Multiple layers of intermediaries driving up essential commodity prices: CPD

Multiple layers of intermediaries in the supply chain and excessive dependence on urban wholesale markets are among the key reasons behind the wide price gap between producers and consumers for essential food commodities in Bangladesh, according to a new study by the Centre for Policy Dialogue (CPD).

The findings were presented at a seminar titled "The Food Price Chain: Markets, Margins and Intermediaries in Bangladesh" held at the BRAC Centre in the capital on Thursday (July 30).

The session was chaired by CPD Executive Director Dr Fahmida Khatun, while Senior Research Associate Fakhruddin Al Kabir presented the study.

The research traced the supply chains of 10 essential commodities—rice, lentils, onions, potatoes, green chilies, eggplants, eggs, beef, fish and chicken—from producers to retail markets. The survey covered 820 market stakeholders across 10 markets in the Dhaka division.

According to the study, prices increase by 10 to 116 percent between the producer and retail levels, depending on the commodity.

Green chilies recorded the highest price escalation at 116 per cent, followed by rice (100 per cent) and onions (87 per cent).

The study found that products with relatively shorter supply chains—such as eggs, chicken, beef and Rui fish—show comparatively lower price differences. In contrast, commodities passing through multiple intermediaries, including collectors, traders, commission agents, millers and wholesalers, experience significantly higher markups before reaching consumers.

CPD's analysis also shows that six of the ten surveyed commodities—onions, potatoes, green chilies, eggplants, eggs and Rui fish—are primarily sourced through city-based wholesalers.

Researchers warned that such concentration weakens market competition and bargaining power while increasing the risk of price volatility, particularly when supply disruptions, hoarding or collusion occur at the wholesale level.

The study identified supply shortages, market collusion and hoarding as the most frequently cited reasons behind high food prices.

Evidence of commission-based transactions was found across nearly every stage of the supply chain for onions, eggplants, green chilies, fish and beef.

It also revealed that poultry and cattle farmers recorded negative net marketing margins, largely due to rising feed costs.

Speaking at the seminar, Dr Fahmida Khatun said persistently high food prices are forcing low-income households to spend nearly all of their income on basic necessities, leaving little room for savings, healthcare or other essential expenditures.

She described the interaction between production constraints, supply-chain inefficiencies and market demand as a "vicious cycle" driving food inflation.

"The widening gap between what farmers receive and what consumers pay has become a major concern," she said, warning that food inflation has remained the principal driver of overall inflation in Bangladesh over the past four to five years.

"If food inflation cannot be brought under control, it will weaken the economy further and hit ordinary people the hardest," she added.

Recommendations

The CPD recommended:

• Reducing unnecessary intermediary layers between farmers and consumers.
• Increasing competition in wholesale markets.
• Expanding direct market linkages and cooperative marketing systems.
• Improving transparency in market and pricing information.
• Strengthening oversight against hoarding and anti-competitive practices.
• Investing in storage and cold-chain infrastructure.
• Reducing farmers' production costs, particularly feed and livestock service expenses.