"marketing of fish"
Fish-marketing To make fish available to consumers at the right time and in the right place requires an effective marketing system. Fishermen who catch fish by labouring overnight (from common-property water bodies) do not usually sell fish in retail marketsAt the break of day, they take their catches to places where Nikaries/Beparies, or retailers, meet them and bargain by the lot. At the landing point, the number of intermediaries is low. Only one or two intermediaries may approach a fisherman. Once bargaining has started, other intermediaries remain at a distance and wait for their turn to deal, should the first intermediary fail to obtain the fisherman's lot. If the first intermediary is unsuccessful, another steps in to bargain for the catch. Normally, the first Nikary/Paiker-retailer does not allow this to happen and secures the lot for himself. No open bidding exists in such a case. Therefore, the poor fisherman often falls prey to the Nikari/Bepari/Paiker-retailer's crude exploitations. A fisherman, as a seller, cannot negotiate favourable prices for himself mainly because: he meets buyers (intermediaries) one at a time and at different times, he cannot keep fish for a long time because the product is highly perishable, he has no specific place to sit in the market to sell his fish. Entry into the market is difficult for fishermen for many reasons, mainly because of strong non- cooperation and resistance from the Paikers/retailers. Thus, it is obvious why fishing communities remain poor or are getting poorer over the years, although they trade an important, necessary and every-day commodity. Markets at the primary catch stage are almost completely non-competitive and therefore, exploitation is high. A pond-farmer, who sells fish by the lot or by species, faces one or two 'nikaries' in his area. Sometimes, Nikaries/Beparies establish their own exclusive trading areas, where other nikaries do not interfere or compete openly. Therefore, a fish farmer does not encounter a market with many buyers but rather a situation in which he meets more fellow sellers than buyers. This is particularly the case in remote villages. In areas that are well connected by roads and rail, fish farmers contact wholesalers in secondary or higher secondary markets directly and negotiate prices and quantities of fish with the 'Arat's on their own initiatives. Intermediaries, particularly Aratdars, face competition from other wholesalers, which gives the secondary and higher secondary markets an oligopoly-type structure. Table 21 shows the number of retailers in primary/rural secondary markets by category of fish sellers. A fair number of retailers are competing in the primary retail markets. Table 21. Types of retail fish sellers in the rural markets Fish seller category Av. sellers per market Percent of all sellers Dry fish seller 6.90 21 Preserved fish seller 2.32 7 Live fish seller 5.56 17 Fresh fish seller - Small fish 11.96 36 - Large fish 6.20 19 Source: M-AEP survey conducted by the present author, 1995. Fifty-five percent of fish sellers deal in fresh fish in rural primary markets, 17% sell live fish, and sellers of dry fish constitute 7%. Some vendors of small, fresh fish may be the fishermen themselves, who sell directly to the consumers or to the Beparies. If they are, they sit in open places near the fish market and pay exorbitant tolls to extortionists. Thus they face high transaction costs for selling their fish in the market. Competition is higher in retail markets than in any other kind of market, e.g. secondary or higher secondary markets. Prices of fish are determined by the direct interplay of demand for and supply of fish in retail markets. Markets at all levels have retailing arrangements, that is, a group of retailers that sell fish to consumers. In major cities like Dhaka, Chittagong, Khulna and Rajshahi and in district towns, city corporations or municipalities manage the retail markets. In general, conditions in urban and rural retail markets are not satisfactory regarding stalls, parking, spacing, sanitation, drainage and management. Bargaining, in terms of eye estimation, is still the common practice for pricing fish. Strict grading, sorting and price tagging are ignored in retailing. Quality of the products and a standard for weighing are not enforced at all. In such a situation, cheating and exploitation are unavoidable. Fair pricing according to grade, size, origin and freshness of the fish may not be possible in the absence of standard norms of marketing practices and a lack of enforcement by legal authorities. Thus, market access is limited for the economically weaker section of the consumers. 5.2 Fish-marketing channels Domestic markets and distribution of fish are dominated by a large number of intermediaries. All fish traded internally and for export pass through private channels. Fish distribution usually involves four levels. 