Article on Agricultural Marketing Md.

Faruk Hossain (ID # 35)

Research Article on

PRICE DISCRIMINATION OF RICE: FACTORS CAUSED TO DEPRIVATION OF

FARMERS FROM FAIR PRICE

Agricultural Marketing
[Course No: 421]

Md. Faruk Hossain

Roll No – 35
Section – A
BBA 12th Batch (Marketing)
University of Dhaka

Date of Submission: September 16, 2010

1|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

TABLE OF CONTENTS

S. No. Topic Page No.

1. Abstract 03
2. Introduction 03
3. Literature Review 04
4. Conceptual framework and Hypotheses development 05
5. Research Methodology 06
6. Analysis, Findings, & Discussions 09
7. Conclusion 09
8. Limitation of the study 09
Bibliography 10

Appendices i-x

2|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

Price Discrimination of Rice: Factors caused to

Deprivation of farmers from fair price

Md. Faruk Hossain

BBA 12th Batch, Department of marketing, University of Dhaka, Bangladesh

__________________________________________________________________________________
Abstract
This study is concerned with the price discrimination of the Rice Farmers who don‟t get fair price of
their cultivated rice despite bumper production in each year. Several factors and causes might be
responsible for that. This study will be tried to seek these factors and variable by conducting mainly
Exploratory and Descriptive Research, where exploratory research was conducted through qualitative
data, and descriptive research was conducted through field survey. Around fifty samples have been
taken from the relative population of farmers from a single district. After collection and analysis of
data, conclusion will be made by qualitative research that depicted three main factors that affect most
to the farmers from having fair price and creating fair price deprivation. The result might affect also
on significant decision and implication of both in General and Managerial Implication.

Keywords: Rice, Price, Price Deprivation, Rice farmers.

__________________________________________________________________________________

Introduction
Rice holds the primary crops commodity in Bangladesh where it is the main staple food. It
also holds the greater percentage of food crops cultivated here, because lots of farmers live
on Rice Cultivation. Despite large amount of production, Bangladesh has still to import Rice
to balance the consumption (IRIN News, 2008). Due to the worldwide shortage of Rice
Production (Bangladesh News, 2008), the price of Rice has been soaring frequently, for
which import price has been increasing day by day. On the other hand, though the full
swing with bumper productions of Rice in every year, farmers are still deprived of fair price
(The Daily Star, 2010). So it is always needed to seek for the factors and causes for what
farmers are not obtaining their deserved price of the Rice Paddy, where at the same time
consumers have to purchase Rice at a soared price. This study has sought to find out the
factors caused to deprivation of farmers from fair price of Rice despite the bumper
production of rice every year. Here, the main broad objective or aim of this study was “to

3|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

seek out the causes and factors of depriving the farmers from obtaining fair price of Rice after the
cultivation by comprehensive review of literature and empirical studies.” And the specific
objectives were: to seek for the factors of price deprivation, to evaluate these factors, to explain the
factors and causes, to suggest some general remedies to ensure the fair price of Rice to the farmers.
Through the rigorous literature review and the empirical analysis, the evidences were found
that some factors are undoubtly highly influential to the rice cultivators that drive them to
sell the commodity in a lower price.

Literature Review
Through the qualitative research wish secondary data and quantitative research through
field survey and empirical analysis, some basic variables have been found to strengthen the
overall study. Though farmers conduct bountiful rice production, the biggest problem of
farmers’ remains to be solved, that is poverty (Xuan, 1995). Xuan (1995) also depicted that
the main cause of that poverty of farmers is their limited capability in managing their
resources for sustainable development. In another study, irrigation inefficiency is mentioned
a cause to low price of Rice paddy (Kan, 2004). Due to irrigation inefficiency, farmers get the
crops harvested in inadequately dried form that offer them low price from the middlemen
(Priyo News, 2010). Mondal (2010) opined that middlemen and millers are the most
influential key factors who collected rice paddies from farmers with a very low price. He
also stated that there is the need for devising the procurement mechanism in such a way that
the growers or farmers, not the middlemen or the rice-millers, are benefitted most from the
government procurement drive. The farmers must get the right price of their produce so that
they feel encouraged to grow more food to feed the nation. Majumder et al. (2009)
mentioned predominant tenancy arrangement as the factor of not getting fair price of rice
because the crop share tenants were unable to invest on modern farm inputs. Regional
Imbalance and Information gap can be big factors or causes for farmers not to have expected
price of the crops (Ullah, 2008). Ullah (2008) also depicted preservation crisis, Increase of
food production, and Transportation as the basic causes of selling Rice with very low price.
In another study, it was suspected that food production and distribution are centrally
controlled by giant, globe-spanning business enterprises (Barker, 2007), that might be the
cause not to getting fair price for the farmers. In an IMF country report on Bangladesh,
Inadequate marketing infrastructure of agro-based products and farmers’ getting of
inappropriate price of their products are considers two of the major impediments to poverty
reduction in several districts in Bangladesh (IMF, 2004). Regarding and considering all of

