usaid/dai banana agricultural value chains (avc) … · 2018. 9. 19. · 10.1 bangladesh banana...

USAID/DAI BANANA AGRICULTURAL VALUE CHAINS (AVC) PROJECT USAID.GOV | 1

USAID/DAI BANANA AGRICULTURAL

VALUE CHAINS (AVC) PROJECT:

BANGLADESH AND INDIA

(VALUE CHAIN REPORT, END MARKETS AND

VALUE CHAIN ANALYSIS)

BY

DR. ESENDUGUE GREG FONSAH, PHD

PROFESSOR AND AGRIBUSINESS EXTENSION ECONOMIST

FRUITS AND VEGETABLES

DEPARTMENT OF AGRICULTURE AND APPLIED ECONOMICS

UNIVERSITY OF GEORGIA

TIFTON, GA 31793


CONTENTS

ACKNOWLEDGEMENT 7

1. INTRODUCTION 8

2. CURRENT BANANA PRODUCTION TRENDS, SITUATIONS

AND OUTLOOK IN BANGLADESH

8

2.1 PLANTING PERIOD 9

2.2 PLANTING PATTERN 10

2.3 HARVESTING 10

2.4 PLANTED BANANA CULTIVAR 10

2.5 IRRIGATION SYSTEM 10

2.6 PESTS AND DISEASES 11

2.7 PEEL-FEEDING CATERPILLAR 11

3 SUSTAINABLE BANANA PRODUCTION IN BANGLADESH

(SUPPLY)

11

4 SUSTAINABLE MARKETING AND TRADE OF BANANAS IN

BANGLADESH (DEMAND)

12

5. COST OF PRODUCTION ANALYSIS 13 5.1 DEMAND FOR BANANAS 14

5.2 FARM GATE PRICES 14

5.3 WHOLESALE PRICES 15

5.4 RETAIL PRICES 16

6 AGRICULTURAL VALUE CHAIN (AVC) SURVEY

METHODOLOGY

17

6.1 SAMPLING PLAN 17

6.2 DATA COLLECTION 18

6.3 DATA ANALYSIS 18

7 AGRICULTURAL VALUE CHAIN (AVC) SURVEY RESULTS 18 7.1 PRODUCTION SURVEY RESULTS AND ANALYSIS 18

7.2 INTERMEDIARIES SURVEY RESULTS 29

7.3 CONSUMER SURVEY RESULTS 33

8 MARKET AND DISTRIBUTION CHANNELS 37 8.1 EXISTING MARKET CHANNELS 37

8.2 ONE-LEVEL-CHANNEL 37

8.3 TWO-LEVEL-CHANNELS 37

8.4 FOUR- LEVEL-CHANNELS 38

9 DOMESTIC MARKET STRUCTURE 38 9.1 WHOLESALERS/DISTRIBUTORS IN DHAKA 38

9.2 POST-HARVEST TREATMENT 38

9.3 TRANSPORTATION SERVICES 39

9.4 RIPENING CHAMBERS 39

9.5 PACKING SHED/HOUSE 40


10 INTERNATIONAL TRADE 40 10.1 EXPORT MARKET 40

10.2 EXPORT CERTIFICATE 41

10.3 MEGA INTERNATIONAL TRADING COMPANY 41

10.4 BANGLADESH HORTICULTURAL EXPORT DEVELOPMENT FOUNDATION

(HORTEX FOUNDATION)

41

10.5 BANGLADESH FRUIT, VEGETABLES & ALLIED PRODUCTS EXPORTER’S

ASSOCIATION

(BFVAPEA)

42

11 CONCLUSION 42

11.1 RECOMMENDATION 43

11.2 FIELD/PLANTATION MANAGEMENT 43

11.3 HARVESTING MANAGEMENT 44

11.4 PACKING SHED/HOUSE AND POST-HARVEST MANAGEMENT 44

11.5 RURAL DISTRIBUTION CENTER AND RIPENING CHAMBER 45

12 AGRICULTURAL VALUE CHAIN (AVC), INDIA 46 12.1 PURPOSE 46

12.2 KEVENTER AGRO LIMITED 46

13 BANANA SUPPLY VC MODEL 47 13.1 MARKET SHARE AND PROFIT MARGINS 47

13.2 IMPORT/EXPORT 48

13.3 BUSINESS MODEL 48

14 MARKET AND DISTRIBUTION CHANNELS 49 14.1 EXISTING MARKET-LEVEL-CHANNELS 49

14.2 SUCCESS STORIES 49

14.3 BANANA PRODUCTION 50

14.4 PRODUCTION COSTS 50

14.5 GOOD AGRICULTURAL PRACTICES (GAP) AND QUALITY 50

14.6 DISEASE PROBLEMS 51

15 SUPER MARKET, KOLKATA 51 15.1 BANANA RETAIL PRICES 51

16 WORLD BANANA PRODUCTION OUTLOOK 52 16.1 WORLD BANANA SUPPLIERS 52

16.2 WORLD BANANA EXPORT COUNTRIES 53

16.3 WORLD BANANA IMPORT COUNTRIES 54

16.4 WORLD BANANA EXPORT BY REGIONS 54

17 CONCLUSION 55 17.1 RECOMMENDATION 55

REFERENCES AND RECOMMENDED READING 56


TABLE OF FIGURES

2.1A PLANT INFESTED BY BBTV 11

2.1B SIGATOKA INFESTATION 11

2.1C PEEL-FEEDING DAMAGE 11

5.1 PROJECTED BANGLADESH POPULATION, 1950-2100 14

5.2 GROWER AVERAGE PRICE FOR SHABRI-KOLA, 2005-2015 15

5.3A GROWER AVERAGE PRICES FOR SHAGOR-KOLA, 2005-2015 15

5.3B GROWERS AVERAGE PRICES FOR CHAMPA-KOLA, 2005-2015 15

5.4A ORDINARY-SHAGOR-KOLA AVE. WHOLESALE PRICES, 1986-2015 16

5.4B SHAGOR-HIGH QUALITY AVERAGE WHOLESALE PRICE, 2006-2015 16

5.5A SHABRI-KOLA AVERAGE WHOLESALE PRICES, 1986-2015 16

5.5B CHAMPA-KOLA AVERAGE WHOLESALE PRICES, 1986-2015 16

5.6A SHAGOR-KOLA ORDINARY AVERAGE RETAIL PRICES, 2005-2015 17

5.6B SHAGOR-KOLA HIGH QUALITY AVERAGE RETAIL PRICES, 2005-2015 17

5.7A CHAMPA-KOLA AVERAGE RETAIL PRICES, 2005-2015 17

5.7B SHABRI-KOLA AVERAGE RETAIL PRICES, 2005-2015 17

7.1 WHAT IS YOUR PROFESSION? 18

7.2 WHAT IS THE SIZE OF YOUR FARM? 19

7.3 WHAT ELSE DO YOU CULTIVATE BESIDES BANANAS? 19

7.4 HOW MANY YEARS HAVE YOU BEEN PRODUCING BANANAS? 20

7.5 HOW OFTEN DO YOU PRODUCE AND/OR CULTIVATE BANANAS? 20

7.6 WHAT VARIETY OF BANANAS DO YOU CULTIVATE? 21

7.7 WHY DO YOU PREFER THE SELECTED VARIETY? 21

7.8 IS BANANA PRODUCTION INCREASING OR DECREASING? 22

7.9 WHY DO YOU THINK BANANA PRODUCTION IS INCREASING OR

DECREASING?

22

7.10 HOW MUCH DO YOU SELL A BUNCH OF BANANAS ON THE AVERAGE? 23

7.11 IS THE QUALITY OF ANY KIND OF BANANAS IMPORTANT TO YOU? 23

7.12 DO YOUR BUYERS COMPLAIN ABOUT QUALITY? 24

7.13 DO YOU USE FERTILIZERS 24

7.14 DO YOU DO SOIL AND TISSUE ANALYSIS BEFORE, DURING AND AFTER

PLANTING?

25

7.15 WHAT FERTILIZERS DO YOU USE? 25

7.16 HAVE YOU EVER SEEN BANANAS PACKAGED IN BOXES BEFORE? 26

7.17 IF YOUR CUSTOMERS WANT PACKED BANANAS, WOULD YOU ACCEPT TO

ADOPT THE CHANGES?

26

7.18 WHAT WOULD YOUR PACKAGING PREFERENCES BE? 27

7.19 WHAT IS YOUR MONTHLY HOUSEHOLD INCOME? 27

7.20 HOW OLD ARE YOU? 28

7.21 WHERE DO YOU BELONG IN THE BANANA VC? 29

7.22 WHERE IS YOUR BUSINESS LOCATION? 29

7.23 WHAT ARE THE VARIETIES OF BANANAS YOU BUY? 30

7.24 HOW DO YOU BUY YOUR BANANAS? 30


7.25 HOW MUCH ARE YOU WILLING TO PAY FOR A GOOD QUALITY BUNCH OF

ANY VARIETY OF BANANAS?

31

7.26 WOULD YOU PAY PREMIUM PRICE FOR ANY QUALITY BANANAS? 32

7.27 WHAT ARE THE QUALITY ATTRIBUTES THAT INFLUENCE YOUR PURCHASING

DECISIONS?

32

7.28 HOW MUCH WILL YOU BE WILLING TO PAY FOR ONE BUNCH OF GOOD

QUALITY LOCAL AND CAVENDISH BANANA VARIETY

33

7.29 WHICH OF THE LOCALLY GROWN BANANAS DO YOU PREFER TO BUY? 34

7.30 HOW OFTEN DO YOU EAT BANANAS? 34

7.31 WHY DO YOU PREFER THE SELECTED LOCAL VARIETY? 35

7.32 HOW MUCH ARE YOU WILLING TO PAY FOR 1 KG OF BANANAS? 35

7.33 WHAT IS YOUR MONTHLY HOUSEHOLD INCOME? 36

8.1 EXISTING BANANA MARKET CHANNELS IN RURAL AND URBAN AREAS 37

8.2A JATRABARI KALAPATTI URBAN WHOLESALE MARKET, DHAKA CITY 38

8.2B POBAHATI URBAN WHOLESALE MARKET 38

8.3A HORTEX FOUNDATION REEFER TRUCK EXTERIOR 39

8.3B INTERIOR OF REEFER CONTAINER 39

8.3C BANGLADESH AIRFREIGHT AT THE INTERNATIONAL AIRPORT, DHAKA 39

10.1 BANGLADESH BANANA EXPORT, 2014 40

11.1A FARMER’S COOPERATIVE DEMARCATION ZONES 44

11.1B REEFER CONTAINER’S INTERIOR 44

11.2A MR. RAHMAN – A LOCAL MANGO ENTREPRENEUR, WHOLESALER AND

DISTRIBUTOR

45

11.2B COLD STORAGE WAREHOUSE, HAZRAT SHAHJALAL INTERNATIONAL

AIRPORT, DHAKA.

45

12.1 KEVENTER OFFICE, CONFERENCE ROOM AND TEAM OF EXPERTS 46

12.2 MR. CHOUDHURI ON THE LEFT, DISPLAY OF QUALITY BANANAS IN MIDDLE

AND DELIVERY EXTREME RIGHT

47

12.3 COLOR CRATES ON THE LEFT, RIPENING CHAMBERS (MIDDLE) AND INTERIOR

OF RIPENING CHAMBER (EXTREME RIGHT)

47

13.1 KEVENTER AGRO LTD BUSINESS MODEL 48

14.1 EXISTING MARKET CHANNELS IN KOLKATA, INDIA, WEST BENGAL REGION 49

14.2 NEWLY HARVESTED GRAND NAIN BUNCHES OF BANANAS 50

14.3 FIELD CONDITIONS THAT CONTRIBUTE TO QUALITY AND POST-HARVEST

DEFECTS

51

14.4 VISIT OF BANANA ORCHARD IN KARIMPOR, NADIA DISTRICT, KOLKATA,

INDIA

51

15.1 PRICES OF DIFFERENT BANANA VARIETIES IN SUPER MARKET IN KOLKATA,

INDIA

52

15.2 FRESH BANANA BLOSSOM SOLD IN SUPERMARKET, KOLKATA, INDIA 52

16.1 TOP 10 BANANA PRODUCING COUNTRIES COMPARED TO THE UNITED

STATES

53

16.2 TOP BANANA EXPORTING COUNTRIES 53

16.3 WORLD BANANA IMPORTING COUNTRIES 54

16.4 BANANA EXPORT BY REGIONS 55


LIST OF TABLES 2.1 ACREAGE, PRODUCTION AND YIELD RATE OF BANANAS, 2003-2012 8

5.1 ECONOMIC RISK-RATED RETURNS OVER TOTAL COST OF PRODUCING

BANANAS FOR TWO CYCLES IN ALOMPUR VILLAGE OF MEHERPUR DISTRICT,

2015

13

5.2 RISK-RATED SENSITIVITY RETURNS OVER TOTAL COSTS OF PRODUCING

BANANAS FOR TWOCYCLES IN ALOMPUR VILLAGE OF MEHERPUR DISTRICT,

2015.

