers in other areas of the FTF zone. Such a
program would offer a mix of flower types, including gladiolus, tuberoses and marigolds with special focus
on the two rose varieties (China and merinda) and gerbera. A mix of flowers is necessary to limit market
risk from excessive concentration.
Major constraints to this opportunity include:
o Knowledge of good cut flower production practices among producers is weak and limited to several
specific geographic clusters. Outside of the core production areas in the Jessore District, flower cultivation
is little practiced and farmers lack basic knowledge of planting protocols and input requirements for
growing flowers. No effective extension service providers exist for flowers. Although some agro-chemical
retailers do offer advice on input use, these are concentrated in the clusters with strong existing farmer
production bases.
o Capital requirements for several important varieties of flowers, particularly gerbera and roses, that
require the purchase of perineal planting material or shade protection is higher than for most food
crops, limiting the pool of potential adopters. As shown in the production section above, roses and
especially gerbera require significant outlays of cash for farmers seeking to enter production. This limits
their attractiveness for farmers unable to come up with the required cash. Loan amounts at this level are
beyond the usual micro-finance range. Some farmers have obtained bank financing on a multi-year basis,
but the supply of such loans is much more limited than shorter-term micro-finance loans—which are
appropriate for annual flower financing needs. In the absence of financing plan then, access to the ‘elite
level’ of flower production will be hard to achieve for poorer farmers.
o Planting material is not available in Bangladesh, leaving producers dependent on Indian nursery
suppliers and subject to considerable transaction costs. Seedlings and flower seeds are mostly sourced
from Indian nurseries. The BARI produced flower varieties have not had much success penetrating the
domestic market. In itself this is not debilitating problem, as Indian nurseries have a continuing interest in
exporting to Bangladesh. However, since imports of seedlings and planting material from India are subject
to a 5 percent tariff, there is some incentive for farmers to go through unofficial channels—thereby
avoiding the tariff. This seems to be the main way in which planting material reaches farmers, as
evidenced by the absence of any formal commercial vendors of Indian planting material in Bangladesh.62
This tends to limit access to planting material for new farmers to the relatively few who are able to make
informal connections with others who will bring back material from India for them or who will sell or give
away cuttings. Because of this, farmers in the Southern Delta farmers commonly use retained seed for
propagation of gladiolus and tuberose and are unable to plant newer less common types of flowers. It also
62
Given the wide extent of informal cross-border imports, it is very unlikely that any retailer who sells product subject to the
import tariff would be competitive.

makes flowers much more difficult to get into for new farmers than vegetables, for which there is an
abundance of local retailers of seeds.
o Access to certain key inputs is extremely difficult. Common inputs such as poly-vinyl sheets for building
UV-protected greenhouses, mulching, drip irrigation, and flower-specific compound fertilizers are
generally unavailable. The absence of these inputs prevents their widespread use by producers which
limits overall productivity.
o Dhaka lacks a permanent flower market, with current wholesale locations offering substandard
facilities, leading to high losses and shortened product shelf life. The poor condition of the wholesale
markets in Dhaka is an evident problem. Although rudimentary infrastructure exits all along the value
chain, the lack of any sort of shelter or surfaced areas for wholesalers adds to market loss rates and leads to
distressed sales. Even simple closed stalls with some permanent storage facilities would be an
improvement over the street-side sidewalks and open ground lots now in use.
Opportunity #2: Capitalize on the rapidly growing demand for new varieties that are being
imported but not yet widely produced in Bangladesh, particularly for the high quality market niche.
The high quality “luxury” market has clearly demonstrated that a market exists for flowers that are
not traditionally produced in Bangladesh. Although the size is limited to 2 to 3 percent of the total
flower market, there are real possibilities for Bangladeshi producers to supply this market and to
grow it substantially if they prove able to supply quality at a lower cost than imports for such flowers
as lilies, carnations, chrysanthemums and eventually other types of internationally available flowers.
Constraints to seizing this opportunity include:
o The viability of international production technologies that adhere more closely to world standards has
not been proven in Bangladesh. Producing highest quality flowers will require the introduction of new
production techniques that have not yet been used commercially in Bangladesh. Common elements of
international flower production technology such as: multi span ventilated greenhouses with temperature
controls, misting sprayers, drip irrigation coupled with nutrient packs (fertigation) have never been tried.
To produce at true international standards, Bangladeshi producer will need to increasingly adopt such
techniques, if they prove to be feasible and commercially viable. Whether this can be done or not has not
been demonstrated.
o Varieties that are newly imported but not produced locally, such has chrysanthemum, carnations and
lilies, have only been trial tested on a limited basis. Similarly, trial production of these flowers has been
done on a small scale with some success. But it remains to be seen that this can be replicated on a
significant scale. Producing these flowers would not require necessarily the adoption of all the
technologies listed above if the objective is to produce for the mass Bangladeshi market for which there is
a demonstrated demand. But even with the use of current simple improved technology, such as furrow
irrigation with the use of non-ventilated plastic-covered greenhouses, trials would be needed to
demonstrate commercial feasibility at this level of the market.
o The lack of any sort of cold chain at every point in the value chain makes it hard for Bangladeshi
producers to approach import quality levels. Cold chain integrity is a cornerstone of the flower value
chain in most countries. It is totally lacking in Bangladesh. As a result, shelf lives for local flowers are
generally 2 to 3 days under those of imported flowers—which is a key advantage for retailers. If
Bangladeshi producers are to approach international standards, appropriately-sized investments in cold
chain capacity will be required.