4|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

these facts, this study was conducted to find out the causes of deprived pricing to the
farmers and the ways of mitigating these effects regarding empirical evidences found out.

Conceptual framework and Hypotheses development

1) Conceptual framework
This research was concerned with the variables and factors that cause for failing to ensure
fair price to the Rice farmers who cultivates bumper rice every period. Seeking out these
factors through the literature study, Middlemen & Millers effects, Information gap,
Knowledge of Price, Preservation crisis of rice, Imperfect transportation & distribution
facility, and inadequate marketing infrastructure were used as main treatments or
independent variables which were tried to be manipulated (Xuan, 1995; Barker, 2007; Ullah,
2008; Mondal, 2010). Here, highly increase in food production and Rush money expectation
of farmers (IMF, 2004; Ullah, 2008) will be used as Extraneous Variables that might affect the
treatments to perfectly create the effect on dependent variable. Here, dependent variables
are the outcome of the effect on Farmer Price, as well as the evaluation and control of the
treatments on the Farmer Price. The Conceptual framework used in this study is mentioned:

Figure-1: Schematic Diagram of Conceptual Framework / Model

*Source: Original development and proposed

5|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

2) Development of Hypotheses
Through the extensive literature review and variables sought, seven different primary
concepts were used as the Hypotheses, among which, the hypotheses that were not rejected
by empirical evidences, were used as the predicted factor statements that might affect rice
farmers to get fair price of rice. All hypotheses were tested through the one sample t-test

Hypotheses developed in this study

H1: Due to the Middlemen and Millers, farmers don’t get fair price of Rice despite bumper production.
H2: Information gap is one of the main factors of fair Price deprivation.
H3: Farmers don’t have enough knowledge of current price that lead them to sell their Rice with very low price.
H4: Considering Preservation crisis, farmers sell Rice with a minimal price.
H5: Due to Imperfect transportation and distribution facility, farmers don’t sell their crops perfectly with fair
price.
H6: Inadequate Marketing Infrastructure also causes to hinder to ensure the fair price to the farmers.
H7: Highly increase in food production and Rush money expectation of farmers can affect the treatments to make
effect on the farmers’ fair price having.

Table-1: Eight Hypotheses developed for this study

where the data have been found through the empirical evidences regarding field survey and
observations.

Research Methodology
Both Exploratory and Descriptive Research have been conducted in this study. In
Exploratory Research design, extensive qualitative research has been conducted by
collecting secondary data. After that, descriptive research has been designed to manipulate
the treatments that were found through literature review and qualitative research. Here,
rigorous questionnaire has been designed to conduct a survey on farmers to influence the six
treatments on the dependent variable. Around fifty samples were drawn from the.
Descriptive research was based on both quantitative and qualitative. In quantitative, data
collection and analysis were conducted, and decision making was based on qualitative
research. Research was conducted in the area of Munshiganj to conduct survey on fifty
samples of farmers. Farmers’ price attitude toward the treatments as well as the
questionnaire was used as the Instruments. Data analysis was not much complex but through
an observable process where mainly measures of central tendency and measures of frequencies are
conducted. Also, Crosstabs, Histograms, and t-test are highlighted for the data analysis. The
SPSS and MS Excel applications were used to analyze the data. The decisions and

6|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

conclusions were based on the interpretation of the analyzed data. Finally, decisions are
made to use empirically with few limitations. The Implication of the study would be highly
dispersible in several sectors. As a part of General Implication, this study would help the
future study conducted based on or relevant to this issue as references. On the other hand,
as a part of Service or Managerial Implication, this study would help the country policymakers
to design the policies in agricultural sectors, as well as help to reduce the poverty line.