13

10.1 BANGLADESH BANANA EXPORT, 2014 40


ACKNOWLEDGEMENTS

This study was funded by USAID/DAI for which the author is truly indebted. I wish to express gratitude

towards the following individuals within USAID/DAI Bangladesh who assisted in one way the other in

making this research a success: Dr. William (Bill) Levine (Chief of Party), Bani Amin (Deputy Chief of

Party), Anup (Tutul) Toy, Arshad Hussain, Mahbuh Khan, Masud Ahmed, Mohammad Saiful Islam,

Mohammad Soeb Iftekhar, Sadequl Amin, Somashree (Soma) Chattapadhya, Tanvir Manower, Shamia

Chowdhury, Serajul Isam, Rekha Lal, Bithika Das Hazra, Md. Sazzad Hossain, Rashed Reza Chowdhury and

Abdul Mannan Sarkar. More-so, my gratitude goes to the following private sector individuals who provided

valuable information that strengthened the depth of this research: Mr. Mitul K. Saha (Assistant General

Manager - Supply & Value Chain, Marketing, R&D) and Md. Rafiqul Islam (Assistant General Manager

Production) at Hortex Foundation; Mr. Kbd. Md. Hafizur Rahman (Deputy Director), and Mr. Abdul Aziz

(Sub-Assist. Agriculture Officer), Plant Quarantine Station, Hazrat Shahjalal International Airport, Dhaka,

Mr. Monjurul Islam (Adviser, Bangladesh Fruits Vegetables & Allied Products Exporters Association), Mr.

Md. Moshin (Manager, Dhali Super Store) and Syed Salim Uddin Ahamed (Floor Manager, Lavender Super

Store Ltd.) My special thanks goes to Mr. Aniruddha Hom Roy (Private Sector Advisor, Economic Growth

office, US Embassy Bangladesh) for taking time off his busy schedule to attend my debriefing presentation,

Meg Karchner and her team for effectively using her soft diplomacy to provide assistance that contributed

to the success of the assignment, and providing the logistics to facilitate travel and documentation. My

appreciation also goes to Messrs Sarada Prasad Choudhuri (Deputy General Manager - F&V Division) and

Balaram Nandi (Sr. Executive - F&V Division), Keventer Agro Limited, Bazar Kolkata, India, Bandhab Kalar

Arat (Wholesaler in Tehatta), Nadia, India. Finally, thanks to Messrs Sourabh Sen (Global Affairs Advisor),

and Gaurav Bansal (Consul for Political and Economic Affairs), Consulate General of the United States of

America, Kolkata, West Bengal, India.


1. INTRODUCTION

Agriculture is very important to Bangladesh’s economy as it contributes to 17% of its total GDP.

According to Bangladesh Statistics, the banana is the only fruit crop available year-round, with the highest

per capita consumption compared to the over 118 different fruits crops produced in the country. Bananas

are considered “one of the finest fruits and the most important in terms of food value, food security, food

availability and above all, it is a crop that has a positive impact due to its profitability margins aimed at

increasing household income and alleviating poverty. Most importantly, the “super fruit” crop is not only

important economically, but it has the best nutritional value as well - all in one.

It is important to note that the popularity of bananas is partially due to its “low price and multiple uses”

i.e., as a vegetable and as a dessert fruit. It is a rich source of carbohydrates and has plenty of vitamins,

particularly vitamin B. It is also a good source of potassium, phosphorus, calcium and magnesium (Fonsah

et Chidebulu, 1995; 2012; Fonsah et al. 2007). Ripe bananas mixed with rice and milk is the traditional

dish for the Bangladeshis. Banana powder is used as the first baby food. It helps in reducing risk of heart

disease when used regularly and is recommended for patients suffering from high blood pressure, arthritis,

ulcer, gastroenteritis and kidney disorders” (Bangladesh Statistics, 2015; Fonsah and Chidebelu, 1995;

2012).

2. CURRENT BANANA PRODUCTION TREND, SITUATION AND

OUTLOOK IN BANGLADESH

Bananas alone represent 20% of the 118+ fruits crops produced in Bangladesh, with a market share of

36%. From 2003 to 2006, the harvested acreage, production, and yields experienced steady increases and

reached its peak in 2007 with a total of 145,300 acres, producing 1,004,500 MT and obtaining an optimum

yield of 6.9 MT/Acre (BBS Yearbook, 2015).

Table 2.1: Acreage, Production and Yield rate of Banana during the year 2003-04 to 2011-12

YEAR ACREAGE (IN ‘000’) PRODUCTION (IN ‘000’ MT) YIELD RATE (MT)

2003-04 121.7 706.6 5.8

2004-05 133.0 898.7 6.8

2005-06 138.4 909.1 6.6

2006-07 145.3 1004.5 6.9

2007-08 131.6 877.1 6.7

2008-09 132.4 836.2 6.3

2009-10 133.3 818.3 6.1

2010-11 130.6 779.4 6.0

2011-12 121.7 745.9 6.1

SOURCE: YEARBOOK OF AGRICULTURAL STATISTICS OF BANGLADESH-2008, 2011 & 2012) BBS.


This was quite significant, although lower than the world’s average. However, since then all three economic

indicators, i.e. acreage, production and yields, have maintained a downward sloping trend. For instance,

in 2012, 121,700 acres were harvested, and 745,900 MT produced with a yield of 6.1 MT was reported.

This translates to a 16%, 26% and 11% decrease in planted acreage, production and yields respectively in

almost a decade.

The reasons for these declines were:

1. The cyclone that devastated all farms from 2007-2008

2. Population explosion that is converting farm land to residential properties

3. Pests and diseases

4. Adopted outdated agricultural practices

5. Increased Pre and Post-harvest losses

6. Quality

7. Lack of general farm management skills

8. Lack of post-harvest management skills

9. Lack of improved planting materials

10. Lack of cold storage and ripening facilities.

That explains why the government found it necessary to subsidize and lend support to the industry with

inputs such as fertilizers, irrigation, pest and disease controls respectively.

2.1 PLANTING PERIOD

In Bangladesh, bananas are planted year-round, but there are three major periods namely:

1. Mid-September to Mid-October

2. Mid-January to Mid-March

3. Mid-March to Mid-May

4. December to February – Best planting

time for premium prices

According to discoverybangladesh.com, “Bangladesh has a subtropical monsoon climate characterized by

wide seasonal variations in rainfall, high temperatures and humidity. There are three distinct seasons in

Bangladesh: a hot, humid summer from March to June; a cool, rainy monsoon season from June to

October; and a cool, dry winter from October to March” (Bangladesh Weather Online, 2015).

We were told that March – May was a longer planting period. It is not a good or recommended time, and

harvesting is done 10 – 12 months. However, according to Google search, March to May is supposed to

be a “humid summer.” I am tempted to think that it is because this period runs into the rainy monsoon

season (June-October), and therefore makes it difficult for the young banana plants to establish. The

ratoon for the March-May planting is 8-9 months. The second ratoon (F2) is the same 8 – 9 months.

After the 3rd, the plantation is fallowed or rotated with other crop, i.e. vegetables like cauliflower, cabbage

etc. Also, intercropping is done in the first year of planting with potatoes. After 90 days, the potatoes

are harvested. The potatoes are fertilized, so the banana partially benefits from that. After 90 days, the


potatoes are harvested, and production continues with banana. Sometimes the rotation is onions,

cauliflower, or cabbage. If intercropping is potatoes, January to February is the preferred planting time.

2.2 PLANTING PATTERN

The planting pattern observed was the single line technique to accommodate the intercropping. The

planting density varied from 350 – 400 plants /Bigha or 1,050 – 1,200 plants/acre or 2,594- 2,964 plants/

hectare.

2.3 HARVESTING

Heavy harvesting is carried out from June – July to target the Ramadan Holy month/season. It is believed,

but not scientifically proven, that Bangladeshis eat more bananas in the Holy month. However, bananas

are a perennial crop, and harvesting is supposed to be daily after the plant crop stage/harvest. Harvesting

standard operations procedures (SOP), such as calibration, eye technics and specific target market, were

not known, and harvesting operations were need-based. Quality specifications and handling procedures

were not respected or known. All these can be easily taught at the appropriate time, i.e. when customers

continue to complain about quality or when the industry is ready for a revolutionary change.

2.4 PLANTED BANANA CULTIVAR

The banana cultivars that existed 50 years ago were: “Sabri”, “Champa”, “Kabri”, “AmirtaSagar”. Other

varieties were: “Jahagir” (Singapori); “Mesagir”, “Aati-Kola/Bichi” (seed banana). We were told that

“Shabri” was the most popular variety, then “Champa.” But, the production of Shabri is believed to be

decreasing, while “Champa” is increasing. However, this theory has yet to be proven. Other local varieties

were: BARI-Kola-1; BARI Koli-2 and BARI Kola-3 (BARI stands for Bangladesh Agricultural Research

Institute). Empirically, farmers who grow BARI Kola -1, 2 or 3 are not aware of what they are growing.

They already have local names for them which might be quiet confusing. This is an area where the presence

of Extension could be quite useful in educating the farmers.

2.5 IRRIGATION SYSTEM

The only prominent water supply system observed was the flood irrigation system. In all regions that we

visited, there were no other irrigation system except flooding. However, there were no signs of water

stress on any of the farms visited.


2.6 PEST AND DISEASE

The presence of both yellow and black Sigatoka was eminent. Yellow Sigatoka is caused by Mycosphaerella

Musicola, while black Sigatoka is caused by Mycosphaerella fijiensis (Fonsah and Chidebelu, 1995; 2012).

In some fields, banana bunchy top virus (BBTV) was observed (fig. 2.1a). When questioned, the farmers

reported several incidences of BBTV but did not know what it was (Fig. 2.1b).

Fig. 2.1a: Plant infested by BBTV Fig. 2.1b: Sigatoka infestation Fig. 2.1c: Peel-feeding damage

2.7 PEEL-FEEDING CATERPILLAR

The most common pest that poses major problems in most banana growing countries in the world is

also present in Bangladesh. The peel-feeding caterpillar (fig. 2.1c) was a major threat to Bangladesh’s

banana industry. The solution for this pest is absolutely necessary, especially if the medium and long-

term goal is to transition from traditional production systems to semi-modern or modern systems for

sustainability (Fonsah and Chidebelu, 1995; 2012). There are many species of peel-feeding caterpillars,

such as the Platynota rostrana found in Central America and Colombia or Ecpanteria spp (Arctiid

(Bullock and Robert, 1961; Fonsah and Chidebelu, 1995; 2012).

3. SUSTAINABLE BANANA PRODUCTION IN BANGLADESH

To resolve the declining trend, improve yields, productivity, and profitability, there is a need to adopt

sustainable agricultural practices. Sustainable banana production in Bangladesh is a function of:

SPBgl = f (Bmgt, Smgt, Fmgt, Pmgt, Imgt, Rmgt, Hmgt …, Zn)

Where:

SPBgl = Sustainable Production of Bangladesh Bananas (Supply)

Bmgt = Improved Breeding Program & Management

Smgt = Soil Management

Fmgt = Fertility management

Pmgt = Pest, disease and weed management


Imgt = Water or irrigation management

Rmgt = Continuous Research

Hmgt = Human Resource and Incentives

Zn = Other factors (Climate change, weather, GAP, New Technology Adoption etc.)

