Why Farmers Earn Less While Consumers Pay More

Bangladesh’s farmers begin their day before sunrise and work tirelessly until dusk, producing the food that feeds the nation.

Despite battling natural disasters, rising production costs, mounting debt, and uncertain markets, they continue to ensure the country’s food security.

Yet when their produce finally reaches consumers, prices often double—or even more.

This raises a fundamental question: If farmers receive unfairly low prices while consumers pay excessively high ones, who is pocketing the difference?

A recent study by the Centre for Policy Dialogue (CPD) paints a troubling picture of Bangladesh’s agricultural supply chain.

According to the research, the prices of at least ten essential commodities increase dramatically between the farm gate and the consumer market.

Rice prices nearly double, while green chilies rise by 116%, onions by 87%, lentils by 78%, and eggplants by 72%. However, very little of this price increase benefits farmers.

Instead, much of the added cost stems from excessive profits by intermediaries, extortion in transportation, inefficient marketing systems, and informal logistics expenses.

This exposes one of the greatest contradictions in Bangladesh’s agricultural economy. Farmers struggle to earn fair returns for their hard work, while consumers are forced to pay inflated prices.

Both producers and consumers lose, while a powerful network of middlemen continues to profit.

This is not merely a market failure—it reflects weaknesses in policymaking, governance, and regulatory oversight.

The CPD study also reveals that price increases vary across products.

Millers capture the largest share of added value in rice, urban wholesalers dominate lentils and green chilies, retailers add significant margins to vegetables such as eggplants and potatoes, while cattle traders contribute heavily to rising beef prices.

These findings suggest that price hikes are driven less by healthy market competition and more by unequal bargaining power, limited transparency, and inadequate monitoring.

Another critical issue is the length of Bangladesh’s agricultural supply chain. A product often passes through five to seven intermediaries before reaching consumers.

Each stage adds commissions, transport costs, storage expenses, and profit margins.

While some increase in price is inevitable, excessive markups distort the market and unfairly burden both farmers and consumers.

Perhaps even more concerning is the issue of extortion in transportation. What was once dismissed as rumor has now been documented in research and acknowledged by senior government officials.

Agricultural transport frequently incurs unofficial payments at multiple checkpoints, and these costs are ultimately passed on to consumers. As a result, government efforts to control inflation become far less effective.

Commerce Minister Khandaker Abdul Muqtadir recently noted that Bangladesh’s logistics costs account for around 16% of GDP, significantly higher than the global average of approximately 10%.

This gap highlights inefficiencies in transport, storage, infrastructure, and administrative management.

Reducing logistics costs could substantially lower food prices and improve market efficiency.

However, solving the problem requires more than occasional market inspections or mobile courts. Long-term structural reforms are essential.

First, the government should expand direct procurement and marketing systems that allow farmers to sell their produce without relying on multiple intermediaries.

Strengthening farmer cooperatives, digital agricultural marketplaces, and public procurement systems would reduce unnecessary middlemen and improve farmers’ earnings.

Second, greater transparency in agricultural pricing is crucial. Consumers and farmers should have access to information on prices at every stage of the supply chain.

A national digital agricultural price information platform could discourage excessive profiteering and improve market accountability.

Third, Bangladesh must invest in better storage and transportation infrastructure.

More cold storage facilities, modern warehouses, and efficient logistics would reduce post-harvest losses and prevent farmers from selling crops at distress prices.

Improved infrastructure would also reduce opportunities for artificial shortages and price manipulation.

Fourth, authorities must crack down on extortion and informal payments within the transport sector.

Coordinated action by law enforcement agencies, local administrations, and relevant ministries is necessary.

Extortion is not only a law-and-order issue—it directly contributes to inflation, threatens food security, and undermines economic stability.

Finally, agricultural production planning should be guided by reliable data. Better coordination between demand forecasts, production levels, and market conditions would help prevent cycles of oversupply and shortages.

Data-driven agricultural policies would create a more stable and predictable market.

A healthy economy must protect the interests of both farmers and consumers. If farmers are denied fair prices, they may abandon agriculture altogether.

If consumers continue to face rising food costs, their standard of living will inevitably decline.

Allowing a small group of intermediaries to dominate the market at the expense of both producers and consumers is neither economically sustainable nor socially just.

The CPD study is more than a collection of statistics—it serves as a warning about the deep structural problems within Bangladesh’s agricultural marketing system.

Addressing these challenges requires greater transparency, stronger accountability, genuine competition, and effective governance.

Without meaningful reform, farmers will continue to be underpaid, consumers will continue to overpay, and the cycle of inequality in the agricultural market will persist.

(The writer is the Editor of ClimateJournal24.com and General Secretary of the Bangladesh Climate Change Journalists Forum- BCCJF)