5.2.1 Primary markets Markets located in villages, district headquarters or at a crossroads are considered primary markets They are usually near areas where fish are caught. Fishermen bring a variety of fishes (dominated by small fish from both open-water capture and from ponds) to the primary markets. Fifty-two percent of such primary rural markets are held twice a week, 28% three times a week, and 20% are held daily. Of all these markets, 80% are open during morning-hours, particularly for trading milk, vegetables and fish (Market Survey, M-AEP, 1995) and are attended by a relatively small number of sellers and buyers compared to the usual afternoon markets. 5.2.2 Secondary markets The Beparies take the fish bought from the Nikaries/fishermen/primary markets/landing points to the nearest Upazila or riverport markets by road, river or rail to sell to wholesalers or through Aratdars. From these secondary markets/assembly points the distribution of fish moves through different channels to urban markets/higher secondary markets by commissioned agents for wholesalers/Aratdars, or by other kinds of Beparies. Bhairab Bazar, Kuliarchar, Narshindi, Munshigonj, Deborghat (Sunamgonj), and Madaripur are landing points and secondary market centres for freshwater fish species. 5.2.3 Higher secondary markets From secondary markets/fish assembly points, Beparies bring fish to the higher secondary markets serving large areas of consumer/terminal markets. The higher secondary market may consist of one or more wholesale markets or centres, where Aratdars deal in fish. These markets are well connected by road, river and rail. Higher secondary markets have trading connections with several secondary markets. Landing ports like Cox's Bazar, Chittagong, Khulna, Bagerhat, Khepupara, Chandpur and Barisal are higher secondary markets and major landing and marketing centres for bulk quantities of marine and brackish-water fish and shrimp species. Markets in district headquarters can be considered as higher secondary markets that are connected with several secondary markets for the supply of fish. 5.2.4 City or terminal markets Paikers/retailers buy fish from wholesaling centres of higher secondary and secondary markets. They sell fish directly to consumers either through fixed stalls or by vending from head/rickshaws. From the start of the distribution channel for fish - at the secondary markets to the city or terminal markets - intermediaries operating on different levels perform marketing functions like cleaning, sorting, boxing, icing, re-packing and arranging of transportation, etc. At each market level, wholesalers and retailers may be supplying fish to local consumers. The dominant marketing channels (product route to ultimate consumer) for freshwater fish for domestic consumption are as follows: The marketing channel for cultured fish starts with the fish farmer, passes through a number of intermediaries and ends with the ultimate consumer. Major intermediaries who enter the fish marketing chain are Nikaries, Beparies, Aratdars and retailers. Fish farmers do not sell fish directly to consumers in the market. Figure 1. Marketing channels for open-water fish catches Figure 2. Marketing channels at Upazila level market * The Nikari is a seasonal petty fish trader/broker in the rural areas, who buys fish from the pond owners or from fishermen and transports to the assembly point or to Beparies for sale. An investigation for the present study revealed the following channel at an Upazila-level market (Kachua, Chandpur). Beparies handle a large volume of fish. They sell their purchases to Aratdars and some portion to Paikers/retailers. They can be local or non-local traders. Nikaries are local traders. Some Beparies get advance business loans from Aratdars on condition that they will sell their fish through Aratdars. Beparies do not generally hold any trade licenses like Aratdars. This simple channel covers primary and secondary markets up to Upazila. The other important common marketing channe regards production points, primary markets/landing areas, higher secondary markets and consumer retail markets. The intermediaries involved in this channel are as follows: Figure 3. The other important common marketing channel Higher secondary markets cover wide areas. Markets in district towns serve as higher secondary markets (e.g. Mymensingh, Netrokona, Kishorganj, Chandpur, Rajshah, Khulna etc.). Domestic marketing channel (public sector) Brokers generally call auctions conducted by BFDC. There are 30 to 40 brokers in the Chittagong harbour wholesale market. The brokers are local persons and are well organized. Since the BFDC auctions big lots at a time, small-scale sellers are unable to call auctions. The broker has no function, except to facilitate exchange; he incurs hardly any cost, yet earns relatively high profits. He sells to the Beparies and retailer, who come from different places. The Beparies make their purchases from the brokers and, occasionally, they are able to purchase fish directly from BFDC auctions. Beparies sell to retailers through Aratdars (Sabur, 1977). Figure 4. Domestic marketing channel (public sector) 5.2.5 Domestic marketing channel of marine fish of BFDC (Sabur 