To be sustainable, all the conditions above must be met, at least to a certain level. Empirically, current

production practices in all districts and FtF areas show there is a great need to meet some or all of these

conditions.

4. SUSTAINABLE MARKETING AND TRADE OF BANANAS IN

BANGLADESH (DEMAND)

The most important factor a farmer must consider is how to market their produce. Most farmers,

including subsistence farmers, must find ways to get rid of their excess production. They can either share

with neighbors or find ways to preserve them for a rainy day. However, the banana is a perishable fruit

crop with a limited shelf life. So, it is vitally important that farmers first secure a market for their produce

locally or overseas. The demand for Bangladesh’s bananas is a function of the following:

M&TBgl = h (Pd, Pf, Pg, Qb, Pp, Yf, Ex, … Xn) Where:

M&TBgl = Quantity of Bangladesh’s Bananas demanded by importing country (Demand)

Pd, = Domestic Price of bananas

Pf, = Foreign Price of bananas

Pg, = Prices of other fruits in the domestic and importing country

Qb, = Quality of Bangladesh’s bananas

Pp, = Foreign Population and per capita consumption of bananas

Yf, = Foreign Income level (disposable incomes)

Ex = Exchange rate parity

Xn = External shocks (price fluctuation, hurricanes wind damage etc.)

Take for instance the external shock in our marketing equation, Xn. The cyclone that devastated farms

from 2007-2008 is partially blamed for the decline trend, because farmers were not trained and

prepared to handle/revamp a banana orchard/plantation after a hurricane or cyclone. As a result, the

effect is still being felt today as most farmers switched to other crops, like jute plants.


5. COST OF PRODUCTION ANALYSIS

Although banana production is showing signs of increase after almost a decade of a decreasing trend, it is

important to determine the profitability margin. Basic economic theory tells us that a decrease in

production equals an increase in price. That alone did not satisfy our curiosity, so we decided to gather

a dozen or so farmers in the Moharajpur of the Jhednaidah district and the Alompur village of the Meherpur

district. We sat down with them and developed a risk-rated enterprise budget based on their actual

agricultural practices (Table 1).

Table 5.1: Economic Risk-Rated Returns Over Total Costs Of Producing Banana for Two Cycles in Alompur

Village of Meherpur District, 2015

DESCRIPTION BEST OPTIMISTIC EXPECTED PESSIMISTIC WORST

RETURNS (BDT) 82,631 78,725 74,819 60,555 65,311 59,709 54,107

CHANCES (%) 2% 16% 32% 50% 0.76 0.84 1

CHANCES (%) 95% 84% 57% 32% 16% 2%

CHANCES FOR PROFIT = 99% BASE BUDGETED NET REVENUE = 67,430

+ SUCKER SALES (BDT) 8,000

TOTAL NET RETURNS (BDT) = 75,431

A risk-rated return adopts five different scenarios: expected, pessimistic, worst, optimistic and best.

The best-case scenario can occur once in ten years, while the worst-case scenario can occur anytime.

However, in the analysis we used 2% of the time to avoid zero.

Table 5.2: Risk Rated Sensitivity Returns Over Total Costs of Producing Banana for Two Cycles in Alompur

Village of Meherpur District, 2015

DESCRIPTION BEST OPTIMISTIC EXPECTED PESSIMISTIC WORST NET REVENUE

2% 16% 32% 50% 32% 16% 2% (BDT)

YIELDS (BUNCHES) 550

% CHANGE IN SALES PRICE

BASE

225 -10% 80,725 75,537 70,537 47,493 60,620 55,797 50,975 61,680

238 -5% 81,646 77,193 72,740 54,285 63,125 57,962 52,799 68,830

250 BASE 82,631 78,725 74,819 60,555 65,311 59,709 54,107 75,430

263 5% 83,877 80,504 77,131 67,348 67,576 61,393 55,211 82,580

275 10% 85,330 82,348 79,366 73,618 69,586 62,788 55,989 89,180

In this area, bananas are produced only in two cycles and/or harvest. This is pretty smart since there is

disease pressure of which the farmers don’t know how to control. Even if they did, it would not be


economical given their farm size and weak financial strength. Our analysis depicted a net profit of

75,431 BDT/33 decimal, with a 99% chance of obtaining a profit for banana production. This also

explains why farmers are beginning to switch from jute plant cultivation to bananas, and why there are

several new farms and several new entrant farmers (Table 5.2).

A risk-rated sensitivity analysis of total costs of cultivating two cycles of bananas in the Alompur village of

the Meherpur district, also showed positive net returns. For instance, with a 10% decrease in price and

an expected production of 550 bunches, the farmer can still earn a net profit of 61,680 BDT/33 Decimal

or a net profit of 50,975 BDT/Decimal in the worst-case scenario (Table 5.2).

5.1 DEMAND FOR BANANA

Although the banana production has been downward slopping in the past decade due to several reasons

already mentioned, the local demand is still higher than other fruits crops. More-so, the 2015 Bangladeshi

population of 169.6 million people is experiencing a 1.6% growth rate per annum. This is an eminent

threat to the country’s future food security. Therefore, it is a national priority for the government to get

involved as soon as possible and provide austerity measures aimed at alleviating the current state of affairs

that threaten national food security.

Fig. 5.1: Projected Bangladesh population, 1950-2100

Source: http://populationpyramid.net/bangladesh/2025/ Accessed July 22, 2015

In 2025, Bangladesh is estimated to have 185.1 million that must be fed with bananas and other fruit crops.

Therefore, even if the per capita consumed remains the same as today, the demand for bananas will

continue to increase due to population growth (fig 5.1).

5.2 FARM GATE PRICES

Since 2007, the prices farmers receive for all types of bananas and in all the districts, including the FtF

regions, are increasing. The average price received by Shabri-Kola banana growers in Barisal, Chittagong,

Dhaka, Khulna, Rajshahi and Rangpur are all on the rise (fig.5.2).

http://populationpyramid.net/bangladesh/2025/



Fig. 5.2: Grower average price for Shabri-Kola, 2005-2015.

Source: Bangladesh Bureau of Statistics and Information and Informatics Division Ministry of Planning: Report

on the productivity Survey of the Bananas Crop, 2013.

The same rising trend can be observed for other cultivars, such as Shagor-kola, in all districts. It is worth

mentioning that the farm gate prices for Shagor-kola rose exponentially from 2013 to 2015 compared to

the earlier years where prices were consistently constant. A logical and partial explanation is that

consumer’s behaviors towards Shagor have changed dramatically. This shift is probably due to its longer

and bigger size.

Fig. 5.3a: Grower average prices for Shagor-Kola from 2005-

2015.

Fig. 5.3b: Growers Average Prices for Champa-Kola, 2005-

2015

Source: Bangladesh Bureau of Statistics and Information and Informatics Division Ministry of Planning: Report on the

productivity Survey of the Bananas Crop, 2013.

On the other hand, although grower’s price for Champa-Kola is also increasing, the upward trend started

only from 2014-2015.

5.3 WHOLESALE PRICES

A similar trend was observed for wholesale prices in all the regions. Apparently, there is a huge demand

for bananas due to shortages caused by a decrease in production. Wholesale prices for the regular Shagor-

kola are increasing in all districts. However, there’s not a clear and consistent wholesale price trend for

high quality Shagor-kola. The reason is clear and simple:


Fig. 5.4a: Ordinary-Shagar-kola Ave. Wholesale prices, 1986-2015 Fig. 5.4b: Shagar –High quality Ave Wholesale price

Source: Bangladesh Bureau of Statistics and Information and Informatics Division Ministry of Planning: Report on the

productivity Survey of the Bananas Crop, 2013.

There is no high quality Shagor-kola since cultivar is already becoming the “new kid in town” for banana

lovers and consumers. Consumers have acquired a new banana taste and have started showing increasing

interest.

Fig.5.5a: Shabri-kola Ave wholesale prices, 1986-2015 Fig.5.5b: Champa-Kola: Ave. Wholesale prices, 1986-2015

Another interesting phenomenon is that the wholesale price for Shabri-kola is not only increasing, but it

is increasing at a steeper slope in all the districts in the study compared to other cultivars, i.e., Champa-

kola and Shagor-kola, respectively (Fig. 5.5a & b). That also means that consumers have a stronger

preference for Shabri-kola compared to its competitors (Fig. 5.5a).

5.4 RETAIL PRICES

Retail prices for ordinary Shagor-kola have been increasing from 2006 in all regions, with a slight decline

in Chittagong, Dhaka and Sylhet. The retail prices for high quality Shagor, if available, are significantly

higher than the ordinary quality (Fig. 5.6a; 5.6b).


Fig. 5.6 a: Shagor-kola Ordinary Ave Retail Price, 2005-2015 Fig. 5.6b: Shagor-Kola – High Quality Ave Retail Prices, 2005-

2015

The retail price for Champa-kola increased from 5 Tk in 2005 to about Tk 20 in 2015 (fig. 5.7a). The

lowest retail price in 2014 was 10 Tk, recorded in Khulna, while the highest price in 2015 was recorded

in Dhaka. On the other hand, although the retail price for Shabri-kola has been increasing, there was a

significant decrease in price in Rangpur in 2013, while Barisal

Fig. 5.7a: Champa-kola Ave Retail Prices, 2005-2015 Fig. 5.7b: Shabri-kola Average Retail Prices, 2005-2015

experienced a steep price increase (fig. 5.7b). Although it was difficult to differentiate the price for

Dhaka and Chittagong districts, both districts maintained a consistent retail price increase. It is equally

important to note that prices in the entire banana VC, i.e. farm-gate prices, wholesaler prices and retail

prices, have all been increasing for the past decade.

6. AGRICULTURAL VALUE CHAIN (AVC) SURVEY

METHODOLOGY

6.1 SAMPLING PLAN

Major objectives included developing questionnaires for value chain actors and conducting key informant

interviews and focus group discussions in target areas. Three different sets of questionnaires were

developed and tested several times in Dhaka, Jessore, Faridpur, and Barisal. Thereafter, the questionnaires


were modified based on responses from the field tests. The production questionnaires were designed to

find out current agricultural practices, production trends, and growers’ behavior vis-à-vis willingness to

adopt new technology. The second questionnaire was for intermediaries, also known as middlemen. This

questionnaire was aimed at determining market and distribution level-channels, wholesaler’s price

determination, and wholesaler’s attitude and perception vis-à-vis willing to pay (WTP) premium price for

high quality bananas. The third survey was designed for the customers and/or end-users. The survey was

aimed at studying consumer behaviors vis-à-vis willing to pay (WTP) for quality bananas, determination of

customers preferences for different banana cultivars/varieties, and consumer preferences vis-à-vis quality

attributes.

6.2 DATA COLLECTION

A total of 177 survey questionnaires were distributed amongst the three groups of VC key participants,

out of which 130 were usable. Forty-one production survey questionnaires were distributed to farmers

in Jessore, Jdeniada, Harinakunda, Jhinaidah Sadar, Sailkupa, Kinshargoni, Narayangoni, Shyllet, Barisal and

Faridpur. Only 26 were usable. More-so, 33 questionnaires were distributed to intermediaries/wholesalers

and retailers in Khamarmundia, Kaligonji, Jhedaideh, Shinhutola Bazar, Hakimpur, Chaugacha, Jessore and

Dhaka. Only 25 were usable. Finally, out of 103 surveys sent to consumers/end-users, 79 were usable.

Our consumer survey study areas were Dhaka, Jessore, Barisal, Faridpur, Khamarmundia and Kalingonji.

6.3 DATA ANALYSIS

The data collected from the three different segments of the complete Bangladesh banana VC, i.e.,

production (farmers), intermediaries (wholesalers and retailers) and consumers (end-users) was inputted

in an Excel spreadsheet. Basic statistics, such as percentages, histograms and graphs, were used to analyze

the data.

7. AGRICULTURAL VALUE CHAIN (AVC) SURVEY RESULTS

7.1 PRODUCTION SURVEY RESULTS AND ANALYSIS

The respondents were asked what their professions were. The majority (77%) of them were strictly

farmers, 19% were farmers and retailers, and barely 3.8% of them were farmers/wholesalers (fig. 7.1).

Fig. 7.1 What is your profession?

