Rethinking Bangladesh’s Supply Chain to Address Price Hikes

From its inception, persistent inflation and recurrent price hikes have become one of the most pressing economic challenges facing Bangladesh. Starting from the very basic groceries to high end luxury items, we are struggling a lot to meet basic needs due to excessive hike in the price.

Excessive layers of intermediaries and weak market oversight create opportunities for hoarding and price manipulation. They are buying goods from the farmers or other manufacturers in a very cheap rate and selling the very products in the market in higher price. They are fixing the price so high that it is crossing the general buying capacity of the common people of Bangladesh. The mostly affected groups are the middle and lower middle-class groups who have to heavily rely on their hard-earned money when it comes to fulfill their basic needs. They are having a miserable life due to the uncontrolled hike in the product prices.

One prominent solution can be if we can create a centralized distribution system in the market which will help the end user of the country to buy directly from the producer of that product for example farmers. It has to be executed from the government perspective. There will be a centralized Storage house in all geographical areas like for every district there will be one fixed place where the goods will be stored and from there depending on the needs of the people of that area the goods will be distributed to the market.

The government may consider establishing a centralized procurement and distribution network for selected essential commodities. The govt will assign responsible authorities for every unit of location to collect the data of the producers which will include the type of crops they produce and the maximum capacity of their production. As per the data given by the farmers, there will be field level team who will buy the end products from the farmers at a rate that will be benefitted both for the farmer and the government.

Then, the team will store the products in the designated warehouse. After that, the products will be distributed using the vehicles of the government to the local markets as per their demand. The demand of each item can easily be forecasted from the previous sales data. There will be a separate team in the government level to collect and analyze that data from the market. In this process, firstly the farmers will get the money they deserve and secondly customers or the end users will be able to get the products in the markets at a price significantly lower than the recent price. The general consumers will be able to live their lives smoothly.

Although such a system may sound ambitious, similar approaches have already been adopted in several countries in different forms. In India, the government introduced the electronic National Agriculture Market (e-NAM) platform to connect farmers with buyers and reduce unnecessary intermediaries. China has developed large-scale agricultural logistics networks and modern warehouse facilities to improve the movement of goods from producers to consumers.

South Korea has also strengthened its agricultural supply chain through cooperatives and efficient distribution channels. While Bangladesh has its own unique challenges, these examples show that a more organized and transparent distribution system can help ensure fair prices for both producers and consumers.

Now the question comes What should we do to store perishable goods like proteins and some vegetables which require to be kept in a cold place to keep it fresh? For that, the government can have two options.

Number 1 is to follow a Just in Time (JIT) approach which denotes that, we will only produce based on the demand of those specific products in the market keeping a minimum buffer or safety stock to avoid stock out in the market. But for national level production, JIT may not always work due to high lead time needed in production.

So that brings us to the second option and that is, those products need to be stored in a cold storage house and those have to be distributed also in a cold van. This process can be useful but we have to keep in mind that we have to maintain the quality of the products and that is why we cannot exceed the shelf life of any products.

Maintaining shelf life refers to distributing the products within the time period the products remain at the best of their quality. The shelf life will be determined by the test conducted by the experts assigned by the designated authorities of the government. If this process can be implemented efficiently, we will be able to get fresh quality of products in a very reasonable price which will in the buying capacity of most of the people in the country.

Implementing such a system will not be free from challenges. It will require huge investment, effective monitoring, and strong institutional capacity. There is also the risk of corruption and inefficiency if proper accountability is not ensured. Nevertheless, with technological advancement and proper governance, such a system can be introduced gradually through pilot projects before expanding nationwide.

The writer is a Post Graduate Student (Applied Economics), University of Vienna.