1977) A new development has taken place recently with the increase in commercial pond-fishery. Fishpond farmers have started to approach Aratdars directly at higher secondary markets. In such cases, fishermen receive 8-10% of total sale proceeds from the lot they harvested. Fish farmers bear transportation costs to the Aratdars, who, in turn, arrange the bidding for open sales of fish to paikers/retailers. In exchange for providing space for fishermen's harvests or ice for the fish, Aratdars get commissions of various amounts from the auction proceeds. For example, in Mymensingh and Kishoregonj markets, commission for hilsa is 3%, for carps 4%, for rohu, catla and mrigal 6.20%. Aratdars need trade licences that must be renewed every year to continue their operations (individual farm licence fee is Tk 300/year). Mymensingh's higher secondary market has 15 Aratdars, and their number has not increased for the last ten years. For newcomers, entry into the market is difficult due to shortage of space and resistance from the Aratdars' association. In lean times, an Aratdar may advance credit to Beparies to secure supply of fish to his Arat (stocking place). From October to January, supply of fish is abundant, as reported by the Aratdars. At the higher secondary markets/wholesaling markets, an Aratdar's monthly income (in Mymensingh) after expenses stands at Tk 30 000 to 35 000. From the higher secondary markets, fish is traded to towns and peripheral primary markets in villages (final consumer markets) through Paikers/retailers. Coulter and Disney (1987) observed that the “ communication between the traders in different markets is generally good and takes place by telephone [today, cellular phones are also used] and this keeps wholesale prices in line throughout the country. The least informed party is the fisherman, because of his physical isolation from the markets. Other factors which weaken the fisherman's bargaining position are his dependence on credit and illiteracy”. The limited number of wholesalers in the market and the close communication they keep with each through their association negate the principle of a competitive market. Inadequate competition among the Aratdars is responsible for Beparies paying relatively high commissions and for fish farmers/fishermen receiving lower prices for their products. Open auctioning of and bidding for fish lots by wholesalers, who are selling to Paikars/retailers, make the market competitive at the retail level of the final consumer market. Hence, the market functions differently for different players. Opportunities for exploitation exist from the farm gate to the higher secondary markets. 5.3 Market infrastructure and physical facilities The market for fish is crowded at any level. Infrastructure facilities are important for marketing fisheries products domestically and for the physical development of markets. In cities, towns and river ports, city corporations and municipalities often provide infrastructure facilities in the form of pucca roofs, tinshades, pucca platforms, raised selling places and water connections. These physical facilities are emerging even in primary and assembly markets in rural areas through the initiatives of local governments and market management committees. However, washing and cleaning of spaces dedicated to selling fish, and disposal of wastes and residues do not meet hygienically acceptable standards. Physical facilities need to be improved. Fish traders and market managers need to be educated in maintaining sanitary and hygienic places for handling fish. During the summer and rainy season, fish spoil quickly. This results not only in lower prices but also poses health hazards. Wholesale fish markets are located at secondary, higher secondary and in terminal markets, which may be located at Upazila headquarters, river ports, towns and in cities. The spaces in these markets are generally inadequate for handling highly perishable commodities like fish. However, ice blocks are available in almost all cities and river ports, but not in all Upazila wholesale markets, where waste is still high due to the deteriorating quality of the products sold. The Ministry of Fisheries and Livestock, through one of its farms, the Bangladesh Fisheries Development Corporation (BFDC), has developed domestic fish marketing facilities (physical infrastructures for fish landings and wholesaling) in the secondary and higher secondary markets (channel v). These are harbour and fish landing centres in the coastal regions of Chittagong (fish harbour for deep see fishing trawlers), Cox's Bazar, Barisal, Khepupara, Khulna, Patharghata, Kaptai, Rangamati and Rajshahi. Assembly centres with proper facilities for berthing, landing and auctioning, with ice plants, cold storage, freezer storage, freezer plants and transport facilities have been developed in landing markets. A modern fish-landing centre was established in Chittagong in 1994 with Japanese assistance for a mechanized fishing fleet of 2 000-3 000 boats operating from the Chittagong area. In this centre, about 