0

5

10

15

20

Farmer Farmer/R Farmer/WS


Q. What is the size of your farm?

The respondents were asked the size of their farm. Most respondents had a farm size range of 26-50

decimals (30.8%). The others (19.2%) had a farm size of 51-75 decimals, and 23.1% of them had farm sizes

of 1 acre. Interestingly, a good number (22.3%) of the respondents had farm sizes ranging from 1-13 acres.

The number of new farmers and expanded farm sizes was clear evidence of, and justification that, farmers

were gradually switching from jute plant cultivation to bananas. Another classic example is that the 3.8%

of the respondents who had farms less than 25 decimals were probably the new entrants (fig. 7.2).

Q. What else do you cultivate beside bananas?

The respondents were asked what else they cultivate beside bananas. Out of the total respondents, 26.4%

cultivated rice, while 25% grew jute plants. On the other hand, 13.9% of the farmers grew mangos, and

11.1% were involved in mixed vegetables. Other important crops were potatoes and sugar cane which

depicted 11.1% and 4.2% respectively (Fig 7.3).

Fig. 7.3 What else do you cultivate beside bananas?

0

5

10

15

20

Fig. 7.2 What is the size of your farm?

0

2

4

6

8


Q. How many years have you been producing bananas?

Respondents were also asked to state the number of years they have been involved in banana production.

The figure below shows that 73.1% of farmers have been cultivating bananas between 1- 10 years, while

26.9% were in the range of 11-20 years (Fig. 7.4).

Q. How often do you produce/cultivate bananas?

The respondents were asked how often they cultivate bananas. They were provided three answer choices,

i.e. very often, occasionally and never. Surprisingly, 92.3 % of them grow bananas very often, while barely

7.7% grew the crop occasionally (fig. 7.5).

Fig. 7.4 How many years have you been producing bananas?

0

5

10

15

20

1-10 years 11-20 years

Fig. 7.5 How often do you produce/cultivate bananas?

0

5

10

15

20

25

Very Often Occasionally


Q. What variety of bananas do they grow?

The results of our survey depicted that 30.8% of respondents cultivated Sabri-kola, compared to 21.2%

for Rongin Sagor-kola and 15.4% for Champa-kola. However, it is interesting to find out that 23.1% were

involved in Green / cooking bananas. Other less cultivated varieties were Thota-kola (3.8%), Bangla-kola,

Bitchi-kola, and Baishara-kola with 1.9% respectively.

Fig. 7.6: What variety of bananas do you cultivate?

Q. Why do you prefer the selected varieties?

The principal reasons for selecting the preferred cultivars were: profitability (25.7%); easy to grow (21.6%);

customers like it (17.6%) and good prices (18.9%). Being rational farmers with logical reasoning,

“sweetness” was the least preferred reason after “resistant” and “sucker availability”.

Fig. 7.7 Why do you prefer the selected variety?

02468

10121416

0

5

10

15

20


Q. Is banana production increasing or decreasing?

The respondents were provided with four choices, i.e., increasing, decreasing, not sure and same. The

results showed that as high as 92.3% of the farmers believed that production was increasing, compared to

7.7% who were not sure. It was also surprising to note that no one believed that production was either

constant or decreasing.

Q. Why do you think banana production is decreasing or increasing?

There were four reasons expressed to explain why banana production was increasing. 27.9% of

respondents believed that the increase was due to new farmers entering the business. Another 23.3%

believed that most of the old timers have increased their banana farm size. On the other hand, 25.6%

claimed that production is increasing due to increased pressure/demand from the buyers, and 23.3%

thought that the production increase was being driven by the premium price obtained for their produce.

Fig. 7.9: Why do you think banana production is increasing or decreasing?

99.510

10.511

11.512

Fig. 7.8 Is banana production increasing or decreasing?

0

5

10

15

20

25

Increasing Not sure Decreasing Same


Q. How much do you sell a bunch of bananas on the average?

This question was aimed at determining what the growers get compared to what the consumers are willing

to pay. More-so, it was important for us to determine profitability margin. From the total respondents,

38.5% stated that they receive 151-200 BDT/bunch compared to 43.3% who sell their bananas at 201-225

BDT/bunch. Furthermore, the results depicted that 19.2% actually receive 226-250 BDT/bunch. This

result also illustrates that 100% of farmers sell bananas at prices ranging from 151-250 BDT, or an average

price of193-225 BDT/bunch, despite the inferior quality of the produce. Just imagine the price differentials

if the quality could be improved?

Q. Is the quality of any kind of bananas important to you?

This question was designed to provide answers as to whether there was any willingness on the part of the

farmers to accept and adopt new and good farming techniques and practices. Fortunately, the results

illustrated that all the respondents were willing to change, accept and adopt good agricultural practices

(GAP), if and only if, they had the opportunities.

Fig. 7.10 How much do you sell a bunch of bananas on the average?

0

2

4

6

8

10

12

151-200 BDT

201-225 BDT

226-250

BDT 251-275

BDT 276 -300

BDT

Fig. 7.11 Is the quality of any kind of bananas important to you?

0

5

10

15

20

25

30

Yes No


Q. Do your buyers complain about quality?

This question was crucial in determining whether there was an external force that could place pressure

on farmers to accept and adopt new and improved agricultural practices (GAP). The results confirmed

that 53.8% of respondents accepted that their customers/buyers complain of the quality of their produce,

whereas 15.4% complained sometimes. In total, 69.2% of their customers complain of quality. That is a

significant number of complaints that can place enough pressure on farmers to adopt new technologies if

available.

Q. Do you use fertilizers?

This question was aimed at determining whether good agricultural practices were being utilized by the

farmers. The results depicted that most farmers (79.9%) used fertilizers for banana cultivation, and 23.3%

used them occasionally.

Fig. 7.12 Do you buyers complain about quality?

0

2

4

6

8

10

12

14

Yes No Sometimes

Fig. 7.13 Do you use fertilizers?

0

5

10

15

20

Very often Occasionally Never


Q. Do you do tissue or soil sample

This is another question designed to determine good agricultural practices. The results show that 19.2%

of respondents conduct soil and tissue analysis, while a significant number of them (73.1%) never tested

their soil or plant tissue to determine if the quantity of fertilizer use is adequate. Based on our various groups sessions, I am tempted to think that those who responded “very often” may have not

understood the question well. Another reason to hold onto that logic is that 7.7% of the respondents

omitted the question.

Q. Which fertilizers do you use?

All the respondents admitted that they use some form of fertilizers for growing bananas. Bananas are a

heavy feeder, so fertilizer, especially N-P-K, is absolutely necessary for quality produce. The results show

that 20.8% of farmers used urea (N), 20% used phosphorus and 18.4% used potassium (K). Although

fertilizers are used for cultivating bananas, the most important are macro-nutrients.

Fig. 7.15: What fertilizers do you use?

The results disturbingly showed that the farmers were using micro-nutrients frequently. For instance,

11.2%, 8.8% and 8% of the respondents reported that they used calcium (Ca), Magnesium (Mg) and Sulphur

0

5

10

15

20

25

30

Fig. 7.14 Do you do soil and tissue analysis before, during or after planting?

0

5

10

15

20

Very often Occasionally Never Omit


(S) respectively. More-so, respondents also indicated that they used gypsum, cow dung, TSP, Zinc and

Boron. These micro-elements are only used when absolutely necessary (Fig. 7.15).

Q. Have you ever seen bananas packed in boxes before?

This question was asked to determine producers’ behavior, vis-à-vis their willingness to accept and adopt

new technology if needed, and how much they already know. From the results it is clear that they are far

behind as it pertains to banana technology. Out of the total respondents, 88.5% of them have never seen

green or ripe bananas in a package form.

Q. If your customers want packed bananas, would you accept to adopt?

This question was a follow-up of the previous question, aimed also at determining the acceptability level

at which growers in the FtF areas of Bangladesh are willing to accept new technology if necessary.

Surprisingly, an outstanding 80.8% of the respondents were willing to adopt new technology if necessary.

Fig. 7.16 Have you ever seen bananas packaged in boxes before?

0

5

10

15

20

25

Often Occasionally Never Omit

Fig. 7.17 If your customers want packed bananas, would you accept to adopt?

0

5

10

15

20

25

Yes No Omit


Q. What would your packaging preference be?

After showing them photographs of packaged bananas, we asked them what their preferences were. Fifty

percent of them preferred hand packing, which is basically what they are currently practicing, except

without thinking of quality first, and 30.8% preferred cluster packaging.

Q. What is your monthly household salary?

Out of the total respondents, 23.10% earn between 151 – 175.000 BDT per month, while 19.50% and

19.3% and 11.50% earned 101-125,000 BDT. 11.50% earned as high as 276-300,000 per month, and 7.7%

fell in the category of 176-200,000 BDT. Overall, 92.3% of farmers earned income ranged from 76-100,000

BDT to 301-325,000 BDT per month in the FtF region.

Fig. 7.19 What is your monthly household income?

0

1

2

3

4

5

6

Fig. 7.18

What would your packaging preference be?

0

5

10

15

Hand Cluster Omit


The income disparity could partially be attributed to farm size and the number of crops being grown.

For instance, some (most) of the banana farmers were also involved in jute plant or vegetable farming,

thus generating additional income from other sources.

Q. How old are you?

This question was to determine the age group of the farmers. While many of them (11%) were still

between 20-30 years of age, and 11% of them were mid-age (41-50). The majority, an outstanding 63%,

were still in their prime, i.e. 31-40 years old.

This could partially explain why the majority, 80.8%, was willing to adopt new technology. Empirically, we

observed that growers were eager to learn new agricultural practices during our visits to their various

banana orchards. They asked several pertinent questions about diseases and general agriculture.

Fig. 7.20 How old are you?

0

5

10

15

20

20-30 31-40 41-50 >61 Omit


7.2 INTERMEDIARIES (VC) SURVEY RESULTS

In this study intermediary is defined as actors who are involved in the VC after the banana (produce)

leaves the farm-gate level and before it gets to the end users. It is those who participate and/or facilitate

the process of getting the fresh produce to the consumers.

Q. Where do you belong in the banana AVC?

The result of this question depicted that 60% of respondents were retailers, while 24% were wholesalers.

We also discovered that 12% were wholesalers and retailers at the same time, while 4% were

famers/wholesalers/retailers, thus serving in three different categories of the banana VC.

Fig. 7.21 Where do you belong in the banana VC?

Q. Where is your business location?

The results showed that at the farm-gate level there were local wholesalers, urban wholesalers and

supermarket wholesalers. For instance, 40% of respondents said their business locations were in cities

like Dhaka, while 32% reported that their locations were in the rural areas. At the same time, 28% of the

respondents claimed to be supermarket wholesalers.

Fig. 7.22 Where is your business location

0

2

4

6

8

10

Local Wholesaler Urban Wholesalers Super Market W/S

0 5

10 15


Q. What are the varieties you buy?

This question serves two purposes. First, it reveals what consumer preferences are in terms of cultivars.

Secondly, it serves as guidance to policy makers, the Ministry of Agriculture, and Scientists and County

Extension agents when advising the farmers on what cultivars to grow for the market.

Fig. 7.23 What are the varieties of bananas you buy?

There are several different banana cultivars in Bangladesh. There is, of course, a huge market demand,

because bananas are rated the number one most important and consumed crop/fruit in the country.

The survey results depict that 29.5% of intermediaries purchase the Shagor variety, while 26.9% buy

Champa. On the other hand, 25.6% of respondents buy Sabri, 7.7% Bangla and 6.4% Green or Kacha.

Again, these results are extremely important especially in advising the farmers.

Q. How do you buy your bananas?

This question was asked to determine farmers and intermediaries post-harvest behaviors, vis-à-vis quality,

and to provide field practices to policy makers, including train-the-trainers Extension Officers. The results

indicate that a significant number of farmers still sell, and intermediaries still buy, bananas by bunches

(44%).

0 5

10 15 20 25

Fig. 7.24 How do you buy your bananas?

0

5

10

15

Bunches Hands Cluster Omit


These practices have been eliminated by all banana exporting countries. It is not surprising that this

practice is still ongoing, especially since the largest banana producers in the world, such as India, are not

major exporters. On the other hand, 36% and 12% of the respondents purchased their bananas by hands

and clusters. Empirically, one could comfortably draw a conclusion that those who purchased clusters

(12%) are wholesale/retailers and quasi-retailers.

