Structure, Conduct and Performance of the Rice Market and the Impact of Technological Changes in Mil...
This presentation is the property of its rightful owner.
Sponsored Links
1 / 36

Structure, Conduct and Performance of the Rice Market and the Impact of Technological Changes in Milling PowerPoint PPT Presentation


  • 85 Views
  • Uploaded on
  • Presentation posted in: General

Structure, Conduct and Performance of the Rice Market and the Impact of Technological Changes in Milling. Institution Institute of Agribusiness and Development Studies (IADS) BAU, Mymensingh. Research Team Professor Dr. Shankar Kumar Raha - PI Professor Dr. Md. Monjurul Alam – CI

Download Presentation

Structure, Conduct and Performance of the Rice Market and the Impact of Technological Changes in Milling

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Structure conduct and performance of the rice market and the impact of technological changes in milling

Structure, Conduct and Performance of the Rice Market and the Impact of Technological Changes in Milling

Institution

Institute of Agribusiness and Development Studies (IADS) BAU, Mymensingh

Research Team

Professor Dr. Shankar Kumar Raha- PI

Professor Dr. Md. MonjurulAlam – CI

Md. Moniruzzaman – CI

Dr. M. A. Awal - CI


1 background and rationale of the research project

1 Background and Rationale of the Research Project

  • There has been concern over the efficient marketing system of rice in Bangladesh

  • due to volatility of rice prices in domestic and international market

  • Negative impacts on farmers and consumers

  • No visible sign of any serious imperfection in rice market.

  • Rapid technological changes in the rice milling.

  • Impact of semi-automatic and automatic rice mills

  • Increased volatility of international grain markets and the govt. policy of rice exporting countries necessitate to assess the integration of domestic and international markets.


  • Structure conduct and performance of the rice market and the impact of technological changes in milling

    Objectives of the Research Project

    1. To provide evidence and provide new evidence on rice market structure, conduct and performance in Bangladesh and

    • To analyze the impacts of technological changes in the rice milling sector on employment, financial viability of rice mills, market concentration, rice quality, and cost of milling

      2. To construct detail estimates of costs and margins for key agents along the rice marketing chain in Bangladesh and

    • to analyze market integration between domestic and international markets.

      3. To suggest policy implications for improving market structure, conduct and performance.


    Methodology

    Methodology

    The study is conducted by adopting the structure, conduct and performance approach (SCP). This technique was first formalized by Mason (1939) and his detailed case study approach was modified by Bain (1951).

    Market structure

    Market conduct

    Market performance


    Methodology contd

    Methodology (Contd.)


    Methodology contd1

    Methodology (Contd.)

    (a) Estimation of market concentration

    4 firm concentration ratio, Entropy index, and Gini coefficient

    (b) Financial viability of the mills was assessed by using NPV, IRR, BCR.

    (c) Calculation of marketing costs and margins was done by using

    standard formula (Kohls and Uhl, 2005)

    (d) Market integration

    • Market integration was examined by applying co-integration method developed by Engle and Granger

    • Data: monthly wholesale price from 1990 to 2011(domestic mkts).

    • Data: monthly export price of rice from Thailand, Vietnam, and Eastern India converted into import parity price (2000 to 2011)


    Overview of the structure conduct and performance of rice market in bangladesh

    Overview of the structure, conduct and performance of rice market in Bangladesh


    Overview of the structure conduct and performance of rice market in bangladesh contd

    Overview of the structure, conduct and performance of rice market in Bangladesh contd.


    Overview of the structure conduct and performance of rice market in bangladesh contd1

    Overview of the structure, conduct and performance of rice market in Bangladesh contd.


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Structure, conduct and performance of paddy market in Bangladesh

    Table1: Buyer concentration in paddy markets


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Structure, conduct and performance of paddy market in Bangladesh

    Table 1: Buyer concentration in paddy markets contd.


    Figure 1 buyer concentration in paddy markets

    Structure, conduct and performance of paddy market in Bangladesh

    Figure 1. Buyer concentration in paddy markets

    4 firm concentration (%)

    Markets


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Structure, conduct and performance of paddy market in Bangladesh

    2. Entry barrier

    Table 2 : Problems for the new entrant as perceived by established traders


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Structure, conduct and performance of paddy market in Bangladesh

    3. Degree of product differentiation (paddy)

    No deliberate effort is made to make the paddy differentiated in the market.

    4. Distribution of market information

    • No formal system exist for dissemination of market information.

    • Paddy traders collect market information through their own effort.


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Structure, conduct and performance of paddy market in Bangladesh

    5. Conduct at paddy market

    Table 3: Price setting mechanisms during buying and selling paddy


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Structure, conduct and performance of paddy market in Bangladesh

    6. Performance of paddy market

    • Paddy market is operating smoothly throughout the country;

    • Millers are getting paddy as much they need, though farmers are not getting reasonable price for their paddy.

    • From farmers’ perspective, paddy market is not running in favour of them.


    Market structure conduct and performance of rice milling industry

    Market structure, conduct and performance of rice milling industry

    1.1 Dimensions of market structure (4)

    1.2 Degree of product differentiation

    • Product differentiation is exist buy does not create any

      significant for competition

    Table 4. Seller concentration in rice mill industry


    Market structure conduct and performance of rice milling industry contd

    Market structure, conduct and performance of rice milling industry contd.

