An Enquiry into the Contribution of the Fish Marketing and Distribution System to Economic Indicators in the Khulna City of Bangladesh

Abstract

A number of wholesale and retail fish markets in Khulna city were studied on quantitative and qualitative data collected at each. The qualitative data included a description of the market and the traders operating in it. the typical nature of indebtedness, and any associations or co-operatives based at the market. The quantitative data included information on the number of traders and their costs, business revenues and net incomes. In the Khulna fish distribution chain the aratdars, the commission agents who organise the wholesale market may be able to collude to control the passage of fish through the arats, wholesale markets in the city. The distinctive stages in fish marketing are: (1) fish carching. (2) fish collecting/assembling. (3) fish wholesaling in arats and (4) fish retailing. Fish catchers are very numerous, very dispersed, lack financial capital and lack access to good information. Two types of participants perform the function of bulking up the fish and transporting it to the Khulna market: Mahajans and Beparies. Mahajans are independent traders most of whom own the vessels and gear used by fishermen. Aratdars charge a commission of 2% or more on sales by independent customers. but 5%-7% on sales by borrowers. Economic Value Added/Costs measure of economic surplus or economic rent suggests where extra-normal profit is being earned relative to the costs of purchasing the inputs needed to create it. There may indeed be some small-scale collusion, but relative to the bigger picture, summarised in the cost of inputs, including fish, the values were very low (the Rupsha arat had a value of 2.5). Economic Value Added/kg. This second measure of economic surplus or economic rent is interpreted in the same way. The retail markets in Khulna have an aggregate value of 16 taka per kg. the arats 3 taka per kg. Probably 10%-40% of the retailers who bought at an arat did so on credit while 50%-70% of the sellers had benefited from an advance from the aratdar. The objective of an aratdar in advancing credit is/commit suppliers or purchasers to his business. Hence it is intentionally anti-competitive, The loans to retailers, for example, are relatively small scale and short term, lasting the length of the trading day from the early morning auction to the end of the day's retail activity. Retailers are generally able to buy from the cheapest source. The loans to collectors are, at least potentially, more anti-competitive. Again, the loans are typically short term (say? 7-10 days) but for large amounts and do have the potential to distort the market. Although the rates of interest charged on the loans are extremely high - probably in the order of 2.5% for a 7-10 day loan, which is about 200-350% per annum - the loan is very high risk. The maximum value in Herfindahl-Hirschman Index is, therefore, 10,000 (the square of 100% in a monopoly situation) and the minimum value approaches zero (when there are an infinitely large number of enterprises in the industry). In the more controlled situation at the Skid Ghat No 5 market the value is about 800. A qualitative judgement is that entry into most activities in the fish marketing chain in Khulna is not difficult. By itself membership of co-operatives and associations is not a restrictive practice, but if an association is active there is an indication that it exercises its power in some respects which in turn facilitates the use of commercial might in other areas. The Retailers Co- operative at New Market has demonstrated the power that can come with collaborative action, but against its landlords the Khulna Development Association, not the wholesalers or customers.