Q. How much are you willing to pay for a good bunch of any variety of bananas?

Fig. 7.25 How much are you willing to pay for a good quality bunch of any variety of

bananas?

The answer to this question was important to determine if growers still had room to increase their

profitability. It was welcoming news to find that 76% of the respondents were willing to pay 200-400

BDT per bunch for good quality bananas, and only 12% of them indicated they would pay less than 200

BDT per bunch. Although there were a mix of price preferences amongst the intermediaries, 16%

indicated they would pay 200-225 BDT per bunch, while 12% and 12% indicated they would pay 326-350

BDT, and 401-425 BDT respectively. A resounding 36% indicated they would pay from 326-425 BDT

for any variety of good quality bananas. This is a clear indication that adopting new technology and good

agricultural practices (GAP) would be beneficial to the growers in terms of increasing their household

income. It will also be beneficial to the complete banana VC, as intermediaries will also benefit while

consumers receive good, quality fruits.

Q. Would you pay premium price for quality bananas?

This question was a follow-up of the previous question and a confirmation that quality is important to the

intermediaries. The results show that 92% of the respondents would pay premium price for quality

bananas.

0

1

2

3

4


Q. What are the quality attributes that influence your purchasing decisions?

Most of the respondents (23.6%) ranked the overall cosmetic appearance (OCA) as the most important

quality attribute that influences their purchasing decisions. Other important attributes were taste (20.2%),

sweetness (19.1%), and finger length (13.5%). Texture, multiple uses, and cooking were also indicated but

were ranked low.

Fig. 7.27 What are the quality attributes that influence your purchasing decisions?

Q. How much are you willing to pay for a good quality Cavendish and Local variety of bananas?

This question was aimed at determining whether there was a price differential between the Local and

Cavendish variety of bananas. The results show apparent differences in the prices intermediaries are

willing to pay (WTP). For instance, 15.4% of the respondents said they would pay 200-225 BDT for a

bunch of Local bananas, compared to 8% willing to pay the same for the Cavendish variety. More-so, 20%

are willing to pay 226-250 BDT per bunch of Cavendish, compared to 12% for the Local variety. Cavendish

bananas are the long varieties that have a long history for export markets. The results also indicated that

0

5

10

15

20

25

Fig. 7.26 Would you pay premium price for quality bananas?

0

5

10

15

20

25

Yes No


12% of intermediaries would pay 326-350 BDT for the Local banana variety, compared to 16% who said

they would pay that much for the Cavendish. One of the largest differences was that 20% of the

respondents were willing to pay as high as 450-500 BDT for the Cavendish variety compared to 0% for

the Local.

Another important difference was that 4% of respondents were still willing to pay as high as 700 – 750

BDT for the Cavendish variety, compared to 0% for the Local. Combining these two findings depict that

as high as 24% of the respondents would gladly pay 450-750 BDT for Cavendish bananas compared to

the Local varieties. This is a clear indication that there is a growing demand for Cavendish banana

cultivars in Bangladesh.

7.3 CONSUMERS (VC) SURVEY RESULTS

To get a better understanding of consumer behaviors and preferences for banana consumption it was

critically important that survey data be distributed and collected from different FtF and major perceived

banana marketing/distribution areas. Three different locations were purposefully selected for the study,

namely: Barisal, Faridpur and Dhaka districts respectively.

Q. Which of the locally grown bananas do you prefer to buy?

It was amazing to find out the differences in consumer behaviors and preferences in the given distribution

districts. There was a significant difference in the behaviors and preferences between consumers in urban

and local areas respectively. For instance, when asked which locally grown bananas they preferred to buy,

38% in Dhaka city preferred Sabri, compared to 0% in Faridpur and 13% in Barisal. On the other hand,

30.4% of the respondents in Barisal preferred the Champa variety, compared to 19% in Dhaka and 15% in

Faridpur. More-so, 85% of the respondents in Faridpur preferred Shagor, compared to 34.8% in Barisal

and 13% in Dhaka. Other significant differences were the preferences for the Green/Cooking bananas,

which were preferred by 21.7% of the respondents in Barisal, compared to 0% in Faridpur and 9% in

Dhaka. Finally, 12% of the respondents in Dhaka preferred Bangla, compared to 0% in Faridpur and 0% in

Barisal. It is worth mentioning here that Faridpur and Barisal are both fairly rural areas, while Dhaka is

urban.

Fig. 7.28 How much will you be willing to pay for one bunch of good quality Local and Cavendish banana variety

0

1

2

3

4

5

Local

Cavendish


Fig. 7.29 Which of the locally grown bananas do you prefer to buy?

Q. How often do you eat bananas?

The results show, that on all counts, the city of Dhaka is the largest banana market with the largest per

caput consumption of bananas in the three regions/districts. For example, the number of people eating

bananas daily, once, twice, or more than three times per week is higher in Dhaka than in Barisal or

Faridpur.

Q. Why do you prefer the selected local cultivars?

Taste/flavor stood out within the three districts as reasons for the consumer preference for the selected

cultivars. The respondents in Dhaka ranked high in all the preference categories, such as sweetness,

multiple uses, availability, price, cooking and overall cosmetic appearance (OCA). The Faridpur district

ranked 2nd, followed by Barisal.

0102030405060

Barisal

Faridpur

Dhaka

Fig. 7:30 How often do you eat bananas?

0

20

40

60

80

Barisal

Faridpur

Dhaka


Fig. 7.31 Why do you prefer the selected local variety?

Q. How much are you willing to pay for one Kg of bananas?

This question was aimed at determining the purchasing power of the consumers in Dhaka, Barisal and

Faridpur.

12

10

8

6

4

2

0

11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka

Barisal

Faridpur

Dhaka

Fig. 7.32 How much are you willing to pay for 1Kg of bananas?

Again, Dhaka ranked highest in all the categories, followed by Faridpur, and lastly by Barisal. For

instance, in Faridpur, the respondents were willing to pay (WTP) from 11-25 Taka per Kg of bananas,

while the respondents in Barisal stretched the range from 11-30 Taka per Kg of bananas. However, in

Dhaka, the consumers were willing to pay as low as 11 Taka and as high as 60 Taka per Kg. This result

depicts a strong demand for bananas and a strong purchasing power for this important crop in Dhaka,

compared to Faridpur and Barisal Districts respectively.

Q. What is your monthly family household income

0

10

20

30

40

50

60

70

Barisal

Faridpur

Dhaka


Fig. 7.33 What is your monthly household income?

This question was also aimed at determining how the differences in disposable income and purchasing

power can influence consumer behaviors and spending decisions. The results show that consumers in

Dhaka have a higher disposable income compared to their counterparts in Faridpur and Barisal

respectively. They thus possess a higher propensity to spend on bananas which happen to be

Bangladesh’s favorite and most consumed fruit. It could also be that consumers in Dhaka have higher

disposable income because they are more educated.

0

5

10

15

20

25

30

Barisal

Faridpur

Dhaka


8. MARKETS AND DISTRIBUTION CHANNELS

8.1 EXISTING MARKET CHANNEL

There were three distinct marketing and distribution channels identified in the studied area. The study

areas we visited were Mehepur, Chuadanga, Jhinaidaha, Jessore, Magura, Faridpur and Dhaka.

8.2 ONE-LEVEL-CHANNEL

The one-level-channel marketing and distribution channel was observed mostly in the rural areas. Basically,

the produce goes from the farm-gate to the retailers, and consequently, to the consumer or end users.

Those who were more attracted to this one-level channel in the production chain were also the smallest

farmers in terms of farm size.

Fig. 8.1 Existing Banana Market Channels Rural and Urban Areas

8.3 TWO-LEVEL-CHANNELS

The two-level-channels where the produce leaves the farm-gate, to the rural wholesaler, then to the

retailers, and finally to the consumers, was also prominent in the rural FtF areas. For instance, during our

visit of the wholesale market in Pobahati, Jhenaidah, we noticed that several trucks of fully loaded bananas

were being transported to Shyllet, Dhaka, Mymeshing, and Narayangonj markets respectively.


8.4 FOUR-LEVEL-CHANNELS

The four-level-channel is the most exciting discovery in the Bangladeshi banana agricultural value chain

(AVC). It is exciting, because little did we know, that there is an infinitesimal volume of bananas going to

export market. How this was being managed and processed was more like a secret cult. It was also

exciting because we discovered that there were good infrastructures in place which could support,

facilitate and increase quality bananas for domestic and export markets concomitantly. But the success of

this requires good training and management. It also requires a little support from the industry,

entrepreneurs, and of course, the government. Another exciting discovery was the fact that there were

two levels of wholesalers involved in the VC, i.e. rural wholesalers and urban wholesalers.

9. DOMESTIC MARKET STRUCTURE

9.1 WHOLESALERS/DISTRIBUTORS IN DHAKA

In Dhaka city alone, there are actually seven wholesalers/distributors: Jatrabari Kalapatti, Kutub Khali,

Narayanganj, Was hard, Badamtali, Tejgaon and Khilgaon. Jatrabari Kalapatti is by far the largest of the

seven. Initially, the Jatrabari Kalapatti market used to receive over 27 truckloads of bananas per day, but

recently, this quantity has dropped to 2-3 maximum. We believe the reason for the decline in the number

of truck-loads of bananas is due to the fierce competition from the other 6 distributors who are new

entrants. There are over 79 distributors in the Jatrabari Kalapatti market alone, and they all have their

own banana warehouses.

Fig. 8.2a: Jatrabari Kalapatti urban wholesale market,

Dhaka City Fig. 8.2b: Pobahati rural wholesale market

9.2 POST-HARVEST TREATMENT

Bangladeshi banana production is ranked between 14-18 in the world, with India being #1, and Uganda and

China ranking 2nd and 3rd respectively. Despite this ranking, the industry has problems at all levels of the

supply chain (from production to the end-user), i.e., general farm management, field operations

management, harvesting management, packaging management, post-harvest management, transportation

management, storage and ripening (cold chain) management, distribution and marketing management

respectively. If the country opts to exploit export markets around the world, there are over 36 different

operations they need to know how to implement.


9.3 TRANSPORTATION SERVICES

Bangladesh already has refrigerated containers which are perfect for transporting and storing bananas from

the field to the ripening station or cold storage. The Hortex Foundation has 20 ft. and 40 ft. long reefer

trucks and containers that can greatly improve cool-chain management and quality of bananas. The trucks

have the capacity of 3,000 kg, while the containers hold 18,000 kg with holding temperatures of +15°C to

as low as -25°C.

Fig. 8.3a: Hortex Foundation reefer truck -

exterior

Fig. 8.3b: Interior of reefer container Fig. 8.3c: Bangladesh Airfreight,

International Airport, Dhaka

Reefer containers can be leased for as low as Tk. 1,000/day, while the refrigerated trucks go for Tk.

5,000/day. Priority is given to those involved with horticultural products. Several companies, including the

Hortex Foundation, BFVAPEA and Airfreight International Airport, have refrigerated trucks and

containers available to facilitate cool-chain management of horticultural crops production and management

for domestic and local markets.

9.4 RIPENING CHAMBERS

Bananas are still ripened the old-fashion way in Bangladesh. The carbon dioxides and formalin techniques

that were banned in India were not practiced in Bangladesh. The use of kerosene stoves to ripen their

bananas was observed, which could be considered carbon dioxide. There was no modern banana ripening

chambers. To improve the quality of bananas in the local market there is a need to introduce modern

ripening techniques, infrastructure (chambers), and training. Modern ripening technics could be adopted

and modified by using traditional and inexpensive materials.


9.5 PACKING SHED/HOUSE

There were no packing shades/houses at the farm level. This is probably because fresh bananas are sold

and loaded directly onto trucks for distant markets in either bunches or hands. Our survey results

indicated that a significant number of farmers would switch to packaging if, and only if, there was demand

for it, and if they were trained to do so and paid extra. However, there is a fairly good facility at the

international airport in Dhaka which can be transformed to a modern packing station capable of handling

and passing quality specifications test/requirements of most importing countries. This facility is now

utilized to pack Bangladeshi avocados for overseas’ markets.

