Market transformation in groundnuts

The processed groundnut segment accounts for over 40 percent of the overall market for groundnuts and is expanding rapidly.

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“The tripartite agreement among the three business houses was a boon for us as to have an ensured marketing channel,” said Kazi Ashraful Hassan, Executive Director of SDC"




Telling Our Story

US. Agency for International Development

Washington, DC 20523-1000

http://stories.usadi.gov

Groundnuts, also known as peanuts, are a significant agricultural crop and snack food in Bangladesh. Bangladesh produces approximately 50,000 tons of groundnuts per year, of which approximately 35 percent are produced in the southern regions. The demand for both fresh and processed groundnuts has been steadily growing and there is an emerging segment forming around premium-quality loose/packaged groundnuts in both urban and rural markets. Currently the processed segment, including chanachur in which groundnuts are the key ingredient, captures 40 percent share of the overall market for groundnuts. With this growth and diversification, more commercial farmers are starting to grow groundnuts and clusters of shelling facilities and trading hubs have sprouted up to serve both fresh and processed channels.
Despite these developments, the groundnut sector is still limited by weak relational networks and limited responsiveness to market incentives and demand. Faridpur is a business hub for groundnuts in the southern region and produces about 20 percent of total groundnut production in Bangladesh. Still, without significant private sector or commercial investment, substandard production and traditional marketing persist.
In a bid to improve business to business relationships in the groundnut sector, USAID Agricultural Value Chains (AVC) project partnered with Shariatpur Development Society (SDS), Society Development Committee (SDC) and Rahmat Agro. These three organizations had not worked in the groundnut business before, although they recognized the market opportunity and were willing to invest. AVC played a facilitative role, catalyzing business linkages between these three organizations that lowered the risk of their investments in the groundnut sector.
This partnership met the business needs of all three partners and farmers in the rural Char area of Southern Bangladesh. SDC is a processor that needs a consistent supply of high quality nuts, a minimum of 1,500 tons, to expand its business and enter into larger contracts with four regional snack producers. SDS and Rahmat Agro are contract producers that were able to expand their base of farmers to meet the demand from SDC. With the new commercial scale contract with SDC, Rahmat Agro and SDS will invest to expand groundnut production and adoption of improved groundnuts production practices throughout their supply chain to ensure high quality groundnuts. The new commercial contracts allowed them to increase investment in quality- expanding their business and increasing household income for farmers in the Char region. Kazi Ashraful Hassan, Executive Director of SDC said, “The tripartite agreement among the three business houses was a boon for us as to have an ensured marketing channel. It has opened a new avenue of business opportunities in the southern region.” At the same time, both SDS and SDC are now confident to have a strong foothold in the groundnut sector in the coming years in Faridpur region. AVC facilitation played a critical role in terms of catalyzing relationship among the actors, showing them the potential to improve market information flows, achieve scale, and generate financial returns through business to business relationships. AVC not only supported the initial market linkage between these firms, also provided training on advanced production techniques to 1,800 farmers in Faridpur region.