Will supermarkets in Bangladesh be super for small farmers?

Multinational vs national supermarket chains
It may be useful to make a distinction between multinational and national supermarket chains. In India, the chain is largely national for reasons already stated. Whether national or multinational, the chain provides an one-stop service to consumers. The people of the countries in the developing world have long been used to a typical shopping day at an outdoor market to buy fresh fish, meat, vegetables and fruits. Such markets in the urban areas also include shops for buying rice, cooking oil and other daily necessities such as spices. In the rural markets that is also more or less the case.

Bangladesh case
Bangladesh scenario has been changing fast at least in the urban areas since the 1990's. The rural areas remain more or less unchanged. It is dominated by what is known as Hats that are seen to operate once a week. However, in prosperous locations, in the district and Upazila centres, there are fixed market places.

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The rural market centres provide the supply chain to the urban areas working through Beparis, Aratdars and Wholesalers. It is said that these intermediaries reap more benefit in terms of profit than the poor farmers who sell their products. This system has not changed at least in respect of food items such as rice, wheat, chilies, vegetables and fruits.

However, a distinctive change has taken place in respect of poultry birds. The broilers and layers are in abundance. The growth has been remarkable since the nineties. The supply chain includes both small and big farmers and the product is almost wholly consumed in the urban markets. Milk is another product. But it has not increased on the same scale as poultry.

The growth of supermarkets for food and related items cannot be said to be remarkable in Bangladesh. In Dhaka city, however, the fastest growth has been, not in supermarkets, but in fast food shops and restaurants of various sizes. Twenty years back, one could count Chinese restaurants by the finger. Now one can see all types of restaurants, Chinese, Thai, Japanese, Korean and what not. The number of restaurants serving only Bangladeshi food has also increased.

In the late nineties and early 2000, a few supermarkets have sprung up in Dhaka. Foremost among them are Agora, Meenabazar and Nandan. They can be called big departmental shops or mini supermarkets. But they also provide retailing of fresh fruits, vegetables, meat and fishes. Such markets are located only in Dhanmondi and Gulshan areas. Generally, people in higher income bracket are the customers.

How does it help small farmers?
There are negative views on the above issue. First, the growth of supermarkets poses serious risks for the developing country farmers, who have traditionally supplied the local street markets. Second, the growth of supermarkets is good news for big farmers and efficient well-organized farmers. For others it can be troublesome. There is also the opposite view. The new trend offer opportunities as well as threats which should be faced.

Creating opportunity for small farmers
For small farmers, it is difficult to get into the procurement system of supermarkets. This is because entry into the system will require investment in irrigation, greenhouses, trucks, cooling sheds and packing technologies among other things. Supermarkets will insist on grading, quality control, uninterrupted and timely delivery. There is need to assist farmers in these and other related areas so that they may get full advantage of the opportunity created by supermarkets. One of the ways to provide the linkage between small farmers and the supermarket is to establish what is known as contract growing system.

Bangladesh Agricultural Development Corporation has been pioneer in developing the system. However, it was limited to quality seeds only. The private sector food industry in Bangladesh can also follow the contract growing system. One such industry is said to have been doing this in respect of production of pineapples, tomato and baby corn. But this is for canned products. At the other end are the vegetable exporters. Hortex Foundation during the late nineties took the initiative of establishing contract growing system for production of French beans, which are exported. But the system is yet to gain wider acceptance. Some NGOs such as BRAC does contract growing with maize farmers. Grameen Bank has also the same system. This needs to be further expanded for the benefit of small farmers.

It is not known if the very limited number of so-called supermarkets in Dhaka have adopted the system. It is unlikely that they have done so. This is because it is more convenient for them to buy from wholesalers the products that they need. It is impossible for the small farmers to bring their products in tiny lots for sale to the supermarkets. Then there is the question of grading, quality and packaging.

Difficulties of supermarkets in Dhaka
It is said that some of our supermarkets are not averse to the idea of contract farming involving small farmers. But there are difficulties. At least one supermarket, which was the pioneer, is willing to have links established to buy beef. It finds it difficult to establish such links. It is much easier for them to establish links with poultry farmers which is well organised. Beef and mutton are still the monopoly of our butchers who buy them live and sell them in the post-slaughter stage. This is organised but primitive. There is no organised slaughter houses in or around the city of Dhaka. Even then, the supermarkets in Dhaka are selling beef, mutton, fishes and indigenous poultry meat in well-packed conditions.

Facing up to the new reality of food retailing
Admittedly, Bangladesh is not where other developing countries are, in respect of the growth of supermarkets, involved in food retailing. This need not blind us to the fact that supermarkets, private sector food industry and our exporters may need a nudge to engage in partnership with small farmers. In Bangladesh, development policies and strategies often neglect this new reality, although it cannot be said that such areas have been totally overlooked. In fact, the partnership approach, other than the examples already cited, was actively promoted under Agrobased Industries and Technology Development Project (ATDP) funded by the government and United States Agency for International Development (USAID) during the mid-nineties. By all accounts, it was a successful project that initiated commercialization of both crop and non-crop agriculture involving small farmers, private sector food industry and exporters of vegetables. The striking part of the project was that the government share of funding the project was seventy percent.

As is always the case, the end of phase I of the project led to a deceleration of emphasis on interventions in favour of small farmers. ATDP II, it is said, is not continuing the emphasis so that the gains achieved earlier seem to be lost. USAID, on the other hand, is funding a project in South Africa (SA) to connect small farmers in SA's Eastern Cape province with Pick 'N Pay, the country's second biggest supermarket chain. There is nothing of the kind in Bangladesh.

At the other end, there is no attempt, on the part either of the government or more notably the so-called development partners such as the World Bank (WB), the Asian Development Bank (ADB) and the European Union (EU) to recognise this reality. The World Bank, it is said, brought in a foreign expert in early 2002 to advise it on the feasibility of a project on agribusiness. The expert is reported to have found no possibility.

EU in the same manner brought in a team of consultants on the subject at about the same time. There is yet no initiative for a project. ADB is understood to have taken initiative for Project Preparatory Technical Assistance (PPTA) about a year back on this subject. One is yet to see anything visible.

These then are the facts. Yet the very same institutions show great interest in launching mega projects in the name of poverty alleviation without coming to terms with the new reality of food retailing that may benefit our small farmers. There is perhaps need to make a fair assessment of the opportunities and challenges that lie in the new reality. As aptly put by IFPRI "Given the proper information, training, and infrastructure, millions of small farmers in Africa, Asia, and Latin America may find farming more profitable than everor they may be forced out of farming altogether." It is upto the policy makers and the development partners who influence policy to choose whether to leave the small farmers in the sidelight or to bring them into limelight.

AMM Shawkat Ali is a former Agriculture Secretary