10. INTERNATIONAL TRADE

10.1 EXPORT MARKET

So far, Bangladesh exports an infinitesimal number of bananas and plantains (cooking bananas) to Kuwait,

Bahrain, and a few other countries around the world. The highlighted areas on the map are countries

where Bangladesh is trying to establish export markets. On the other hand,

Fig. 10.1 Bangladesh Banana Export, 2014

Table 10.1 shows that 81 metric tons of bananas and cooking bananas (plantains) were exported to Kuwait,

UK, Bahrain, Malaysia and Italy in 2014. So far, export to Kuwait enjoys the lion’s share of 87.1%, followed

by the UK and Bahrain (fig. 10.1). Despite the quantity exported, this is already a positive sign. Export

activities and volume can significantly increase if the actors involved can start thinking outside of the box

and taking some degree of risk. More-so, some investment will be needed.

Table 10.1: Bangladesh banana export, 2014

IMPORTER

$-VALUE

TRADE

BALANCE ($)

SHARE OF

EXPORT

(%)

TONS

$/UNIT

(.000)

KUWAIT 121,000 121,000 87.1 73 1,658

UK 10,000 10,000 7.2 4 2,500


BAHRAIN 5,000 5,000 3.6 2 2,500

MALAYSIA 2,000 2,000 1.4 2 1,000

ITALY 1,000 1,000 0.7 0 0

TOTAL 139,000 137,000 100 81 1,716

10.2 EXPORT CERTIFICATE

Bananas for export, including other fruits and vegetables, go through the Plant Quarantine Station at the

Hazrat Shahjalal International Airport, Dhaka and the Phyto-Sanitary Office at the International airport.

One or two Plant Quarantine Laboratory Technicians and Inspectors from the office are assigned to

supervise the quality and packaging process. If the bananas or horticultural produce meet the export

quality requirements, the inspectors approve the produce, and a phyto-sanitary certificate is issued to the

exporting company or individual. With the SPS Certificate, the produce is ready for shipment via air

freight.

10.3 MEGA INTERNATIONAL TRADING COMPANY (A SUBSIDIARY OF MEGA GROUP)

MEGA Group claims to export bananas all over the world, but when interviewed on the phone, they told

us they were not successful. The company attempted a banana export operation but failed. Yet, on their

website, bananas are included (http://www.megagroupbd.com/). In fact, the banana section of their website

is very convincing (http://www.megagroupbd.com/banana.html) as they have pictures of bananas already

packed in boxes and ready for export. However, they do not mention any export destinations. To

improve banana VC in Bangladesh, it is important to develop partnerships with MEGA and other export-

oriented organizations, such as the Horticultural Development Foundation, or simply (HORTEX

FOUNDATION), and the Bangladesh Fruits, Vegetables and Allied Products Exporter’s Association

(BFVAPEA).

10.4 BANGLADESH HORTICULTURAL EXPORT DEVELOPMENT FOUNDATION (HORTEX

FOUNDATION)

The Hortex Foundation is an NGO founded in 1993 under the Ministry of Agriculture. Its functions and

objectives are to “develop, promote and market Bangladesh’s high value exportable agricultural produce”.

The Minister of Agriculture’s secretary is the Chairperson of Hortex, whereas the Managing Director runs

the day-to-day activities of the organization. The Foundation has succeeded in assisting farmers and the

government in exporting “about 100 types of fruits and vegetables from Bangladesh to more than 40

countries in the world.” The Hortex Foundation has the monopoly of direct access to the government

since the Chair is the Secretary General of the Ministry of Agriculture, as well as direct access to the

private sector. The organization will be an important asset to the Bangladesh banana VC if any meaningful

improvement and access to export markets are envisaged in the future. The Hortex Foundation also has

a well-educated, young, bright and dynamic staff, along with the Deputy General Managers of Supply &

Value Chain and Marketing Research and Development, who are willing to make positive changes and

move the fruits and vegetable industry forward.

http://www.megagroupbd.com/

http://www.megagroupbd.com/banana.html

http://www.megagroupbd.com/banana.html


10.5 BANGLADESH FRUIT, VEGETABLES & ALLIED PRODUCTS EXPORTERS’S

ASSOCIATION (BFVAPEA).

This organization was created in 1984 under the Ministry of Commerce of Company Act of 1913. The

functions of the BFVAPEA amongst others are (in quote):

1. “To ensure quality export of Agricultural Products of the country.

2. To promote and safeguard the interest of exporters engaged in exporting of fruits, fresh vegetables

and allied products.

3. To ensure organized action on any matters relating to the interest of the exporters.

4. To establish standard principles in exporters trade.

5. To generate rural employment and raise rural incomes of the rural people engaged in agricultural

products.

6. To help in finding out new international markets.

7. To solve the problems of exporters.

8. To take necessary steps for promoting supporting or opposing of any other action affecting general

interest of exporters.

9. To develop documentation and publicity relating to the organization of exporters trade in fruits,

vegetables and allied products of the country, and;

10. To help the exporters in getting incentives for exporting agro products”.

BFVAPEA is one of the pivotal companies in the country that would make an impact in the banana VC if

entrepreneurs from the private sector and the government were willing to improve the banana industry

as a whole. Most importantly, bananas are ranked 1st amongst 118 different fruit crops produced in the

country.

11. CONCLUSION

Bangladeshis have the potential to become producers, marketers and exporters of premium quality

bananas. Domestically, there is a growing market demand, and per capita consumption is more than 4.3

kg per annum. With a population growth rate of 1.6%, the demand for bananas, which is the most popular

fruit crop, will continue to increase. This is true especially since the fruit is used for multiple functions,

including medicinal and health reasons. The problems plaguing the industry are pests, disease and lack of

modern agricultural practices in producing quality bananas for both local and export market. Survey results

across the complete banana VC indicate a willingness to adopt new technology and a willingness to

purchase (WTB) any variety of quality bananas at higher prices. A Total Quality Management (TQM)

strategy, which is an integrated banana management approach, is recommended to revamp the whole

industry.


11.1 RECOMMENDATIONS

The entire Bangladeshi banana industry, including the FtF areas, needs a complete revamp. A Total Quality

Management (TQM) system needs to be put in place. TQM can be defined as the development of a system

that utilizes scientific and practical hands-on tools and processes to acquire its ultimate goal. In layman’s

terms, it is the science of providing simple, but revolutionary, solutions to problems that are threatening

the Bangladeshi banana industry, while minimizing human and quality related errors concomitantly. The

adoption of an integrated TQM approach is highly recommended. An integrated approach includes the

multifaceted aspects of modern banana production and marketing technics. This includes, but not limited

to, all field operations management, postharvest management, marketing management, processes

management, general farm management (GAP), packing shed management, transportation management,

and ripening and storage/distribution chambers management respectively.

Q. Where is the best place to start TQM?

The 1st is marketing. The 2nd is marketing, and the 3rd is marketing. It is vitally important to determine

market sector demand. A determination of grade, price, quality and timing is crucially important, as well

as a determination of product suitability and consumer preferences, i.e., which cultivar or variety does the

customer/end-user prefer, at what price, and which preferred quality attributes. Fortunately, our survey

results will be useful as it provides the necessary answers needed to penetrate various domestic and

export markets respectively.

11.2 FIELD OPERATIONS MANAGEMENT

To improve the quality of the complete VC for banana production in Bangladesh, all field operations must

be reviewed and updated. This includes, but not limited to, land prep, planting materials, pruning,

replanting, plant population count, propping, bagging, de-budding, de-handing, irrigation, weed control,

nematode control, borer control, fertilization, harvesting, plastic removal and deflowering, just to name a

few (Fonsah and Chidebelu, 1995; 2012). Note that there are at least 36 different operations if one is

considering and/or targeting mature export markets. It is absolutely necessary to bring in a production

expert to train-the-trainers (Extension Agents), and if time permits, train the farmers, or both. The

development of a demo plot for training-the-trainers, and farmers as well, is highly recommended. In this

case, the trainer (expert or consultant) will have to make several trips to monitor each production stage,

i.e. from planting to harvest and make sure the trainers and farmers understand the complete process and

SOPs of each operation.


11.3 HARVESTING MANAGEMENT

To maintain quality, it is recommended that each farmer constructs a harvesting stand on each of their

farms (for those with two or more farms). Harvested bananas could be hung on the stand awaiting

transportation. The inflated tubes technique is easy to implement, and padded foams could be used to

transport harvested banana bunches to the packing shade to minimize bruises, mechanical damages and

other quality defects. The farmers should be taught the V-cut and calibration, or eye harvesting techniques

as well.

11.4 PACKING SHED MANAGEMENT

One of the challenges in dealing with small scale farmers is that their individual production volume is not

significant enough to have an impact in the market. Collectively, they could work to reduce costs. For

instance, for every FtF region, it would be nice to create a cooperative of several hundred banana farmers.

Demarcation of each group, i.e., Zone-1, Zone-2 or Zone-3 is advised (see map). Our survey results

showed that farm size ranged from 25 decimals to 3 or 4 acres per farmer. A small packing shed for each

zone, or cooperative group of farmers, using village level technology is recommended. In this packing

house, farmers from the same area could share and take turns. Based on their farm size and volume, a

few farmers could be scheduled to pack their bananas on the same day but at different time slots.

Fig. 11.1a: Farmer’s cooperative demarcation

zones.

Fig. 11.1b: Reefer Container interior

The Extension Agent, or supervisor, will issue a ticket/receipt showing the number of boxes packed

and/or contributed to the pool by each farmer. This arrangement will also facilitate transportation. One

reefer truck or container can come to each pack shed and load up packed boxes ready for distant

markets. If banana farmer’s cooperatives are formed, each farmer will/could be paid based on the

number of quality boxes contributed to the pool. Assume the negotiated price is 20 Tk/ 20 Kg box. A

farmer who contributes 100 boxes gets 100 x 20 = 1000 Tk, whereas a bigger farmer who contributes

250 boxes in the pool gets 250 x 20 = 5,000 Tk. Each farmer could pay a small membership fee and

maintenance fee to compensate for the use of the packing shed construction and reefer truck rental.

The advantage of adopting this method is that fruits can be transported directly to larger cities like

Dhaka, or directly to export markets without the need for a ripening and/or cold storage chamber in

the rural production areas.


11.5 RURAL DISTRIBUTION CENTER AND RIPENING CHAMBER

Mr. Rehman is a local mango entrepreneur, wholesaler and distributor in the Jessore area. He has been

in this business for several decades and his willing to venture into bananas distribution and wholesale. He

is well respected and liked as one of the local influential leaders. He showed us a building which he believes

he can transform into a banana cold storage warehouse and ripening chamber. This is someone DAI or

USAID can work with to provide the necessary missing channel and/or the support system currently

missing in the Bangladesh banana VC. If resources are limited, a village level cold storage technology can

be adopted and it will serve the purpose. Fig. 11.2b is an example of a simple cold storage built with local

material and very efficient. This is located at the Hazrat Shahjalal International Airport and the produces

are ready to be airfreighted to other countries.

Fig. 11.2a: Mr. Rehman – A local mango

entrepreneur, wholesaler and distributer

Fig. 11.2b: Cold storage warehouse,

Hazrat Shahjalal International Airport,

Dhaka with fresh produce ready for

export, 2015.

There is a crucial need for a ripening and cold storage chambers, especially in bigger cities like Dhaka.

Bananas coming from rural wholesalers can be stored there at lower temperatures and ripen them for

the local high and low-end markets. It is not a standard practice to ripen them prior to distant market

distribution, especially when roads conditions are not favorable for fresh produce, such as bananas. If

packing sheds are available, there will be no need for storage facilities in the rural areas since with

refrigerated or regular containers, the fresh produce could be transported to urban areas the same day.

The importance of refrigerated containers or trucks is to maintain optimum quality and lower the

temperature as to prevent post-harvest rots, damages and shortened shelf life.


12. USAID/DAI VALUE CHAIN TRIP TO INDIA REPORT (JULY 5-10,

2015)

12.1 PURPOSE

The overall objective of this short-term consulting assignment was to assess the domestic and export

demand and supply, market competitiveness of bananas, and to develop a value chain study report.