ANNEX 1
FOCUS GROUP DISCUSSION (FGD) INFORMATION AND PARTICIPANT
LIST
Total number of focus group discussions conducted: 18 covered in 17 FTF districts except Barisal,
Jhalokathi and Pirojpur district. Two focus group discussions conducted in Jessore district.
Total number of focus group discussion participants in 17 districts: 226
Total number of male participants in the focus group discussions: 130 (57.52%)
Total number of female participants in the focus group discussions: 96 (42.48%)
Focus Group Discussions Participant List:

Date Location Organized/ FGD Participants
contacted by Name Address Mobile Number
Jan. 19, Abdulpur, Mr. Polash Md. Ator Ali Abdulpur
2014 Jessore Sadar Chandra Torfder Jahanara Begum Abdulpur
Jessore Director, PRIDE Shahida Begum Abdulpur
Agro Enterprise
Monowara Begum Abdulpur
Jessore Cell:
01714-086514 Ms. Asiya Abdulpur
Ms. Nobison Abdulpur
Ms. Shahina Begum Abdulpur
Ms. Shahnaj Begum Abdulpur 01961-978851
Md. Shawkot Ali Abdulpur 01944-257496
Md. Sirajul Islam Abdulpur
Md. Delwar Hossain Abdulpur 01916-407851
Md. Harun Abdulpur 01729-015363
Md. Ali Kadar Abdulpur
Jan. 19, Panishara, Abdur Rahim Abdur Rahim Panishara, 01711-066191
2014 Jhikorgachha Chairman, Nasrin Nahar Panishara, 01716-045412
Jessore Bangladesh Sajeda Begum Haria, 01740-916635
Flower Society Jikorgachha
Cell: Sher Ali Sarder Panishara, 01712-910429
01711-066191
Md. Amir Hossain Panishara, 01715-851911
Azizur Rahman Panishara, 01713-924229
Rafiqul Islam Panishara, 01711-459902
Imamul Hossain Haria, 01740-916635
Jikorgachha
Ahsan Habib Panishara, 01726-757255
Aminur Rahman Bulu Panishara, 01713-924227
Lenin Shardar Panishara, 01726-275380
Md. Nasir Narangali, 01711-375080
Md. Ismail Panishara, 01712-808293
Durga Rani Mallik Panishara, 01746-102361
Nurjahan Begum Haria, 01923-538321
Jikorgachha
Saleha Begum Haria, 01928-453879
Jikorgachha
Jan. 20, Char Dakatia, Anando Mohon Anadi Mandal Chardakatia
2014 Chitolmari, Arun Biswas Chardakatia 01734-819137
208
AVC END MARKET ANALYSIS: FLORICULTURE