45 000 t of fish can be handled at a time. Fishermen Cooperative Societies also run a major fish-landing centre in Chittagong. The supply of ice much improved during the 1990s. In Bangladesh, the main processing activities for prolonging the shelf life of harvested fish are drying fish and packing fish in ice. The process of drying also adds a piquant flavour to the fish, which some consumers like. BFDC has established 11 ice plants with a capacity of producing a total of 197 t of ice blocks a day. These plants are in Chittagong-2, Cox's Bazar-1, Rangamati-1, Dhaka (Pagla)-1, Mongla-1, Patharghata-1, Barisal-2, Rajshahi-1 and Khepupara-1. BFDC owns 11 cold storage units with a storage-capacity of 635 t and four freezer plants with a freezing capacity of 61 t (blast freezing 43 t, plate freezing 12 t). At the private levels, many ice plants are operating in and around Dhaka City, Munshigonj, Comilla and Chandpur. Many ice plants have been established in Cox's Bazar, Khulna, Chittagong, Barisal, Khepupara, Sylhet, Patherghata and in other fish landing areas of the coastal belt. As per 1993 figures, Bangladesh has 227 ice plants with a total capacity of producing 4 280 t of ice per day. Most mechanized fishing boats carry ice on board. During times of peak hilsa harvest, fishermen face a shortage of ice. In the face of an expanding private sector, more ice plants and cold storage plants are needed. Since 1992, BFDC has been directing its development activities towards building further landing facilities and ice plants. Some of the developed landing facilities in Khepupara, Patharghata and Barisal remain unutilized and are not claimed by private traders either. Arrangements should be made to hand over these facilities to the private sectors to utilize them better once they are built. 5.4 Fish traders' margins Fish production centres are spread throughout remote areas in Bangladesh. Thus, a well-organized marketing system is necessary to transport fish to consumers in every region. A marketing system for fish includes transportation to and from the market, handling, storing, packaging, sorting, merchandizing, etc. An efficient marketing system enables the consumer to obtain fresh fish fresh at a reasonable price. Total cost of marketing fish includes all costs incurred by different types of intermediaries in the chain from producers to ultimate consumers. Marketing margins include costs of marketing and profit or loss incurred by all intermediates in the marketing channel. The marketing margin is the price intermediaries charge for all functions they perform. (Kohls and Uhl, 1980, p.230). The marketing cost and margin of intermediaries in Mymensingh higher secondary market per quintal of fish (freshwater) is shown in Table 22. It depicts the cost incurred by different intermediaries involved in the marketing channel from fish farmer ® Bepari ® Aratdars/wholesaler ® Paiker/retailer. Total cost of handling fish (mixed species) per quintal from farm gate to ultimate consumer stands at Tk 661 on average (Tk 6.61/kg). Table 22. Marketing cost (Tk) of intermediaries per quintal of fish handling in Mymensingh town Intermediaries involved Cost items Total Percent of total cost Bepari Aratdar Retailer Transportation 107 (27%) - - 107 16 Wages 22 (5%) 34 (27%) 30 (22%) 86 13 Wastage - - 10 (8%) 10 2 Market tolls 9 (2%) 12 (9%) 10 (8%) 31 5 Aratdar's commission 215 (54%) - - 215 33 Containers & baskets 8 (2%) - 6 (5%) 14 2 Personal expenses 40 (10%) 77 (62%) 66 (49%) 182 28 Telephone - 2 (2%) - 2 0.37 Storage and icing - - 12 (9%) 12 2 Total 401 (100%) 125 (100%) 135 (100%) 661 100 SOURCE: Mia, 1996. NOTE: Figures in parenthesis indicate percent of total cost. Of total marketing costs, share of Aratdars' commissions became the highest component, followed by intermediaries' personal expenses (entertainment, food and drinks included). Of total costs, transportation cost amounted to 16%. Beparies pay 54% of their total costs in commissions to Aratdars, followed by 27% for transportation. Retailer's highest cost item was their personal expenses. Retailers often bring fish to sales spots with the help of hired labourers. Beparies are involved in marketing as purchasers of fish from fish ponds or transporting fish from assembly markets to Arat centres. Beparies' costs comprise transportation, wages, market tolls, Aratdars' commissions, containers, etc. Total cost per quintal incurred by Beparies was Tk 401 Tk 125 by Aratdars and Tk 135 by retailers. Marketing margins earned by Beparies and Paiker/retailer are shown in the following table. Table 23. Marketing margin earned by Beparies and Paiker/retailers Intermediary Purchase price Sale price Gross margin Marketing cost Net margin (1) (2) 3 = (2-1) (4) 5 = (3-4) Bepari 2 798 3 507 709 401 308 (11%) Paiker/retailer 4 193 5 022 829 135 695 (17%) SOURCE: Mia, 1996. NOTE: Figure within parenthesis indicates profit as percentage of purchase price. Farmer's share to consumer's price: On average, fishermen and fish farmers get 56% of the price paid by consumers, that is, 44% of the consumer