However, one of the specific objectives was to “Visit Kolkata based banana ripening facilities to explore

the feasibility of exporting different varieties of banana to cater for the demand of this market segment

and conduct a study on import policy environment of India with a special focus to that of West Bengal

state”, hence, the reason for our trip to India. We flew to India in the evening of July 05, 2015 from

Bangladesh.

12.2 KEVENTER AGRO LIMITED

The next day we visited Keventer Agro Limited, one of the major actors of the banana industry in the

Barasat District of Kolkata. We were well received by the Deputy General Manager of F & V Division,

Mr. Sarada Prasad Choudhuri and his dynamic team of experts, including his Sr. Executive (F & V

Division), Mr. Balaram Nandi. A briefing was held in Keventer’s Conference Hall with a PowerPoint

presentation by Ms. Grace Ihouvum. Participants were:

1. Dr. William Levine – Chief of Party, DAI Bangladesh via skype

2. Mr. Bani Amin, Deputy Chief of Party, DAI Bangladesh

3. Mr. Sarada Prasad Choudhuri, Deputy General Manager of F&V Division, Keventer, Sagar Estate,

India

4. Mr. Balaram Nandi, Sr. Executive (F&V Division), Keventer, Sagar Estate, India.

5. Mr. Kishore Majhi

6. Ms. Grace Ihouvum, USAID, India

7. Dr. Esendugue Greg Fonsah, Professor & USAID/DAI Banana VC Consultant

Figure 12.1 Keventer Agro Ltd. office, conference briefing and team of experts.

After the briefing, we visited the ripening house facility and learned how the bananas were transported

from the field to Keventer’s fresh produce ripening chambers. It was very fascinating and most

importantly, we enjoyed the enthusiasm and pride of the management team as they shared their success

stories.


Fig 12.2 Mr. Choudhuri on the left, banana quality in the middle and delivery extreme right.

Currently, Keventer has 7 ripening chambers with a capacity of 40 MT/day. The fresh bananas are

transported from the field to Keventer’s facilities in plastic boxes, each color representing a different

grade. There are 30 crates in a pallet. Their ripening cycle is 4 days, using ethylene gas since calcium

carbide, a traditional ripening agent used by the farmers and distributors, is now banned from the entire

fresh produce industry in India. Keventer’s successful business model was initiated 6-7 years ago.

Fig. 12. 3 Picture of different color crates on the left, ripening chamber in the middle and interior of the ripening chamber on the

extreme right.

Their grading system consists of three different categories, thus:

1. Category A = 5 pieces / kg

2. Category B = 7 pieces/kg

3. Category C = 10 pieces/kg

13. BANANA SUPPLY VALUE CHAIN MODEL

13.1 MARKET SHARE AND PROFIT MARGINS

We were told that with an operation such as Keventer, the company needs a supply of 10 MT/day to be

sustainable. Currently, Keventer has exceeded that target four-folds as it produces 40 MT/day with 7

ripening chambers. With the lucrativeness of their model, expansion plans are being finalized with the aim

of opening two more facilities in a few months, one in Siliguri and other in Ranchi (Jharkaand), with a

capacity of 10 MT/per day.

Kolkata consumes around 400 MT bananas daily; Keventer is supplying approximately 40 MT, or barely

10% of the market share; therefore, there is room for expansion. It is important to mention that the


infrastructural set-up cost for a small ripening operation with a capacity of 10 MT/day, which is

recommended for any beginner, is approximately 7-8 million Indian Rupees (INR). With working capital,

the required investment is about 20 million INR. In West-Bengal, the peak season for bananas is Ramadan

Holy Season since bananas have become an important item for Iftar.

13.2 IMPORT/EXPORT

For now, the demand for bananas in India is still higher than the supply. As a result, import or export

ventures are not appealing to businesses. More-so, Indian import and export policies for fresh produce,

especially bananas, which is also a staple, is a major hindrance with too many bottle necks involved. There

are also trade barriers between India and Bangladesh that has encouraged smuggling practices and

discouraged official import/export trading between the two countries. Many tariffs and non-tariff barriers

have been put in place that discourage business, especially for perishable goods like bananas.

13.3 BUSINESS MODEL

After studying Keventer’s business model, we concluded that the company represents a classic example

of a Contractor/Wholesaler/Ripener/Distributor (CWRD). This is a good business plan, especially since

Keventer, as an individual business entity, has straightened its supply chain, eliminating unwanted

middlemen in their equation. Thus, no additional broker fees are incurred, and profitability is maximized

in the process. As shown in the diagram below, Keventer contracts farmers, provides them with

technical and extension services, including seeds/planting materials, and guarantees to purchase all that

the farmers can produce. That is really an incentive to the farmer and a minimizing risk buffer.

Additionally, the farmers are still allowed to sell part of their crops directly or indirectly to others.

Fig. 13.1 Keventer Agro Limited’s Business Model

After harvesting, Keventer provides crates, and their affiliated vendors transport the fresh, green bananas

to the ripening facilities at Barasat District at no additional cost to the farmers. After ripening, Keventer


carries out direct sales to institutional buyers such as hospitals, restaurants, supermarkets, wholesalers

and retailers. The consumers or end-users have access to Keventer’s produce through retailing outlets.

14. MARKET AND DISTRIBUTION LEVEL-CHANNELS

14.1 EXISTING MARKET AND DISTRIBUTION CHANNELS IN THE KOLKATA AREA, WEST

BENGAL, INDIA

There are three visible market level-channels, namely: One-Level-Channel when the produce enters the

market through retailers; Two-Level-Channels when the produce goes from the farmer to the wholesaler,

retailer then the consumer; Three-Level-Channel marketing where the produce leaves the farmers and

goes through a Contractor/Wholesaler/Distributor/Ripener (CWDR) to the wholesaler and then retailer

before reaching the consumers. There is also an infinitesimal amount of Zero-Level-Channels.

Fig. 14.1 Existing Market Channels in Kolkata

14.2 SUCCESS STORIES

As part of its business model, Keventer has trained over 3028 farmers across 7 blocks, and provided

them with G9 banana planting materials. Out of these, 437 farmers have adopted the farming practices

technique during the life of the project period. In addition, Keventer has developed 6 demonstration

sites, and 26,310 G9 suckers(plantlets) and/or additional planting materials have been purchased by the

farmers in the project area during the project. Keventer’s operation has encouraged farmers to switch

from jute-plant production to bananas, and have increased their household income, productivity and

profitability by about 50%.


14.3 BANANA PRODUCTION

Almost all the growers (with an exception of a few) cultivated G9 “Grand Nain,” which is a Cavendish

variety that belongs to the Musa acuminate spp. Grand Nain is classified as a AAA genotype and is a

triploid, which makes it susceptible to disease pressures. The word “Grand” is actually borrowed from

the French language, meaning “Big” or “Big Bananas” (Fig. 6). At this stage, production is not a major

problem. The growers in India have mastered planting techniques and are successful in producing big

and healthy banana bunches and fruits, as shown in fig 5 below. Planting distance was 6 x 6 ft. with an

overall density of 400/plant/Bigha. Average bunch weight was 40 Kg. This planting distance and density

was the same for G9 (Grand Nain) and the Local cultivars. Tissue Culture (TC) was obtained from

Kementer. Various forms of N-P-K fertilizers were used, but no one had ever done a soil test. A good

practice would be to start by testing the soil.

Fig. 14.2: Newly harvested Grand Nain banana bunches

14.4 PRODUCTION COSTS

On average, a G9(Grand Nain) farmer spends 60000 INR/Bigha in banana farming and makes a net return

of 300,000 INR in a two-year farming cycle, constituting 3 harvests. On the other hand, a traditional farmer

spends more than INR 80,000 and makes approximately 200,000 INR in a 27-month farming cycle with 3

harvests. Due to the high profitability, farmers were switching from jute-plant production to bananas.

14.5 GOOD AGRICULTURAL PRACTICES (GAP) AND QUALITY

Good agricultural practices (GAP) are still lacking. Bananas don’t do well with weeds. Also, the quality

of the fruit is compromised from the field to postharvest levels respectively. For instance, no de-leafing

operations and/or fruit obstacle removal (FOR) were practiced. Fresh fruits were loaded and

transported in trucks, thus increasing quality defects and postharvest injuries.


Fig. 14.3: Field conditions that contribute to quality and post-harvest defects and excessive field loss

14.6 DISEASE PROBLEMS

The major problem in Indian banana production is disease. There is the serious yellow

Sigatoka disease caused by Mycosphaerella musicola, and the black Sigatoka caused by Mycosphaerella

fijiensis. There is also banana bunchy top virus (BBTV) (Fig. 7) that can spread fast if not well treated.

However, due to the production cycle which goes through mother-daughter-granddaughter, or plant crop

– 1st and 2nd ratoon (F1 & F2) before the crop rotation takes place, it might be easier to economically

manage the disease pressures. The three-crop cycle takes from 27- 30 months.

Fig. 14.4 Visiting a banana orchard in Karimpor, Nadia District, Kolkata, India

15. SUPER MARKET IN KOLKATA 15.1 BANANA RETAIL PRICES

At the supermarket in downtown Kolkata, there were four kinds of bananas displayed on the shelf. The

Cavendish, two local varieties that looked like Champa kola and Shabri kola, and surprisingly, they also

had local variety organic bananas. The G9 sold for 30 rupees (INR) per Kg. The organic sold for 35

rupees (INR) for four small fingers, and the two local varieties sold for 6 rupees and 5 rupees per finger

each respectively (Fig. 15.1).


Fig. 15.1 Retail prices of different banana varieties in the supermarket in Kolkata, India

Interestingly, banana blossoms were also found on the shelf of the supermarket and sold for 27 rupees

(INR) each (Fig. 15.1). Banana flowers are actually eaten as vegetables in some Asian countries, and this

could be a readily exploited niche market. Most farmers I spoke to did not know that banana flowers

could be eaten. They cut and throw them in the field.

Fig. 15.2 Fresh banana blossom sold in

Supermarket, Kolkata, India

16. WORLD BANANA PRODUCTION OUTLOOK

16.1 WORLD BANANA SUPPLIERS

Recent reports depict India as number one in terms of banana production in the world (fig. 10), followed

by China and the Philippines. It is also interesting to note that most of the big producers are not exporters.

One could logically argue that their production is just enough for local consumption, hence the demand =

supply, or equilibrium. Empirically, the story might have another twist.


Fig. 16.1 Top 10 Banana Producing Countries Compared to the United States in 2012 (FAO, 2014; Hernandez, 2015)

16.2 WORLD EXPORTING COUNTRIES

Most exporting countries do not appear on the list of top producing countries, and those that do are

not ranked very high, except the Philippines ranked at number 3. It is questionable why the top ranking

producing countries are not necessarily top-ranking exporters.

Fig. 16.2 Top Banana Export by Countries (FAO 2014; Hernandez, 2015)

27,042,000

12,111,752 11,816,619

8,935,874

6,897,403

6,503,886 5,774,084

3,133,299

3,043,234 2,601,710

7,263

0.00E+00

5.00E+06

1.00E+07

1.50E+07

2.00E+07

2.50E+07

3.00E+07

India China China, mainland

Philippines Brazil Ecuador Indonesia Guatemala Angola United Republic

of Tanzania

United States of America

5,198,703

2,646,380

1 ,986, 76 1 1,885,909 1,834,936

0

1000000

2000000

3000000

4000000

5000000

6000000

Ecuador Philippines Guatemala Costa Rica Colombia


16.3 WORLD BANANA IMPORTING COUNTRIES – IMPORT DEMAND

Although China is ranked the 2nd largest world banana producer, based on its population of 1.6 billion

people, one could conclude that its local market is large enough to consume all its supplies. Empirically,

quality bananas were introduced to the Chinese markets almost two decades ago. Today, China’s global

import share is 4%, while Japan is 7%. The major importing countries are the United States and EC-27,

with the lion’s share of 27%. However, if we consider individual countries, the United States would be

the number one net importer of bananas in the world (Fig. 16.2).

Fig. 16.3 World Banana Importing Countries.