Bagerhat Biswas, Director, Md. Jainal Shekh Chardakatia 01762-080254
Renaissance, Maloti Rani Mandol Chardakatia 01770-530852
Chitolmari, Dashi Rani Charkhal
Bagerhat shekhali
Cell: Maloti Lata Charbaniari,
01715-333624 Uttarpara
Akul Mazumdar Charbaniari,
Amolendo Biswas Charbaniari, 01758338567
Bhumen Gharami Charkhal
shekhali
Anjali Mazumdar Chardakatia 01944835185
Shipra Pande Chardakatia 01919898175
Nilima Roy Chardakatia
Jan. 21, Tilok, Rupsha, G. M. Tayebur Srity Biswas Tilok
2014 Khulna Rahman Sandha Rani Biswas Tilok
Director, EFADF,
Anjali Biswaas Tilok
Tilok, Rupsha,
Khulna Thakur Dasi Biswas Tilok
Cell: Sweety Biswas Tilok 01855-391549
01740-650900 Ms. Josna Biswas Tilok
Abdur Rahim Sheikh Tilok 01728-533650
Md. Joynal Tilok 01930-361819
Md. Abu Taher Tilok
Eskander Howlader Tilok 01913-773350
Md. Selim Reza Tilok 01925-057221
Shamsul Haque Tilok 01721-687716
Md. Monir Hossain 01728-427570
Jan. 22, Baradi Mustafizur Md. Shukur Ali Mominpur 01720-900875
2014 Meherpur Sadar, Rahman Md. Ajit Ali Kolaidanga 01720-660721
Meherpur Proprietor, Bio
Md. Touhidul Karim Kolaidanga 01737-178938
Tech Agro
Complex, Md. Abdur Rakib Mominpur
Munshigong, Lal Mohammad Mominpur
Chuadanga Md. Nasir Uddin Mominpur
Cell:
Most. Sahera Khatun Mominpur
01711-398696
Most Samena Khatun Mominpur
Most. Ayesha Khatun Mominpur 01731-773928
Most. Hadisa Khatun Mominpur 01745-721378
Most. Rikta Khatun Mominpur 01767-692304
Most Arjina Khatun Mominpur
Md. Kitab Ali Gohorpur 01925-598040
Jan. 23, Loknathpur Noor Alam Liton Md. Ashadul Haque Loknathpur 01912-194901
2014 Damurhuda Managing Mostafa Kamal Loknathpur 01721-537316
Chuadanga Director, Konika
Hafiza Begum Loknathpur 01737-178938
Seed Co. Pvt. Ltd.
Cell: Selina Khatun Gobindapur
01711-371662 Mahfuza Khatun Loknathpur 01928-553675
Rohima Khatun Kadirur
Nur Mohammad Loknathpur 01746-722799
Md. Nurunnabi Loknathpur 01920-696261
Daud Ali Kadirpur 01916-546862
AVC END MARKET ANALYSIS: ANNEX 209

Alaul Haque Loknathpur 01725-626567
Md. Aminur Rahman Kadirpur 01717-215258
Hamzar Ali Loknathpur 01930-460427
Jan. 27, Jinnagor Md. Solaiman Abdul Alim Aminabad 01735-207787
2014 Charfashion Chairman, Md. Shamsuddin Aslampur 01753-911395
Bhola Shantirhat
Md. Abul Kalam North Madraz 01724-769391
Collection Point
Cell: Rohima Begum North Madraz
01724-323253 Salma Begum North Madraz 01750-809206
Josna Begum North Madraz
Hasina Khanam North Madraz 01749-716703
Nore Asma Aminabad 01753-232232
Md. Nur Uddin Belal Charfashion 01730-047738
Md. Abul Kalam Jinnagor 01739-755938
Md. Solaiman Charfashion 01724-323253
Abdus Satter Faruk Charfashion 01729-363082
Jan. 28, FGD Wahab Munshi Md. Amzad Akand Angulkata
2014 Khekunia Bazaar Chairman, Water Abdul Malek Angulkata
Amtoli Management
Rustom Ali Howlader Angulkata
Barguana Group
Cell: Motleb Howlader Angulkata
01729-902685 Motin Howlader Angulkata
Md. Sona Mia Khekuani
Fatema Akter Angulkata 01779-819153
Ms. Aklima Angulkata
Pori Banu Angulkata
Ms. Mahmuda Angulkata
Suraiya Begum Angulkata
Ms. Nasima Angulkata
Abdus Salam Angulkata
Feb. 9, Chandanprotap, Md. Shafiqur Akmal Sheikh Chandanprotap
2014 18 Khada Rahman Unnati Rani Maloncho 01943-199234
Magura Director, Shamsun Nahar Chandanprotap
Polly Prokrity
Most. Firoza Begum Chandanprotap 01965-051624
Magura
Cell: Most. Selina Begum Chandanprotap 01965-413826
01711- 585602 Most. Johora Begum Chandanprotap 01920-118569
Julekha Begum Chandanprotap
Ansar Uddin Sheikh Chandanprotap 01850-472571
Sadar Uddin Sheikh Chandanprotap 01765-014782
Momen Mollah Chandanprotap 01930-577519
Kamal Mollah Chandanprotap 01921-774058
Ibrahim Sheikh Chandanprotap 01741-095881
Afsar Sheikh Chandanprotap 01725-847040
Feb. 10, Daulatpur, Itna, G. M. Ashiqur Maloti Das Daulatpur 01741-406624
2014 Lohagara, Narail Rahman, Sadhona Biswas Char Daulatpur 01729-933632
CBO/FBG DS, Ahmed Biswas Radhanagar
iDE Bangladesh Subhas Biswas Char Daulatpur
PROSHAR
Project Robin Das Char Daulatpur 01741-406624
Cell: Nikhil Kamakar Daulatpur
01712-042068 Rohima Begum Char Daulatpur 01719-868327
Md. Nazrul Islam Char Daulatpur 01782-317979
Anil Bala Chorkhali 01937-227595

