MAJOR DOMESTIC VALUE CHAINS FOR FRESH VEGETABLES - A COMPARATIVE STUDY OF SRI LANKA AND BANGLADESH

By

J.M.P.N.ANURADHA

Department of Agricultural Extension Faculty of Agriculture University of Peradeniya Peradeniya Sri Lanka

-Approved by-

. Dr. W.A.D.P. Wanigasundara Internal Supervisor /Head, Department of Agricultural Extension, Faculty of Agriculture, University of Peradeniya, Peradeniya, Sri Lanka. Date..

Dr.H.Hemal Fonseka External Supervisor/Senior Program Specialist(Crops), SAARC Agriculture Centre, BARC Complex, Farmgate, Dhaka 1215, Bangladesh. Date ..

ABSTRACT Vegetable sub-sectors in the South Asian nations are not well developed compared to the food grain (cereal) sub-sectors, although there is huge potential for these countries to achieve a significant economic growth through expansion and sustainable development of vegetable sub-sectors. This research is an attempt to comparatively study the major existing domestic vegetable value chains in Sri Lanka and Bangladesh in relation to functional characteristics of the value chain actors, linkages, governance structure and the nature of information transfer mechanisms available for vegetable marketing in the respective countries. A comprehensive survey was conducted with a total of 275 value chain actors in five different levels i.e. production, assembling, wholesale trade, retailing and consumption. Structured questionnaires were used to gather data from the respondents at each level in both countries and the surveys were supplemented by discussions with important stakeholders. Descriptive statistical techniques and mean comparisons were used to analyze data through the SPSS software. Major domestic value chains for fresh vegetables in both countries were found to be poorly organized and functioning under many constraints. Awareness of the others in the value chain by actors at all levels was moderate and not significantly different between the two countries. Compared to vertical linkages, the horizontal linkages among the actors at the same level were much stronger equally in both countries. Lack of information necessary to make business decisions appeared to be a major weakness. Vertical flow of information along the value chains was weak in both countries, although Sri Lankan value chain actors were sharing information with their immediate buyers and/or sellers at a higher rate compared to Bangladesh. The wholesale traders in terminal wholesale markets had better access to information compared to the actors in other levels. An Arm`s length type of governance structure was predominantly prevailing at all levels of the value chain in both countries although a quasi hierarchical type of governance structure could also be noticed in some levels to a certain degree. Low level of business functions such as sorting, grading and proper packing/repacking has affected the competitiveness of the industry negatively in both countries. Lack of infrastructure facilities for the actors at different value chain levels is another constraint found common to both countries. However, Sri Lanka has shown a better improvement with respect to infrastructure development at both micro and macro levels especially at the wholesale trade compared to Bangladesh. Although the domestic value chains for fresh vegetables in Bangladesh and Sri Lanka still appears to function at a higher inefficiency, both countries have a great potential for value chain upgrading through what these two nations can achieve the desired competitiveness at all value chain levels. In order to facilitate marketing decisions and regulate the competitive market processes, it is essential to strengthen the linkages along the value chains for fresh vegetables in such a way the value chain actors could exchange information necessary for them to act competitively in the market. A strong public and private sector intervention is needed to upgrade the value chains for fresh vegetables in Sri Lanka and Bangladesh as a strategy to contribute to economic growth at the macro level. Key words Value Chain, Linkages, Governance Structure, Competitiveness,

ACKNOWLEDGEMENT
I would like to take this opportunity to offer my deepest gratitude to my Internal Supervisor Dr. W.A.D.P. Wanigasundera and External Supervisor Dr. H. Hemal Fonseka

for all the encouragement and guidance given to me during the development of this study. This research would not have been a reality, if I had not received their support and guidance. My special thanks also go to Mr. K.N. Mankotte, Director General of the Department of Agriculture for facilitating my visit to Bangladesh. I would also like to take this opportunity to thank Dr. Rafiqul Islam Mondal, Director of the SAARC Agriculture Centre for taking the initiative to make arrangements for my field research work in Bangladesh. I also greatly acknowledge the Dr. Nurul Alam and other staff members of the SAARC Agriculture Centre in Bangladesh for making my stay in Bangladesh a pleasant one. My enumerator Mr.Md.Raisul, who assisted me to collect primary data for this research in Bangladesh is highly appreciated for an excellent work rendered. I would also like to pay a special thank to Dr.Saleh Ahmed and other professionals at the Hortex Foundation who assisted and encouraged me greatly during the field research work in Bangladesh. Dr.Wais Kabir, Chairman of the Bangladesh Agriculture Research Council from whom I received a good deal of inspiration is also highly acknowledged. I offer my deepest gratitude to all the staff members of the Department of Agricultural Extension as well as in other Departments of the University of Peradeniya and the Dean, Faculty of Agriculture for being the guiding stars to me over a period of four years. I would also make this an opportunity to convey my special gratitude towards my loving parents for adding a great value to my life and being behind me in all my steps towards success. At the last, but not the least I thank each and everyone who assisted and encouraged me to make this research project a success.