COMMODITY SUPPLY MESS
Supermarket pioneer reveals findings
Kazi Azizul Islam
If middlemen are eliminated and agro-produces from growers reach directly to retailers, prices will remain low — it is not only a public perception, also many economists subscribe to this idea.
But, from his experience of running the operations of the country’s premier superstore chain Agora for the past eight years, Niaz Rahim does not agree to that. ‘Supply chain here is not so simple,’ he says.
In an exclusive interview the managing director of the Tk 1,400-crore Rahimafrooz Group described to New Age how farmers and small traders occasionally even abandon truckloads of vegetables unclaimed in Dhaka’s wholesale markets when they are unable to get the right prices of their produces.
In his opinion, due to the existing disorganised supply-chain, a coconut that costs Tk 7 in the coastal districts sells at Tk 25 in Dhaka.
Niaz also touched issues spanning from the government’s pledge to cut essential prices to the necessity of corporate management practice and corporate social responsibility.
Agora has more than a hundred contract farmers in Jessore under a long-term plan. But, Niaz said, Agora has to sell those farmers’ produces on local market as its procurement department found transporting the vegetables from Jessore often unprofitable.
Niaz detailed some noticeable facts revealed in an investigation by his company, for example why on many days Dhaka wholesale markets sell vegetables at much lower rates than others.
‘When they [farmers or local traders] find that spot prices have tumbled massively and calculate that the proceeds from selling their entire lots may not be enough even to pay their truck rents, they flee penniless abandoning truckloads of vegetables unclaimed,’ Niaz said.
A number of wholesalers at the city’s Karwan Bazar verified the information, telling New Age that such happenings are quite common. When groups of farmers and traders from different parts of the country gather at the city’s wholesale hubs during the peak trading hours, between midnight and dawn, prices often tumble, they said.
Truckers in such a situation go to the wholesale market committee concerned, which traditionally arrange auction of the abandoned vegetables to pay them the rents.
Agora has found that although in the south-western Barguna district fish is much cheaper than in Dhaka, but the sellers in the bordering district find smuggling the fish to India more profitable than sending those to Dhaka, Niaz said. ‘The reasons include lack of proper marketing network and transports to bring the fish from Barguna to Dhaka in a short period.’
Whether it is vegetable or fish or dressed chicken, if processing, sorting and cold storage centres are developed in the production areas and smooth and convenient transportation system is established to and from the end markets, things will improve, Niaz said.
‘Anyway, whatever an individual grower or retailer may think, it makes no sense until required or viable volumes are gathered in facilitated market places and a convenient network of commodity supply chain is developed,’ he observed.
In this regard, the Rahimafrooz chief said, properly utilising the existing government facilities, a public-private partnership could help develop linkage between growers, local markets and end retailers.
For instance, the Bangladesh Agricultural Development Corporation can support farmers with right seeds, soil tests and cold storage facilities, while the Bangladesh Railway and Bangladesh Road Transport Corporation can develop smooth transportation of commodities, he said.
‘River transportation also can make commodity-carrying cheaper,’ Niaz said, adding, ‘Although we are blessed with a huge network of rivers, river transportation of goods has become too insignificant, inviting private-sector investments here has great potentials.’
Niaz termed the pledge made by the present government to reduce prices of essential commodities flawed, because, he said, ‘if supply chains are not managed, price stability is a remote possibility.’
Automobile battery manufacturing is the major concern of the 54-year-old Rahimafrooz. It has stepped into retailing in 2001 by launching Agroa, under the banner of Rahimafrooz Superstores Limited . It has now four stores in Dhaka with a turnover of Tk 115 crore in 2008.
Although sales have grown 20 per cent over the years yet Agora is still not a profitable organisation, as unorganised supply chains of many food commodities have kept all organised retailers in difficulty.
Niaz said some 2,500 items or 55 per cent of Agrora products are food items.