Bijoy Laxmi Char Daulatpur

Arpana Bowali Radhanagar
Azizul Sarder Radhanagar
Rash Mohon Sen Radhanagar 01815-408154
Sobita Das Radhanagar
Feb. 11, Boalia, Md. Salauddin, Abul Kalam Morol Boalia, Kolaroa 01733-805430
2014 Keragachhi Social Worker, Sirajul Islam Boalia, Kolaroa 01731-733001
Kolaroa, Kolaroa, Satkhira Amena Begum Boalia, Kolaroa 01726-830542
Satkhira Cell: Ronjina Khatun Boalia, Kolaroa 01788-735837
01718-051377 Nazma Khatun Boalia, Kolaroa 01737-873373
Hazera Khatun Boalia, Kolaroa 01774-089184
Golam Mostafa Boalia, Kolaroa 01763-564366
Abdur Rashid Boalia, Kolaroa 01747-777944
Belal Hossain Boalia, Kolaroa 01721-803928
Arijul Haque Boalia, Kolaroa 01747-035624
Shohor Ali Boalia, Kolaroa 01773-656720
Md. Salauddin Kolaroa 01718-051377
Feb. 12, Berashola, Md. Anwar Ashura Begum Berashola 01752-046855
2014 Modhuhati, Hossain Most. Nasima Berashola 01929-901757
Jhenaidah Proprietor, M/s Asia Khatun Berashola
Padma Seeds, Mafia Khatun Berashola
Sarojgonj,
Saleha Khatun Berashola
Chuadanga
Rekha Khatun Berashola
Cell:
01711-668026 Razu Ahmed Berashola 01722-784263
Shafiqul Islam Berashola 01921-950560
Akramul Islam Berashola 01730-967226
Khalil Mia Berashola 01758-686574
Abdul Zobbar Berashola
Obidul Islam Berashola 01916-470512
Moshiur Rahman Berashola 01742-039646
Feb. 16, Kadirdi Kazi Ashraful Md. Zakir Hossain Kadirdi, 01735-303290
2014 Fakirpara, Hassan Boalmari
Boalmari, Executive Yunus Ali Kadirdi, 01733-167269
Faridpur Director, Boalmari
Society Abul Kalam Kadirdi, -
Development Boalmari
Committee (SDC) Imarat Hossain Kadirdi, 01770-381526
Cell: Boalmari
01714-022987
Md. Asad Kadirdi, 01742-828676
Boalmari
Md. Lovelu Kadirdi, 01735-726449
Boalmari
Ms. Jhorna Kadirdi, -
Boalmari
Aleya Begum Kadirdi, 01756-055946
Boalmari
Zaheda Begum Kadirdi, -
Boalmari
Most. Kushum Kadirdi, -
Boalmari

Most. Begum Kadirdi, -
Boalmari
Most. Shefali Kadirdi, 01735-726049
Boalmari
Feb. 17, Char Jadabpur, A. K. M Nasir Md. Manik Hossain Char Jadabpur