Analysis, Findings, & Discussions

The analysis is based on three parts. Based on each part of analysis, each variable has been
analyzed, and finally t-test was used to test the hypotheses whether the Null Hypotheses
(H0) would be rejected or not. Data were input from the questionnaire used to conduct the
survey. For background information, data were input from 1 to 5 point scale measurement
regarding each category. Later, for the variable based question, Yes-No type questions were
used where 1 refers to ‘Yes’ and 0 refers to ‘No’ in the analysis input data. Finally, 5 point
Likert Scale is used to analyze the variables from Totally Disagree point of -2 to Strongly Agree
point of +2 along with a Neutral value of 0. Regarding the painstaking analysis, the following
findings can be shown based on each variable:

Frequency Distribution
For the variable Middlemen and millers effects, according to the following table, analyzing
the fair price mean, it was depicted by most of the farmers that Middlemen and millers
affects most for not having the fair price. Here, the mean is 0.14 that indicates that most of
the farmers supported this as one of the important cause of fair price deprivation. On the
other hand, 43 (86%) of 50 farmers opined that they generally don’t get the fair price from
the middlemen. For Information Gap, at least 36 (72%) of the respondents provided opinion
that they don’t get adequate information from the market about Rice. For this reason, they
don’t have a fair price of Rice. So it is a strong factor to be considered. On the other hand, for
Knowledge of Price, regarding the knowledge of price, though more than 50% (26) of 50
respondents opined that they have enough information about the price of rice, it might not
be a great factor of not having fair price. For Preservation Crisis of Rice, 60% of the
respondents don’t have adequate preservation facilities. Similarly, for Imperfect
Transportation & Distribution facilities, a large number (76% of 50) of respondents don’t

7|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

Rush mone
Fair price Inperfect expectation of
from the transportation & Adequate the farmers
Middlemen & Adequate Knowledge of Preservation distribution Marketing (Extraneous
millers Information price facility of Rice facilities infrastructure variable)
Sample size (n) 50 50 50 50 50 50 50
Mean .14 .28 .52 .40 .24 .66 .34
Standard Deviation .351 .454 .505 .495 .431 .479 .479
Frequency No 43 36 24 30 38 17 33
Yes 7 14 26 20 12 33 17
Frequency (%) No (%) 86% 72% 48% 60% 76% 34% 66%
Yes (%) 14% 28% 52% 40% 24% 66% 34%
*Source: Original Calculation

Table-2: Frequency Distributions of variables (details are in APPENDIX-I & II)

have enough facilities. For the Inadequate Market Infrastructure variable, most of the
respondents agreed that they have enough buyers in the market. Regarding all of these
analyses, it is highly recommended that, Middlemen and millers effects, Information Gap, and
Imperfect Transportation & Distribution facilities be the most influential factors of fair price
deprivation.

Cross-tabulation
In Cross tabulation analyses, the needs for the facilities were found which were proved as
lacking as well as pertaining as main variables. In APPENDIX-III, the detailed crosstabs are
included. From these, it can be depicted that, 41.7% agreed and 36.1% highly agreed with the
needs for adequate information of the 36 respondents who don’t have enough information.
On the other hand, approximately 53% of the farmers, who don’t get fair price of rice,
opined that middlemen and millers are the main causes of deprivation of fair price. Total of
66% farmers are not aware of Rice Market of whom, 70% feel the need for Enough
Information Sources. 75% of the respondents who have less Price knowledge of Rice feel the
need for the knowledge of Price Structure. 73.3% of the respondents who lack the Availability of
Preservation Facilities opined that they need Enough Preservation Facilities. It is surprising that
approximately 95% of the respondents who lack Transportation & Distribution Facilities feel
that they need immediate remedy of Transportation & Distribution problems. Around 66%
respondents opined that they get enough buyers in the market. Following on all these
crosstabs, it can be recommended that Information gap, Middlemen & millers’ effect,
Imperfect transportation & distribution facilities be the important factors of fair rice price
deprivation.

8|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

Hypotheses Testing (One sample t-test)

Regarding the hypotheses testing of these variables based on one sample t-test, it can be
depicted that, only Null hypothesis (H0) would be rejected only for the Hypothesis-1 and
Hypothesis-2. And there are not enough evidences that H0 would be rejected for the other
hypotheses.