price goes to intermediaries. Beparies and retailers earn 11% and 17% profit respectively, which may not be considered a high return on capital invested. Islam (1982) observed that for hilsa, the price per maund (37.33 kg) paid in Rajshahi was Tk 696. He reported that fishermen were paid a spot price of Tk 387 per maund for their catches. That is, fishermen received 56% of the price consumers paid, while the middlemen involved in the marketing process siphoned off 44% of it as profit and cost for their marketing services. Profits taken by fish traders may appear high but are not considered to be excessive in comparison to profits from other agricultural commodities like Jute fibre (farmers' share is 56% with processing activities (Poddar, 1992); farmers' share for Aman is 72%, Boro 71%, (Ismail, 1999)). Fish is a perishable commodity, and transportation is more hazardous for fish than for crop products. Judging from the modest profits of intermediaries and their reasonable marketing margins, fish markets appear to be competitive and efficient. Marketing margins in imperfect markets are likely to be higher because of abnormal profits than they are in competitive markets. 5. 5 Fish farmers' access to credit Farmers trade agricultural products and commodities in an atomistic, competitive market, where the margin of profit is usually minimal, barely covering the cost of labour. Farmers of agricultural commodities face a high degree of uncertainty in terms of prices and fluctuating production-yields. Low capital and low productivity is the norm for agricultural production in developing countries. Therefore, credit extended to producers can play a vital role in sustaining and increasing levels of productions by small-scale entrepreneurs. The credit situation encountered by farmers of fish ponds is depicted in Table 24. Table 24. Institutional and non-institutional credit received by respondents according to different sizes of farms Institutional credit Non institutional credit Farm size Received Not Received Total Received Not Received Total Small 4 (8.70%) 42 (91.30%) 46 (100%) 9 (19.57%) 37 (80.43%) 46 (100%) Medium 4 (10.82%) 33 (89.18%) 37 (100%) 4 (10.81%) 33 (89.19%) 37 (100%) Large 10 (30.30%) 23 (69.70%) 33 (100%) 5 (15.15%) 28 (84.85%) 33 (100%) All 18 (15.52%) 98 (84.48%) 116 (100%) 18 (15.52%) 98 (84.48%) 116 (100%) SOURCE: Field Survey, 1999. NOTE: Figures in parenthesis show percentage share. Only 16% of fish farmers had access to institutional credit (banks/NGOs). Altogether, 31% of fishpond farmers obtained loans from institutional and non-institutional sources (friends/relatives/money lenders) in 1998-99. Many farmers operating fish ponds do not have access to institutional financing, although they are engaged in an apparently profitable agricultural activity. Small-scale farmers of fish ponds, on average, received Tk 6 461 (11% of variable costs; Table 16) in credit. Medium and large-scale fish farmers, who were able to obtain credit, covered all their variable production costs of culturing fish. However, fish farmers' access to credit is still limited. Table 25. Average credit received from institutional and non-institutional sources by respondents according to different sizes of farms Farm size Institutional credit received Non-institutional credit Per-farm credit (Tk) (Tk) (Tk) Small 6 250 6 555 6 461 Medium 90 000 8 250 49 125 Large 65 300 85 060 71 887 All 41 625 24 450 43 203 SOURCE: Field Survey, 1999. Ahmed (1983) estimated that about 85% of the fish produced in Bangladesh is consumed fresh and 15% is marketed in cured form (dried, dehydrated, smoked or salted). About 74% is sold through wholesalers and retailers. Fishermen used 7% of their catches for household consumption (Sanjeeb, 1999). Secondary markets have differentiated, oligopoly-type structures, each one trading in different species of fish, having varying sizes of each species and from different sources of origin. Each intermediary can influence prices to the extent of price elasticity of demand for each size of fish and consumers' preference for origin of fish. A Bepari is a trading intermediary who collects products directly from producers or from primary markets for further transfer of products/commodities. Paikers – a small-scale wholesaler who may be involved in retailing at the same time. This is revealed by a market survey conducted by the author. Coulter and Disney (1987) reported the following numbers of Aratdars in the higher secondary markets: Dhaka i) Swarignat 72 ii) New market 12, Narayangonj 12, Chittagong 54. There are four BFDC cold storage plants in the landing center of Cox's Bazar; but they remain unused for most of the time because BFDC, at present, does not preserve fish at Cox's Bazar. There are two cold storage units in Chittagong, but they are not available to private traders. Fishermen's shares and marketing margins for fish sold in Dhaka and Pabna in 1981 were analyzed for Hilsa, Ruhu and Singhi by Ahmed (1983), who observed fishermen's shares in prices paid by consumers between 51-63% for these fish.