2014 Angaria, Uddin, Technical Md. Yunus Bepari Niamatpur
Shariatpur Specialist, AIN Abdul Majid Char Chatang
Project, WFC, Md. Ramiz Uddin Niamatpur
Madaripur
Md. Robiullah Bepari Niamatpur 01719-282692
Cell:
Ali Ahmed Khan Niamatpur
01711-002937
Abu Alem Sarder Dewan Char 01726-664304
Chatang
Most. Nurun Nahar Niamatpur
Most. Sufia Niamatpur
Sanowara Begum Niamatpur
Surjo Banu Niamatpur
Anis Uddin Fakir Char Jadabpur
Md. Jalal Mirza Char Chatang
Anwar Hossain Char Jadabpur 01710-565293
Feb. 18, Dattakendua, A. K. M Nasir Most. Jesmin Dattakendua 01982-630485
2014 Rajoir, Uddin, Technical Sajeda Begum Dattakendua 01732-287899
Madaripur Specialist, AIN Nazma Begum Dattakendua
Project, WFC, Most. Reba Dattakendua
Madaripur
Sarwar Molla Dattakendua 01926-954919
Cell:
Seraj Sarder Dattakendua 01934-192807
01711-002937
Seraj Madbar Dattakendua
Md. Abul Molla Dattakendua 01748-175499
Farhad Molla Dattakendua 01724-964809
Fatik Howlader Dattakendua
Feb. 19, Bahirbagh, Kazi Ashraful Mina Begum Bahirbagh
2014 Poshargati, Hassan Shahanara Begum Bahirbagh 01931-619435
Muksudpur Executive Riva Begum Bahirbagh 01731-261978
Gopalgonj Director,
Shova Begum Bahirbagh
Society
Development Zaheda Begum Bahirbagh 01717-698173
Committee (SDC) Yunus Fakir Bahirbagh 01762-998995
Cell: Md. Miron Mia Bahirbagh 01931-619435
01714-022987 Moslem Mia Bahirbagh 01723-241074
Wahab Sheikh Bahirbagh 01736-397226
Hiru Mia Bahirbagh 01753-728621
Abdul Jalil Sheikh Bahirbagh 01718-948485
Mizanur Rahman Bahirbagh 01717-698173
Md. Obaidur Rahman Bahirbagh 01772-083456
Feb. 20, Khamarmagura, Kazi Ashraful Md. Shahid Molla Khamarmagura 01731-847730
2014 Jamalpur, Hassan Poritosh Kumar Das Khamarmagura 01777-025958
Baliakandi Executive Md. Omar Ali Sheikh Khamarmagura 01816-033714
Rajbari Director,
Nepal Chandra Ghosh Khamarmagura 01710-034794
Society
Development Aziz Sheikh Khamarmagura 01948-356409
Committee (SDC) Jhorna Das Khamarmagura -

Cell: Morzina Begum Khamarmagura -
01714-022987 Helena Begum Khamarmagura -
Bilashi Sarker Khamarmagura 01767-918879
Selina Begum Khamarmagura -
Mar. 4, East Sharikhali Md. Faruk Nazma Begum Sharikhali, 01939-745935
2014 Kalikapur, Farmer, Patuakhali
Patuakhali Sadar, Sharikhali Aklima Begum Sharikhali,
Patuakhali Patuakhali Sadar, Patuakhali
Patuakhali Ambia Khatun Sharikhali,
Cell: Patuakhali
01749-769455
Md. Habib Sharikhali, 01775-280835
Patuakhali
Md. Nazrul Islam Sharikhali, 01747-080511
Patuakhali
Shah Alam Mridha Sharikhali, 01748-256762
Patuakhali
Salma Begum Sharikhali,
Patuakhali
Hasina Begum Sharikhali,
Patuakhali
Md. Faruk Sharikhali, 01749-769455
Patuakhali
Md. Shanu Mridha Sharikhali, 01934-387460
Patuakhali
Md. Alamgir Sharikhali, 01834-822181
Patuakhali