H1 H2 H3 H4 H5 H6 H7

Confidence Interval 95% 95% 95% 95% 95% 95% 95%

Confidence level ±1.96 ±1.96 ±1.96 ±1.96 ±1.96 ±1.96 ±1.96
Neutral value 0 0 0 0 0 0 0
t 1.680 7.180 5.093 4.599 12.079 7.523 -0.799
Rejection of Null Hypothesis H 0 Rejected Not Rejected Not Rejected Not Rejected Not Rejected Not Rejected Rejected

*Source: Original Calculation

Table-3: Hypothesis testing (details are in APPENDIX-IV)

So, from this point of view, it can be said that Middlemen and millers, and rush money
expectation of the farmer (extraneous variable) would be the main factors of fair price
deprivation of rice.

Extraneous variable
In this study, the analyzed extraneous variable “Rush money expectation of farmers” should be
highly considered because, in all analyses such as: frequencies, crosstabs, and t-test, it indicates
that this variable can highly affect all of the treatment variables.

Conclusion
Regarding all of these qualitative research, literature study and empirical study evidence, It
could be concluded that ‘Middlemen and millers’ effect’, ‘Information gap’, and ‘Imperfect
transportation & distribution facilities’ are the main and influential factors that drive the
farmer to have a very low price and deprivation of fair price for Rice. Also the external factor
‘Rush money expectation of farmer’ might affect the above mentioned factors.

Limitation of the study

Though no study is perfectly universal, this study got some limitations too. The sample size
is only 50 which might not represent the whole farmers’ tendency adequately. Similarly, the
empirical study was conducted only a single district that might not also be a perfect
representative of overall population. All the farmers might not have provided information
correctly that might have injected the faulty information and delivered inaccurate output.

-------------------------

9|Page
Article on Agricultural Marketing Md. Faruk Hossain (ID # 35)

Bibliography

Barker, Debbie, (2007). „The Rise and Predictable Fall of Globalized Industrial Agriculture‟,
International Forum on Globalization (IFG), San Francisco, USA.

Bangladesh News Online, (2008), ‘Worldwide shortage of rice shoots prices soaring‟,
Available from: http://www.independent-
bangladesh.com/200802212190/business/worldwide-shortage-of-rice-shoots-prices-
soaring.html [Accessed May 22, 2010]

Hossain, Nazmul, 2000. Ecommerce in Bangladesh: Status, Potential, and

Constraints, Available from: http://www.jobsproject.org/content/publication/E-
Commerce_in_Bangladesh_status.pdf [Accessed April 22, 2010]

IMF, (2004), „Bangladesh: Preparation of Poverty Reduction Strategy Paper‟, IMF Country
Report No. 04/279, 2004.

IRIN, (2008), BANGLADESH: „Rice price stabilises but shortages continue‟, Available
from:
http://www.alertnet.org/thenews/newsdesk/IRIN/d08bdc8ed113a42989155893cca
08dec.htm [Accessed May 22, 2010]

Kan, Chun, E., (2004). „Improving Irrigation Management Systems for Rice Farming‟,
Available from: http://www.agnet.org/library/eb/547/eb547.pdf [Accessed May
23, 2010]

Majumder, M. K., Mozumdar, L., Roy, P. C., (2009). „Productivity and Resource Use
Efficiency of Boro Rice Production „, Journal of Bangladesh Agricultural University, 7(2):
247-252, 2009.

Mondal, M., Abdul, Latif, (2010), „The middlemen rule the roost‟, The Daily Star, May 6,
2010.

Priyo News (2010), „Boro harvest continues in full swing with bumper productions‟,
Available from: http://priyo.com/news/2010/may/21/40786.html [Accessed May
23, 2010]

The Daily Star, (2010), „Boro harvest continues in full swing with bumper productions‟,
Available from: http://www.thedailystar.net/newDesign/news-
details.php?nid=137151 [Accessed May 22, 2010]

Ullah, Mr., Shahid, (2008). ‘Budget 2008-09: Agriculture, Food security and Public
Service Sectors’, Paper Presented at CIRDAP, Dhaka, Bangladesh, April 20, 2008.

Xuan, Vo-Tong, (1995). „Priorities for Rice Research - A View from Developing Countries‟,
paper presented at the Festival of Rice, Montpellier, France, Oct. 6-8, 1995.

10 | P a g e