As the salt production season approaches its halfway this year, the clouds of frustration, sorrow, and fear of the coastal salt farmers of Cox's Bazar begin to be evident. Cox's Bazar district is the largest crude salt producing area in terms of volume as well as employment. Almost 15 per cent of the total rural households of this district are salt farmers. According to the recent report of BSCIC, currently, around 51,092 acres of land of Cox's Bazar district accounts for crude salt production by more than 30,000 salt farmers. In terms of production, around 95 per cent of the 1.8 million MT crude salt produced per year in Bangladesh is produced in Cox's Bazar area.
The salt industry being one of the largest labour intensive cottage industries of Bangladesh absorbs largely around 5 million people directly or indirectly. The total value chain of the salt industry in Bangladesh involves largely two sub-sectoral activities namely-- the refining process which is operated by salt mills and the crude salt production process that involves a significant chunk of marginal farmers of coastal Bangladesh, specifically Cox's Bazar district.
Despite increasing industrial and local demand for salt, the price of crude salt that the farmers are receiving depicts a declining trend over the past few years. The increasing trend of the price of edible refined salt further confirms that while the price of edible refined salt has gone upwards over the past few years, the crude salt price has experienced completely the opposite trend.
This poses an interesting question regarding the distribution of resources across different agents of the value chain of the salt industry. The steady upward movement of the price of edible refined salt translates into the fact that the increased share of the price has been absorbed by either one or a few agents of the salt value chain. This obviously excludes the crude salt producing farmers as they have been experiencing low prices continually for the last five years.
The salt industry stands on the produced crude salt by the marginal salt farmers who use the solar evaporation method to produce crude salt in the summer season covering the months between November and May each year. Given that, most farmers do not own land, they usually take the land on lease to cultivate crude salt. The produced crude salt is then sold to the refineries which perform the task of washing, crashing, iodising and packaging the salt.
However, in reality, the value chain does not appear to be as straightforward as it should be. Given that, farmers are already at the bottom of the value chain and their economic status is further worsened by the presence of external market agents, who adversely affect the market by capturing the value that otherwise would have been directed towards the farmers who put their backbreaking effort in producing crude salt.
As mentioned earlier, the salt farmers produce their crude salt on leased lands, and in most cases the landlords are brokers rather than the landowners. These brokers locally known as dalal, not only keep the farmers dependent in terms of cultivable land but also keep them indebted by providing access to credit in the off season when most farmers face income adversity due to lack of alternative income generating activities and also in the salt season to finance their raw material cost like, polythene, irrigation pump, etc. This essentially traps the farmers to sell the produced crude salt to their respective brokers whom they are indebted to, at a price considerably lower than the market price. In many cases, the brokers seem to create a syndicate to predetermine the price of crude salt at a specific area even before the production season.
While the brokers receives a premium in the form of lower crude salt price from the farmers, they ensure that they themselves get the highest price at the refinery mills by stocking a good portion of the bought crude salt till the rainy season. This dalal culture appears to be prevalent in most parts of the Cox's Bazar district. To understand the approximate size of the benefit captured by the brokers, a simple accounting can be useful.
While the current market price of edible salt appears to revolve around USD 0.4 per kilogram (kg), the salt farmers sell their produced crude salt at the rate of USD 0.04. The brokers usually stock the crude salt to sell in the off season to the refineries at an approximate average rate of BDT 8-10 per kg i.e., around USD 0.10 per kg. This implies for every maund i.e., around 40 kg, brokers pocket nearly BDT 220 i.e., USD 2.4.
Although apparently it seems this culture is only affecting the income of the marginal salt farmers, in reality, it is also affecting the seasonal production of the crude salt indirectly, if not directly. This dalal culture can gradually drive out the subsistence farmers from the sector by capturing their benefits of crude salt production and thus deprive the whole economy of the additional value that could be generated from the small scale subsistence crude salt farmers.
Bangladesh has been both an importer and exporter of salt in the international market. The country being a net importer of salt, currently imports salt from Hong Kong (46 per cent), Pakistan (16.9 per cent), and Germany (37 per cent) to meet its domestic demand. In 2020, the import value of salt was USD 419.47 thousand, and the import volume was 1.24 million metric tons. On the other hand, Bangladesh exported its locally produced salt to Gambia (99 per cent) and Switzerland (1 per cent) which amounts to the value of USD 912 in 2020. The export volume was 2.85 thousand metric tons in 2020. Given the existing demand for crude salt at home and abroad, this sector has the potential to enable thousands of subsistence coastal salt farming households to graduate from the level of extreme poverty.
Currently, BSCIC has been supporting this sector through providing promotion & extension services to the salt farmers at the field level by dissemination of technical knowledge, providing market information etc. Although BSCIC has been providing loans to the salt farmers at a very small scale, it has been found to be inadequate in the context of the size of the rural subsistence farmers involved in this sector. Appropriate sectoral reforms coupled with access to credit facilities at an economical rate can unleash the true potential of this sector by eliminating the market disrupting agents from this labour intensive sector.
Kazi Golam Tashfiq is a development researcher with a particular concentration on socioeconomic issues, livelihood, and public policy. He is currently working as Monitoring and Evaluation Officer at WorldFish Bangladesh and South Asia. [email protected]