ANNEX 2
KEY INFORMANT INTERVIEWS (DAE)
Date Interviewee Designation & District
19 January 2014 Mr. Abdur Rouf Horticulture Specialist, Jessore
20 January 2014 Dhirendra Nath Hawlader Deputy Director ,DAE,Bagerhat
20 January 2014 Md. Abu Talha Upazilla Agriculture Officer,Chitalmari,
Bagerhat
22 January 2014 Mr. Shuhash Chandra Biswas SAAO ,DAE, Chuadanga
23 January 2014 Sk. Iftekhar Hossain Deputy Director, DAE, Meherpur
27 January 2014 Mr. Deb Dulal Dhali DTO, DAE, Bhola
28 January 2014 Mr. Md. Lutfar Rahman Deputy Director, DAE, Barguna
29 January 2014 Mr. A.Z.M Montazul Karim Deputy Director, DAE, Patuakhali
29 January 2014 Pobitra Chandra Shil Crops Development Officer, DAE, Patuakhali
30 January 2014 Mr. Debangshu Kumar Saha DTO, DAE, Barisal

09 February 2014 Mr. Mukhlesure Rahman Deputy Director, DAE, Magura
10 February 2014 Mr. Ashok Kumar Haldar Training Officer, DAE, Norail
11 February 2014 Mr. Ganesh Chandra Mondol Deputy Director, DAE, Satkhira
12 February 2014 Mr. Joynul Abedin Deputy Director, DAE, Jhenaidah
13 February 2014 Mr. Zahidul Alam Upazilla Agriculture Officer, Jhikargacha,
Jessore
16 February 2014 Mr. Vashkor Chakrabartty Deputy Director, DAE, Faridpur
16 February 2014 Md. Kashim Uddin Agriculture Extension Officer,DAE,Faridpur
17 February 2014 Mr. Monsur Rahman Deputy Director, DAE, Shariatpur

18 February 2014 Mr. Golam Mostofa Deputy Director, DAE, Madaripur
19 February 2014 Mr. Ashit Kumar Saha Deputy Director, DAE, Gopalganj
20 February 2014 Mr. Golam Kibria Deputy Director, DAE, Rajbari
KEY INFORMANT INTERVIEWS (IN THE FIELD)

SL Name Organization Mobile Number
1 Ananda Mohan Biswas RENAISSANCE O1715333624
2 Ashok Kumar Sikder Kodalia Arad 01740873267
3 G. M. Tayyebur Rahman EFADF 01740650900
4 Mongol Roy Vegetable Trader 01743923609
5 Q. S. Islam Mukto ORGANIXS 01715268606
6 M. Monjur Kader SMKK 01762692182
7 Moinul Hossain SMKK 01762692200
8 Md. Tafsir Uddin Kalu Pranto Fal Vandar 01745309406
9 Md. Kalim Uddin Adorsha Foundation 01918896882
10 Md. Abu Jafor Siddiquee CRESCENT 01712621792
11 Md. Ataur Rahman CHESTA 01711847707
12 Md. Anowar Hossain M/S Padma Seeds 01711668026
13 Md. Obaidul Haque Khalid Agro. Trading 01916670512

14 Palash Chandra Trafder PRIDE 01714086514
15 Parimal Saha Saha Fal Vandar 01720663554
16 Sree Arjun Saha Satabdi Vandar 01914884254
17 Md. Nure Alom Kanika Seed Co. Ltd. 01711371662
18 Md. Azizul Haque VOSD, Barisal 01715648157
19 A.K.M. Mostafizur Rahman VOSD, Barisal 01713443747
20 Dipak Hawlader Barisal 01713628100
21 Harun-ur-Rashid PDI, Bhola 01712305589
22 Md. Farque Bhola N/A
23 BM Kamrul Hasan Badol SDS, Sariatpur 01712535700
24 Anil Baroi Uzirpur, Barisal N/A
25 Md. Abdur Rashid Patuakhali 01712107213
26 Amol Chandra Sarker Sariatpur 01736365983
27 K.M. Enayet Hossain SDA, Patuakhali 01712103394
28 Shahabuddin Panna NSS, Barguna 01712795359
29 Md. Solaiman Bhola 01724323253
30 Md. Badrozzaman SDS, Sariatpur 01712740576
31 Kazi Ashraful Hassan SDC, Faridpur 01714022987
32 Md. Ruhul Amin Sariatpur 01987383041
33 Md. Alim Sikder Faridpur 01939803063
34 Shusanta Kumar Tarafder Agri. Officer, Darshana 01712195781
35 Md. Harish Uddin Mollah M/S. Faridpur Jute Fibers 01711600872
ltd
36 Mr. Matiur Rahman Jobeyda Karim Jute Mill 01755522201
37 Natural Fiber, BCIC, Bagerhat Mr. Mostafiz Ahmed 01711337103
KEY INFORMANT INTERVIEWS (WITH COMPANIES/PROJECTS)

