DHAKA, May 20, 2025 (BSS) – Bangladesh Bank (BB) survey has laid emphasis on addressing the supply shortage to keep prices of agricultural products stable.

The central bank observed that supply shortage typically occur during off-peak seasons and is also associated with decreased cultivation areas replaced by other profitable products. Production is being hampered by floods, and increased pest attacks, among others.

BB made the observation in the study report on ‘Value Chain Efficiency of the Agricultural Products in Bangladesh’ jointly conducted by its Chief Economists Unit and Governor Office was published today.

The central bank conducted the study on five items such as paddy or rice, potato, onion, broiler chicken and egg.

According to the study, a significant amount of profit is earned by the farmers, while intermediaries and wholesalers gain small margins in the case of rice and paddy production during the survey period.

Forias and Arathdars just add margin, considering their costs while not directly influencing the paddy price.

However, rice millers in the supply chain play a crucial role, setting prices based on milling costs and market demand and supply conditions for paddy and rice and making profits both from rice sales and by-product income.

Arathdars and retail sellers for rice, both in local and urban markets, set their prices based on supply, demand, and competition. During the period of supply shortages, both for rice and paddy, implementing a reliable and transparent price range, particularly for millers and Arathdars, is critical, and close monitoring of stocks is also needed.

Floods and excessive attacks of pests, higher prices of fertilizer and pesticides, electricity, wages, and labor contribute to higher costs of production at the farmer level. Increased transportation and labor costs at the intermediary levels also lead to an increase in rice prices.

 The recent government requirement to use jute bags adds a new cost component, but it would provide environmental benefits. Imports of rice can play a catalytic role in stabilizing prices during shortage periods. Moreover, it creates competition for local millers.

The government withdrew the import duty on rice in October 2024, and thereafter, the imported rice from India softened the price pressure of rice in January 2025.

However, during the survey periods, the survey team found that importers were unable to import the required quantity of rice due to a lack of sufficient foreign currency in the country.

However, the study suggested that timing is critical to adjust the import duty policy and the extent of imports, predicting the actual production losses.

In the case of potatoes, the study found that the production cost is moderate and farmers earn an expected profit; however, they must accept the selling prices set by intermediaries such as Foria and Arathders.

The survey found that all actors, including growers and stockers in the potato supply, can exploit the prices at the cold storage gates during the post-harvest periods, reflecting speculation driven by a demand-supply mismatch.

An unusual price surge in late November 2024 reflected natural supply decreases at the post-harvest closure in addition to floods in some regions during August-September of that year.

The floods suppressed the vegetable harvest, which created extra demand for potatoes as a substitute and also led to an increase in potato prices.

To stabilize the price pressure, government monitoring of the stock of cold storages and its timely releases in phases, while quantifying the actual demand of potatoes in the market by a competent authority, is crucial so that Arathdars or any other intermediaries in the supply chains cannot earn excessive profits.

Particularly from July to November, during the end of the post-harvest period, the authority may consider setting a month-wise cold storage gate price ceiling to attenuate the build-up of price pressure.

Additionally, importing during off-peak periods (October-November) can address the supply shortages without harming the local farmers. On the other hand, the unusual price surge in 2024 incentivized many farmers to expand potato cultivation in 2025, raising prospects of higher production.

Therefore, the study anticipated that there would be abundant production of potatoes, leading to stable prices.

However, the farmers had to face higher production costs as prices of seed and lease rent increased because of their high demand. Therefore, government monitoring and support for adequate seed supply are essential to moderate the production costs.

About onion, this study suggested that importing onions during periods of supply scarcity, like those experienced with rice and potatoes, can alleviate price pressure.

The study found that September and October are the months of off-peak production when the local supply is naturally low.

Therefore, the government can play a critical role by reducing or withdrawing import duty before September so that an abundant supply could be available during the off-peak period.

The study also suggested that the government should take initiatives to ensure widespread dissemination of accurate and timely price information, allowing all actors in the value chain to make better-informed decisions.

About egg, the study found that feed is the main cost component (74 percent of production cost), impacting heavily on the production cost of eggs.

Respective authorities should take proper initiatives to minimize the feed cost.

The study suggested that a stable foreign exchange market can contribute to a cheaper and more stable poultry feed price.

Besides, Bangladesh Bank can allocate funds for feed mills and biogas plants to stabilize the egg markets.

The study findings suggested that the broiler producers are the main risk-takers, but they made lower profit margins as compared to other actors in the supply chain. For safeguarding the producers, floor price schemes should be chalked out to ensure that broiler producers receive a minimum level of profits.

While broiler prices fluctuated depending on availability, demand, and transportation costs, their prices rose significantly at each stage, with the highest increase seen in Dhaka’s retail markets. Feed and day-old chick costs are the key cost components.

The government should incentivize the private feed manufacturing factories and hatcheries to reduce the high price of feed and day-old chicks.

Bangladesh Bank can allocate funds for feed mills and biogas plants to encourage domestic production of raw materials. Respective authorities should evaluate the import duty on poultry feed and medicine, the advance income tax (AIT), and the taxation policies on feed raw materials and medicine.