Home ›› 28 Nov 2021 ›› Front
The government has criminalised agro business without licences with punishment ranging from a year’s imprisonment to Tk 1 lakh in fine or both.
For a repeated offender, the punishment will be doubled.
The Agricultural Marketing Rules 2021 – framed under the Agricultural Marketing Act 2018 – came into effect on November 3, followed by a gazette notification issued on October 26. Through this, the agriculture ministry has made it mandatory for everyone involved in agro businesses to get a licence from the Department of Agricultural Marketing (DAM).
Anyone found operating without a licence will be punished under the law.
But officials said DAM was adamant about enforcing the act and the rules, adding that the new rules gave specific definitions to agro importers, exporters, wholesalers, warehouse owners big and small, commission agents, marketing teams, individuals and organisations involved in contract farming and marketing, dealers, departmental heads, retailers and fair prices.
It also has detailed provisions for implementing the law more effectively. Marketers, importers and exporters of agro goods will have to take separate licences depending on their specific involvement in this sector.
Licences issued by the department are now mandatory for anyone under the abovementioned criteria, though the Office of Chief Controller of Imports and Exports – under the commerce ministry – has been issuing import and export licences since 1973.
Dhaka University’s Prof Selim Raihan, also the executive director of South Asian Network on Economic Modeling (SANEM), told The Business Post that it was necessary to bring the whole agro marketing sector under a formal process.
“It has a big potential for exports, and traceability should be an important factor in this regard. Licensing is important for the local market to ensure accountability. The authorities should make an effort to curb irregularities and bribes in the licensing process,” he said.
Raihan noted that if businesses were extorted for getting licences, it could hold back this sector. “Besides, DAM is a relatively new agency and lacks adequate manpower. The existing manpower has to be skilled to prevent complications in the licensing process – which should be digital, transparent and simple. The law should have provisions for preventing irregularities centring transactions for licences,” he said.
Providing more details about these new rules, DAM’s Director General Mohammed Yousuf said the government had formulated a law in 2018 for agro goods marketing, and later formed DAM under this law.
“Now, to enforce this law properly, the government issued the new rules after three years of discussions and reviews. This move was not implemented to oppose anyone else,” he said.
“It is not possible for the commerce ministry to monitor the marketing processes of all sectors. If the Office of Chief Controller of Imports and Exports could handle everything, then why was this law formulated? The government established DAM because they deemed it necessary. Besides, an online application process and speedy issuance of licences will ensure that businesses face no hassle at all,” Yousuf said.
These rules have been introduced to ease monitoring of the agro goods business community, he noted.
Agro business licensing fees
DAM will issue separate licenses based on different criteria, and those will have to be renewed annually. For cold storages, the licence fee is Tk 1,500, and renewal fee is Tk 800.
For individuals and entities involved in contractual farming and marketing processes, agro goods processing companies, owners of large warehouses, exporters, importers and suppliers, the licence fee is Tk 1,200, and renewal fee is Tk 600.
For owners of cool chambers, small warehouses (with capacities of 10-100 tonnes), retailers, wholesalers, stockpilers, dealers, millers, commission agents and brokers, the licence fee is Tk 1,000, and renewal fee is Tk 500.
For small middlemen, the licence fee is 300, and renewal fee is Tk 200. For those responsible for weighing and collecting samples, the licence fee is Tk 100, and renewal fee is Tk 50.
The licences will have to be renewed within 60 days of their expiration, and a 10 per cent late fee will be applicable for delays.
The authorities will suspend the licence if anyone is found to be involved in concealing information related to their businesses, or market goods that are harmful to public health. Licence can also be suspended if a business’ activities disrupt its neighbours, pedestrians, individuals or organisations.
DAM sets fair prices, profits
Due to the free market economy, the authorities concerned could not control commodity prices directly. However, as part of the new rules, DAM has set fair prices and highest rate of profits for agro goods at production, wholesale and retail stages – on a case by case basis.
The highest rate of profits for a particular product will be 30 per cent – 40 per cent at the production stage. After adding this markup, profit rates will be set at 15 per cent – 25 per cent at the wholesale stage, and 25 per cent to 30 per cent at the retail stage.
This means, a farmer can charge up to Tk 140 for an agro product if the production cost is Tk 100. At the wholesale level, adding the farmers’ profit margin with transportation costs and warehouse commission, the price for the same product will be Tk 175.
At the retail level, traders’ expenses and profit margin will be added to the product’s price, and consumers will be able to buy it for Tk 227.50.
For example, if the production cost of a particular variety of rice is Tk 32 per kg, its maximum price at the production level must not be higher than Tk 41.60, at the wholesale level it must be Tk 47.84 or less, and at the retail level it must be Tk 69.80 or less.
‘Pricing structure impractical’
Terming the pricing structure impractical, Consumer Association of Bangladesh (CAB) President Golam Rahman said, “This pricing system will not be helpful in safeguarding the consumers’ interest. The fair price and profit margin should be set keeping the market rates affordable. The government should reconsider the pricing structure, and lower the maximum profit margin.”
He pointed out that under the current model, a consumer will have to pay Tk 127 more for a product that has a production cost of Tk 100.
“This is unacceptable. The authorities should set the price and profit margin of rice – which is a staple food – to a figure which will keep the prices of coarse and fine varieties to Tk 50 and Tk 60 respectively at the consumer level,” he said.
Prof Raihan said that the price of agro goods rises and falls with the changing of seasons. The pricing system is open to the risks of irregularities. “We need more transparency to ensure that agro goods are bought and sold at fair prices. The authorities concerned should conduct reviews to fix prices.”
DAM’s Yousuf told The Business Post that they set a fair profit margin. “Farmers are suffering losses during the peak season, while consumers are buying the agro goods at higher prices during the off season. To address such issues, we have set fair prices at three phases through reviews to monitor the market,” he said.
Yousuf clarified that they would verify challans at all phases.
“I admit that the move will be difficult to implement, but if the farmer gets subsidies, enforcing the fair price system will be easier. The new rules will be implemented as part of a long-term plan. We have requested more manpower to help us implement the new rules. After getting the required manpower, we will enforce the decision in phases. This will benefit farmers, traders and consumers,” he insisted.
Markets to be established with gazettes
Under the new rules, interested parties will have to apply to DAM for establishing gazetted markets. The department has also made policies for announcing, operating and controlling these markets.
After scrutiny, the department will issue a gazette notification for a particular market. These agro markets must have at least five wholesalers each, and show their wholesale and retail prices in a public place inside the market.
Besides, the traders will have to preserve receipts for every product they purchase.
The department has enforced rules on how super shops will run their businesses, such as making it mandatory for them to package agro goods. The packaging will have to show nutritional facts, percentage of ingredients, expiry date.
Super shops will also have to inform the department about their brick-and-mortar locations and other relevant details.
The government will form a “National Agro Marketing Coordination Committee” with the agriculture minister as advisor, and agriculture secretary as member secretary.
Separate agro marketing committees will also be formed at the district, upazila and market levels, and those will run the gazetted market. Upazila and market committees will play an active role in curbing disruptions centring transportation of agro goods, and extortion.
Currently, the commerce ministry, Bangladesh Trade and Tariff Commission, Directorate of National Consumer Rights Protection, and Competition Commission are carrying out the market management, control and monitoring activities.