Company Name Designation
PRAN Food Limited Eleash Mri Executive Director
Square Consumer Products Limited Mr. Abdul Khaleque General Manager
Bombay Sweets and Co. Limited Mr. D D Ghosal Head of Marketing
Golden Harvest Agro Industries Ltd Mr. Samad Choudhury Chief Operating Officer
Vegan Agro Limited Mr. Atiqur Rahman M anager(Development &
Marketing)
SME Foundation S.M.Shaheen Anwar General Manager
ACI Seed Mr. A B M Kamal Operations Manager
Cold Chain Bangladesh Alliance, Mr. A.B.Siddiqui Chief of Party
USAID
Lal Teer Seed Limited Mr. S.M. Abdul Mukit Head of Marketing
Metal Agro Limited Md. Shaidul Haque Head of Marketing
Development
Patwary Flakes Mr. Abdul Awal Patwary Chairman and Managing
Director
CareBangladesh Mr. Md. Nurul Amin Siddiquee Coordinator Agriculture and
Value Chain
Agrasol Agriculture & Technology’s Mr. Nazmul Haque Chief Executive Officer
Jagorani Chakra Foundation Mr. Md. Wahiduzzaman Director, MFI

Amrita Consumer Food Products Mr. Bhanu Lal Dey Managing Director
LTD
Satata Agro Products Mr. Fazlul Haque Chief Executive Officer
SNS Agro Tec Ms. Jebun-Nesa Chowdhury Managing Director
Hotex Foundation Mr. Mitul K. Saha Assistant General Manager
Kellogg’s Mr. Chris Stevens Director of Agronomy
SEBA Limited Mr. S.M. Hasan Iqbal Executive Director

ANNEX 3
BIBLIOGRAPHY
Ahmed, E. “Cold Storage Facility in Bangladesh.” Paper presented at the Workshop on Potato
Processing, Bangladesh, July 2012.
Bangladesh Bureau of Statistics (BBS). Household Income & Expenditure Survey. Dhaka,
Bangladesh: BBS (available at http://www.bbs.gov.bd/PageReportLists.aspx?PARENTKEY=66).
Bangladesh Bureau of Statistics (BBS). Yearbook of Agricultural Statistics of Bangladesh 2005–

06. Dhaka, Bangladesh: Statistics and Informatics Division, Ministry of Planning, Government of
Bangladesh, 2007.
Bangladesh Bureau of Statistics (BBS). Yearbook of Agricultural Statistics of Bangladesh 2011.

Dhaka, Bangladesh: Statistics and Informatics Division, Ministry of Planning, Government of
Bangladesh, July 2011.
Bangladesh Bureau of Statistics (BBS). Statistical Yearbook of Bangladesh 2012. Dhaka,

Bangladesh: Statistics and Informatics Division, Ministry of Planning Government of Bangladesh,
2013.
FAOSTAT Statistical Data for Crop Production. Rome, Italy: Statistics Division, Food and
Agriculture Organization of the United Nations (available at http://faostat3.fao.org/home/E).
Hossain, Md S. “The 2013–14 Budget and Its Challenges,” The Financial Express, 19 May
2013 (available at
http://www.thefinancialexpressbd.com/old/index.php?ref=MjBfMDVfMTlfMTNfMV85Ml8xNjk4MD
U=).
ICRISAT, International Crop Research Institute for the Semi-Arid Tropics, Bulletin 2012
Islam, S., ed. “Bangladesh Soil,” Banglapedia, National Encyclopedia of Bangladesh. Dhaka,
Bangladesh: Banglapedia, 2012 (available at http://www.banglapedia.org/HT/B_0282.htm).
Karim, N. H. “Agriculture Management Systems in Bangladesh.” In Gender Dimensions in
Biodiversity Management and Food Security: Policy and Programme Strategies for Asia, 25.
Rome, Italy: Food and Agricultural Organization of the United Nations, 1999 (available at
ftp://ftp.fao.org/docrep/fao/005/ac795e/ac795e00.pdf).
The Nation. “Pakistan to Capture $180b World Horticulture Market,” The Nation, August 28, 2013
(available at http://nation.com.pk/business/28-Aug-2013/pakistan-to-capture-180bworld-
horticulture-market).
Neogi, M. G. “Mungbean Cultivation in Southern Districts,” Daily Sun, January 14, 2013
(available at http://www.daily-sun.com/details_yes_14-01-2013_Mungbean-cultivation-
insouthern-districts_379_1_17_1_0.html).

