Cash remains king in local food chain transactions

All intermediaries within the country's agri-food value chain are less interested in using digital finance for transactions than cash, according to a study by the International Food Policy Research Institute (IFPRI).
The IFPRI found that 80-90 per cent of buying transactions by all types of intermediaries are conducted in cash.
Increasing digital financing among rice, potato and other essential food processors, traders and wholesalers could improve transparency, the study, titled 'Financial Access and Digital Services Within Agri-food Value Chains in Bangladesh', suggests.
It was disclosed at a workshop, organised by IFPRI and CGIAR with support from the Bill & Melinda Gates Foundation, in Dhaka last week.
The study explored the role of intermediaries within the local agri-food value chains.
Dr Akhter Ahmed, the IFPRI-Bangladesh country representative, said agriculture-led growth is three times more effective in alleviating poverty than other sectors of the Bangladeshi economy.
Strong growth linkages within value chains benefit the economy, he said, emphasising farm mechanisation for improving farmers' profitability, especially as rural labour wages rise.
Dr Md Mahmudur Rahman, joint secretary at the Ministry of Agriculture, said they remain committed to thorough programme evaluations and evidence-based policymaking.
This commitment, he said, reflects their unwavering resolve to ensure that policies are informed by empirical evidence and tailored to address the unique challenges of the local agri landscape.
IFPRI Senior Research Fellows Dr Kate Ambler and Dr Alan de Brauw presented IFPRI and CGIAR's research on the role of intermediaries in rice and potato value chains and their access to financial and digital services in Bangladesh.
IFPRI's research identified widespread concerns that rice and potato value chain actors take high margins, especially during periods of rising prices. The research also proposed policy options for enhancing the efficiency and inclusivity of value chains.
The study suggests that digital financial services could potentially lead to better prices for producers and higher-quality products for consumers.
The IFPRI study, conducted among rice and potato intermediaries in Rangpur and Bogura districts, found that 80 per cent of traders have accounts with financial institutions, but few use them for transactions.
Less than 20 per cent of traders were able to use their accounts digitally, according to the study. The study also examined buying and selling transactions in Rangpur and Bogura. It found that in the first instance, 80-90 per cent of intermediaries used cash for purchases.
In another case, the study showed that 75 per cent of purchases and 65 per cent of sales were conducted in cash.
The study also revealed that 99 per cent of the intermediaries were male and over 40 years old, indicating a lack of youth and women's participation in the rice and potato value chain.
Dr Ben Belton and Dr Mehrab Bakhtiar of IFPRI presented preliminary findings from their ongoing policy research on farm mechanisation in Bangladesh.
This research aims to assess the current state of agricultural mechanisation and study the impact of the government's 'Farm Mechanisation Through Integrated Management' programme on the agricultural sector.
Dr Ruhul Amin Talukder, senior policy advisor at IFPRI, said understanding key factors like tax regimes, financing mechanisms, private sector participation and regulations is important for agri mechanisation.
ACI Agribusiness Managing Director Dr FH Ansarey said that while the IFPRI study used data from 2005 to 2019, there has been a vast expansion of mechanisation in the last four years. A government project sold nearly 10,000 combine harvesters to farm investors at subsidised rates during this period.
Other speakers included former Agriculture Secretary Anwar Faruq, former Executive Chairman of the Bangladesh Agricultural Research Council Dr Wais Kabir, Bill & Melinda Gates Foundation representative Ms Maria May, and agro-machinery company Metal Managing Director Sadid Jamil.

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