    Table 5. Major problems for potential entrant as perceived by established mills


    Market structure conduct and performance of rice milling industry contd1

    Market structure, conduct and performance of rice milling industry contd.

    Table 6. Reasons for exit from the market


    2 1 price policies

    Market structure, conduct and performance of rice milling industry contd.

    2.1 Price Policies

    2. Market conduct

    • Selling price of rice is set independently

    • Automatic rice mill owners are in better position in negotiation for setting price.

    • In the case of husking and semi-automatic mills buyers are more powerful.

    2.2 Product Policy

    • With the changing of milling technology, millers are capable to process rice according their own choice and also to buyer’s choice

    • Sometimes the millers supply rice with labeling as per direction of trader- buyers.

    2.3 Policies aimed at coercing rivals

    No evidence of predatory and/or exclusionary tactics adopted by the established firms in rice market.


    3 performance dimensions

    3. Performance-Dimensions

    Figure 2. Capacity utilization of rice mills

    54.45

    • Size of selling cost

    • Product quality

    • Progressiveness of the industry

    • Employment position

    • Discrimination by sex


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Impact of technological changes in rice milling

    • Number of husking rice mills are shrinking and the businesses are shifted either to semi-automatic or to automatic rice mills.

    • The demand for quality rice (brightness, polishing, free from foreign particulars and black rice) and higher price encouraged semi-automatic and automatic rice mill owners to use the new technologies.

    • The bran of semi-automatic and automatic rice mills have good demand in the edible oil mills

    • Automatic rice mills have overcome the problem of rainy season and shortage of labour supply for processing of paddy.


    Table 7 milling cost and profit by different types of rice mill

    Impact of technological changes in rice milling contd.

    Table 7: Milling cost and profit by different types of rice mill

    *Without modern equipment

    **With modern equipment


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Table 8. Employment in different rice mills

    *Without modern equipment

    **With modern equipment


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Financial viability of the rice mills


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Procurement centre

    Farmer

    Faria

    Aratdar-cum-wholesaler

    Bepari

    Rice miller

    Paddy processor

    Aratdar

    Aratdar-cum-wholesaler

    Wholesaler

    Wholesaler-cum-retailer

    Retailer

    Government procurement

    Consumer

    Figure 3: Typical Marketing Channels of Paddy/ Rice in Bangladesh


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Table 10. Marketing margins of paddy/rice for different actors

    (for 1 quintal of rice /and equivalent amount of paddy)

    *only from rice ** Commission


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Figure 4: Marketing margins of paddy/rice for different actors (for 1 quintal of rice /and equivalent amount of paddy)


    Share of different actors in gross marketing margin marketing cost and net margin

    Share of different actors in gross marketing margin, marketing cost and net margin


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    in 2010

    Map 6.1: Extent of rice surplus and deficit at district level in 2010


    Integration of rice market

    Integration of Rice market

    • ADF test shows that all the rice price series were non-stationary at level but stationary in their first differences.

    •  All the 12 districts rice markets found integrated

    • Dhaka market is significantly integrated to all regional markets of rice markets in Bangladesh due to having the facility of infrastructure and information technology, which closely connected the markets to each other.

    • Price move in the unison in all the markets together. Central price policy making will be effective in rice market.

    • Rice market of Bangladesh , Eastern India, Vietnam and Thailand found integrated also


    Suggested policy options

    Suggested policy options

    • Paddy market

    • Structure –Oligopsonistic and atomistic

    • Formation of farmers’ marketing cooperative / group

    • Development of market yard for paddy market as most of the paddy markets sit along and /on the road

    • Provision of credit facilities to paddy traders. The traders should have trading licenses.

    • Conduct

    • Cost of inputs in paddy production can be reduced through adopting cost reducing technologies and optimum utilization of machines.

    • Arrangement to be made to disseminate paddy prices of different important markets through mobile phones.

    • Display of buying prices of paddy on board by buyers Association / market committee on market.


    Suggested policy options contd

    Suggested policy options contd.

    • Rice mills

    • Structure

    • Husking mills should be modernized to semi-automatic/automatic rice mills. Profitable cases should be financed

    • Conduct

    • Development and introduction of quality standard for rice in the market

    • The rice bag should contain minimum information about the product (name of the mill, its location, date of processing, number of boiling, net weight, variety of rice, millgate price). Labeling on the bag of rice should be mandatory

    • Needs investigation of the nutritional aspects of milled rice after extracting bran to ensure the quality of rice


    Suggested policy options contd1

    Suggested policy options contd.

    • Performance

    • Ensure regular and undisrupted power supply to rice mills

    • Make available of spare parts at reasonable prices in markets Quality standard of the spare parts may be introduced

    • Contractual arrangements btw. rice growers and millers

    • Improvement in processing technology should be encouraged through providing various services (credit facility, technical knowledge and necessary permission)

    • Installation of Engleberg rice huller in the country should be banned

    • Vocational training programme helps to produce qualified personnel for operating automatic rice mills


    Suggested policy options contd2

    Suggested policy options contd.

    • Ensure optimum use of by-products such as husk, bran, broken rice, husk–ash.

    • Wage discrimination by sex needs to be addressed.

    • Arrangement of foreign visits particularly the rice exporting countries for the millers may help to change the attitudes to the business. FAO may sponsor such visits.

    • Govt. should develop a complete and accurate data base on rice mills and market intermediaries.


    Structure conduct and performance of the rice market and the impact of technological changes in milling

    Thank You

    for

    Patience Hearing


  • Login