Parvez, S. “Jute Packaging Law Gathers Momentum,” The Daily Star 17 August 2014 (available
at http://thedailystar.net/jute-packaging-law-gathers-momentum-37406).
Quasem, A., and Yasmin, F. Agricultural Research Priority: Vision 2030 and Beyond. Farmgate.
Dhaka: Bangladesh Agricultural Research Council, 2010.
USDA. Oilseeds: World Markets and Trade. Washington, DC: USDA, Foreign Agricultural
Service, 2012 (available at http://apps.fas.usda.gov/psdonline/circulars/oilseeds.pdf).
World Bank. “Bangladesh Poverty Assessment: A Decade of Progress in Reducing Poverty,
2000-2010.” Washington, DC: World Bank, June 2013 (available at
http://www.worldbank.org/en/news/feature/2013/06/20/bangladesh-poverty-assessment-
adecade-of-progress-in-reducing-poverty-2000-2010).

Agricultural Value Chains (Avc) Project Bangladesh: Value Chain Selection Report, End Market and Value Chain Analysis

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AGRICULTURAL VALUE

CHAINS (AVC) PROJECT

DATE: 30 SEPTEMBER 2014

Program Title: USAID Agricultural Value Chain (AVC) Project

Sponsoring USAID Office: Economic Growth Office

Contract Number: AID-388-C-13-00003

Date of Publication: 30 September, 2014

END MARKET ANALYSIS: METHODOLOGY 1

OBJECTIVE OF THE ASSESSMENT

END MARKET ANALYSIS: METHODOLOGY 2

Table 1: 2012–13 Production Data for Pulses

1. CREATE MASTER LIST OF CROPS

2. DEVELOP INITIAL VALUE CHAIN SELECTION CRITERIA AND CONDUCT PRELIMINARY

END MARKET ANALYSIS: METHODOLOGY 3

Non-Food Crops: flowers, jute, coir, and sea grass.

Table 3: Preliminary Ranking by AVC of the Value Chains

END MARKET ANALYSIS: METHODOLOGY 4

END MARKET ANALYSIS: METHODOLOGY 5

END MARKET ANALYSIS: METHODOLOGY 6

END MARKET ANALYSIS: METHODOLOGY 7

Criteria 3: Cross-Cutting (15%)

END MARKET ANALYSIS: METHODOLOGY

Figure 2: Geographic Coverage of Selected Value Chains

Note: Map created by AVC staff.

END MARKET ANALYSIS: METHODOLOGY

Table 7: AVC Agricultural Value Chains Baseline Production Values (2012–13)

NATURAL FIBERS (JUTE AND COIR)

PULSES (LENTIL AND MUNGBEAN)

END MARKET ANALYSIS 12

END MARKET ANALYSIS 13

END MARKET ANALYSIS 14

Environmental Sustainability and Geo-ecological Suitability

END MARKET ANALYSIS 15

Status of Land and Labor

Status of Market Access

END MARKET ANALYSIS 16

Status of Extension Service

Status of Roads, Transport, and Storage Facility

More purchasing power

END MARKET ANALYSIS 17

Real GDP Per Capita, 1998–2013

Annual Rates of Growth of Real GDP Per Capita, 2000–2013 (%)

Source: AVC team compiled data from factfish.com (available at http://www.factfish.com/statistic-

END MARKET ANALYSIS 18

END MARKET ANALYSIS 19

END MARKET ANALYSIS 20

Table 1: Ranking of Pulses Value Chain

Pulses (Lentil and Mungbean)

END MARKET ANALYSIS 21

Figure 1: Porter’s Five Forces

Threats of new Entrants: Moderate

Competitive Rivalry: Low

Threats of Substitutes: Moderate Bargaining power of the buyers: Moderate to Low

END MARKET ANALYSIS 22

2007 2008 2009 2010 2011 2012 2013

World 3,297,791 2,824,688 3,931,824 4,722,774 4,423,901 4,706,351 4,951,000

END MARKET ANALYSIS 23

3.0 Global Production

2.0 Global Trade Volume