Source: http://www.fao.org/docrep/019/i3627e/i3627e.pdf Accessed July 21, 2015

16.4 BANANA EXPORT BY REGIONS OF THE WORLD.

Fig. 16.4 shows that banana export has been dominated by Latin American and Caribbean countries. In

2012 for instance, 13 million MT was exported, compared to 2.8 million MT from Asian countries, and

barely 0.6 million MT from Africa. Why is it that Latin American and Caribbean countries have

monopolized the banana export industry for so long?

http://www.fao.org/docrep/019/i3627e/i3627e.pdf

http://www.fao.org/docrep/019/i3627e/i3627e.pdf


Fig. 16.4 Banana export by Regions of the World (Million tons).

17. CONCLUSION

Although India has a slight advantage over Bangladesh, they have not yet exploited their full capability of

becoming producers, marketers and exporters of premium quality bananas. Domestically, India, just like

Bangladesh, has a huge market demand, and per capita consumption is sky rocking. Projections show that

India will surpass China and become to most populated country in the world in 2028. With such a

population growth rate, the demand for bananas, which is one of their most favorite fruit crops, will

continue to increase. The problems plaguing the industry are pest, disease and lack of modern agricultural

practices if they decide to venture into export opportunities. A Total Quality Management (TQM)

strategy, which is an integrated banana management approach, is recommended to revamp the whole India

banana industry. That would render Keventer Agro Limited even more profitable and efficient.

17.1 RECOMMENDATIONS

Although India is slightly ahead of Bangladesh in terms of banana production and marketing, the country is

still way behind other banana growing countries, especially the exporting countries in Africa, Central and

South America and Asia (Philippines). Keventer Agro Limited, and other companies that have developed

models to improve the entire India banana value chain, deserve recognition and praises. My only concern

here is that their models are still below international norms and standards. They need assistance in order

to continuously improve. The good news is there is a high degree of willingness to learn and improve.

USAID/DAI can capitalize on that “willingness” and provide necessary assistance in terms of transferred

technology, capacity building, training, education, etc. Sections 11 – 11.5 provide all of the

recommendations needed.


REFERENCES AND RECOMMENDED READING

1. Bangladesh Bureau of Statistics and Information (2013). Informatics Division Ministry of

Planning: Report on the productivity Survey of the Bananas Crop. Accessed July 15, 2015.

2. Bangladesh Weather Online (2015). http://www.weatheronline.co.uk/reports/climate/Bangladesh.htm Accessed August 03, 2015.

3. Bangladesh Population Projection (2015). http://populationpyramid.net/bangladesh/2025/

Accessed July 22, 2015

4. Chen, H., A. Ota and E. G. Fonsah (2002). Scientific Note. An Infestation of Sybra alternans

(Coleoptera: Cerambycidae) in a Hawaii Banana Plantation”. Proceedings of the Hawaiian

Entomological Society, 35:133-136 (January).

5. Ezumah, N.N and E. G. Fonsah (2004). “Women in The Banana Industry: A Case Study of

Tiko Banana Plantation, South West Province, Cameroon”, In: Issues In Gender and

Development Studies, New Gender Studies from Cameroon and Caribbean, African Books

Collection, Vol. 1, pp 79-93. ISBN: 0-954538-46-3.

6. Fonsah, E.G., B. Borgotti, P. Ji, P. Sumner and W.G. Hudson (2010). “New Banana Cultivars

Trial in the Coastal Plain of South Georgia”. J. of Food Distr. Research, 41(1):46-50.

7. Fonsah, E.G. and Angus SND Chidebelu (2012). Economics of Banana Production and Marketing in the Tropics: A Case Study of Cameroon. Langaa Research and Publishing CIG,

Mankon, Bamenda, ISBN: 9956-726-54-0, 244 pages.

8. Fonsah, E.G., W.G. Hudson, P. Sumner and J. Massonnat (2011). “Performance of “Veinte

Cohol”: A Short Cycle Banana Cultivar Trial in the South Coastal Plain of Georgia”, J. of Food

Distr Res: 42(1):48-53.

9. Fonsah, E. G., C.M. Ferrer, D. G. Riley, S. Sparks and David Langston. (2010). "Cost and Benefit

Analysis of Tomato Spotted Wilt Virus (TSWV) Management Technology in Georgia". The

Southern Agricultural Economic Association Conference (SAEA).

http://ageconsearch.umn.edu/bitstream/56386/2/51028.pdf

10. Fonsah, E. G., G. Krewer, R. Wallace and B. Mullinex (2007). “Banana Production: An

Alternative Crop for Niche and Ethnic Market in Georgia,” Journal of Food Distribution

Research: 38 (3): 14-21.

11. Fonsah, E.G., C.A. Adamu, B. Okole, and B. Mullinex (2007). “Field Evaluation of Two

Conventional and Three Micropropagated Cavendish Banana Cultivars Over A Six Crop

Cycle In A Commercial Plantation in The Tropics,” Fruits: 62 (4): 205-212.

12. Fonsah, E. G., J. Roshetko, J. Tukan, E. Nugraha, G. S. Manurung, (2007). “Fruit and Vegetable

Industry in Indonesia: Production and Limited Access to Market”. Journal of Food Distribution

Research, 39(1): 62-66 (March).

13. Fonsah, E. G., R. Wallace and G. Krewer, (2007). “Why Are There Seeds in My Banana: A

Look at Ornamental Bananas”. J. of Food Distri. Research, 39(1):67-71.

14. Fonsah, E. G., G. Krewer, R. Wallace and B. Mullinex (2007). “Banana Production: An

Alternative Crop for Niche and Ethnic Market in Georgia,” J. of Food Distr. Research, 38 (3):

14-21.

15. Fonsah, E. G., G. Krewer, M. Rieger, R. Wallace (2006). “Banana and Plantain Research in Georgia” University of Georgia Bamboo Farm and Coastal Gardens Fall Festival, October 27.

16. Fonsah, E.G. (2006). “Go Bananas: Is Banana at the Verge of Extinction?” Central African

Business, pg. 19, August 30.

http://www.weatheronline.co.uk/reports/climate/Bangladesh.htm%20%20Accessed%20August%2003









17. Fonsah, E. G., G. Krewer, R. Wallace (2006) “Third Year Banana Cultivars Trial in South

Georgia”. J. of Food Distri. Research, 37(1): 71-75.

18. Fonsah, E.G. (Contributing author) (2005) “Will Georgia Become A Banana Republic”?

By Elliot Minor, The Associated Press, Savannah Morning News, 011:1A and 5A (January 27). Also

see http://www.savannahnow.com

19. Fonsah, E.G, G. Krewer and M. Rieger (2005) “Second Year Banana Cultivars Trial in South

Georgia”. J. of Food Distri. Research, 36 (1): 48-54.

20. Fonsah, E.G. and A.C. Adamu (2004). “Bites as Banana Planting Material: A Determination of

Growth Performance Three Weeks After Corns were Extracted in the Tropics” Journal of

Applied Social Science, Vol. 4 (2) 162-170.

21. Fonsah, E.G, G. Krewer and M. Rieger (2003) “Banana Cultivars Trial for Fruit Production,

Ornamental Landscape Use and Ornamental Nursery Production in South

Georgia”. J. of Food Distr. Research, 35(1): 86-92.

22. Fonsah, E.G (2002), AIntegrated Quality Control Management Strategies in Banana Production,

Packaging and Marketing@. J. of Food Distr. Research, 34(1): 99-106.

23. Fonsah, E.G. (2002). A Global Sustainable Banana Production, Marketing and Trade

Implications,@ Proceedings of the Global Conference on Banana and Plantain Organized by

AIPUB, FAO, INIBAP and Ministry of Agriculture, Banglore, India, October 27-31.

24. Hernandez, G.A., (2015). Antioxidant Properties and Hypoglycemic Potential of Genomically

Diverse Bananas Cultivated in Southeastern United States, Unpublished MSc Thesis,

Department of Horticulture, Auburn University, Auburn, AL.

25. Hernandez, G., F.M. Woods, E.G. Fonsah, R. Kessler, E.E. Coneva, J.M. Kemble, K. Shetty, D.C.

Crosby, and M. Barnhill. (2014). Preliminary physicochemical characterization of genomically

diverse Georgia grown bananas during postharvest ripening. HortScience 49(9):S309.

26. Kone, D., P. Ji, E.G. Fonsah and A. Csinos (2008). “First Report of Black Leaf Spot of Banana

Caused by Deightoniella Torulosa in Georgia”. J of Plant Disease: 92 (10) 1470.

27. Krewer, G, E.G. Fonsah, M. Rieger, R. Wallace, D. Linville, and B. Mullinex (2008). "Evaluation

of Commercial Banana Cultivars in South Georgia for Ornamental and Nursery Production,"

HortTech: 18 (3): 529-535.

28. Muhammed, A, S. Zahniser and E.G. Fonsah. (2015). “A dynamic analysis of US banana demand

by source: a focus on Latin American suppliers”, Int. J. Trade and Global Markets, Vol X, No.

Y, pp xxx-xxx (forthcoming).

29. Ndenecho, E.N., and E.G. Fonsah (2001) "Wind Hazard: A Limitation To The Development of

the Banana Industry in Tiko Plain, Cameroon" In: Readings in Geography: A publication of the

Research Group in Geography and Environmental Studies, University of Buea. Unique Printers,

Bamenda, Cameroon

30. Nzaku, K. J.E. Houston, and E.G. Fonsah (2011). "U.S. Demand for Fresh Tropical Fruit and

Vegetable Imports". J. of Food Distr. Res: 42(1):96-100.

31. Nzaku, K. J.E. Houston, and E.G. Fonsah (2010). "Analysis of U.S. Demand for Fresh Fruit and

Vegetable Imports". Journal of Agribusiness 28 (2): 163-181.

32. Nzaku, K. J.E. Houston, and E.G. Fonsah (2010). "A Source-Differentiated Analysis of Tropical

Fresh Fruit Imports". Journal of American Agricultural Economics Association’s AAEA &

WAEA (Western Agricultural Economic Association). AgEcon Search:

http://ageconsearch.umn.edu/bitstream/61663/2/AAEA2010%20Paper%20Draft%201185

7.pdf

http://www.savannahnow.com/

http://www.savannahnow.com/

http://ageconsearch.umn.edu/bitstream/61663/2/AAEA2010%20Paper%20Draft%2011857.pdf




33. Parkunan, V., S. Li, E. G. Fonsah, and P. Ji, (2013). “First report of Alternaria leaf spot of banana

caused by Alternaria alternata in the United States”. Plant Disease 97: 1116.

34. Vinson, E. L., E. D. Coneva, J. M. Kemble, F. M. Woods, P. M. Perkins-Veazie , E. G. Fonsah,

and J. L. Sibley, (2015). “The Effects of Selected Cover Crops on Growth Parameters of Musa

(AAB Group) 'Mysore' Banana Plants”. Southern Association of Agricultural Sciencs (SAAS)

Conference, The Westin Peachtree Plaza, Atlanta, GA, January 31-February 02.

35. Wallace, R.H., G. Krewer and E. G. Fonsah (2007). "A Short Cycle Banana for Fruit Production

in South Georgia" Southeastern Palms: 15 (4), 13-17.

36. Wallace, R.H., G. Krewer and E.G. Fonsah (2007). “Ornamental Bananas: New Hybrids from

a Group of Underutilized Landscape Plants”. Southeastern Palms: 15(3):10-18.

37. Wallace, R., G. Krewer and E.G. Fonsah (2008). “Research on Short cycle Bananas As a

New Direct Market and Specialty Crops for the Southeast” Southeast Regional Fruit Conference,

International Trade & Convention Center , Savannah, Georgia, pg. 17.

38. Yin, J., D. Koné, M. Rodriguez-Carres, M. A. Cubeta, L. L. Burpee, E. G. Fonsah, A. S. Csinos,

and P. Ji, (2011). “First Report of Root Rot Caused by Binucleate Rhizoctonia

Anastomosis Group F on Banana, Musa spp.” Journal of Plant Disease Vol. 95: (4) 490

39. Yearbook of Agricultural Statistics of Bangladesh-2008, 2011 & 2012) BBS.

usaid/dai banana agricultural value chains (avc) … · 2018. 9. 19. · 10.1 bangladesh banana...

Documents