Impact of middlemen on vegetable marketing channels in Sri Lanka

Abstract

Vegetable are produced on a year round basis and a large number of farmers are involved in the process of production. However, many people criticize the vegetable marketing system due to fluctuating prices. In this background, this paper attempts to identify the long-term behaviour of Market Margin (MM) of middlemen on vegetable marketing channels in Sri Lanka. This study was mainly done by using secondary data. Nominal market price, producers price and market margin (MM) of beans, carrots, beets, pumpkin and brinjals have increased in a similar percentage in parallel to the prevailing rapid inflation within the last two decades. Therefore, it is clear that the prices of the vegetables have increased due to the high rate of inflation in the country. The MM for the all the vegetables was generally less than 50 %. Average MM of selected vegetables like bean, carrot, beet, pumpkin and brinjals were 42%, 44%, 44%, 49% and 43.5%, respectively. It was also observed that usually when the Retail Price (RP) and Producer Prices (PP) increase the MM decrease and vice versa. It is clear that when the RP and PP are high the middlemen try to control the market prices by reducing their MM. It may help to protect the consumers directly because RP and PP normally increase due to low supply of the production of vegetable and/or high demand for it. When the prices are low they try to get more benefits by increasing their MM as a rational entrepreneur.