Agritech, finance and policy: The three keys to ending food inflation

Although in recent months, prices have somewhat stabilised, food inflation has been an issue for Bangladesh for quite some time now. Are monopolies, supply chain issues and global disruptions the real cause of increased prices, or are they just handy excuses? 

Farmers and consumers are both suffering losses. If both of them are losers, then who are the winners? Is food inflation exogenous, or has market manipulation gone too deep?

How intermediaries exploit seasonal price fluctuations

Global situations like supply chain issues, rising fuel costs and climatic shocks are to blame for the current prices, yet the real culprits are middlemen who dominate distribution, hoard inventories and artificially inflate prices.

Supply and price are controlled by a network of millers, traders and owners of cold storage. Farmers, having no storage and financial security, are compelled to sell at low prices. Middle-men purchase at cheap rates, beparis stockpile, and limit supply to maintain high prices. In spite of constant maize production, prices increased 30% between 2020 and 2025 because of syndicate manipulation.

Potato and onion cartels hoard to raise prices during off-seasons, and farmers are forced to sell at losses. Without storage facilities, farmers are at the mercy of middlemen who dictate the market.

Food prices double or triple by the time they reach consumers. Onions, for example, rise from Tk20-30 per kg at farms to Tk130-150 per kg in markets. The system maintains farmers in dependency while artificial price hikes continue.

Systemic weaknesses

Bangladesh's food crisis is driven by post-harvest losses, economic pressure, and a shortage of storage, which forces farmers to sell in a hurry while middlemen hoard and profit. This is also exacerbated by lack of transportation. The World Bank refers to 16 million Bangladeshi farmers with no access to transport, which limits farmers from reaching fair markets. 

Despite a surplus of 10.4 million tonnes of potatoes in 2023, 90% of the 2.7 million tonnes of cold storage capacity is controlled by syndicates, which drove off-season prices 191.67% higher from 2020 to 2024, according to the Bangladesh Bureau of Statistics.

The debt trap that keeps farmers at the mercy of middlemen

Farmers' reliance on intermediaries rises due to no access to finance. FAO reports that only 17% of small-scale farmers have access to institutional finance, while the rest depend on traders or usurers. Government concessional finance at a 4% interest rate remains out of reach due to poor banking infrastructure and regulatory hurdles.

The European Journal of Agriculture and Food Science expounds that over half of the coastal farmers are illiterate, thus making it hard for them to access good credit. A majority of them utilise cyclical loans, which force them to sell immediately after harvesting to settle loans, typically at prices set by traders. Traders and millers exploit the loophole, offering loans in exchange for exclusive buying rights, disenfranchising farmers of any bargaining power.

How weather shocks deepen the crisis

Climate change destabilises agriculture, affecting 25% of agricultural land and reducing GDP by 2% annually. Soil loss, rising input costs, and pest infestations worsen the crisis, while most farmers lack access to climate-resilient agriculture. The result is 62% of annual crop loss to pests and diseases, with very limited advisory support.

Lacking expert advice, farmers stick to conventional practices promoted by opinion leaders, compounding inefficiencies. Modern practices like climate-resilient crops, efficient irrigation, and integrated pest management are out of their reach, leading to low yields, volatile supply, and price fluctuations in the market. Even when production is steady, middlemen exploit these uncertainties to mark up prices.

Why prices will keep going up unless the system changes

Bangladesh's food supply is controlled by speculation and hoarding rather than genuine supply-demand mechanisms. Government policies, such as the removal of tariffs on rice imports in 2025, were not as effective because millers took the benefits.

Deprived of market access, finance, and climate adaptation, farmers remain vulnerable while consumers bear the cost. Ending this requires financial, logistic, and market transparency reforms. Government, private industry, and agritech startups must collaborate to track production trends and prevent supply shocks.

Breaking the vicious cycle: Why nationwide production mapping is the first step

Bangladesh's agriculture is in a reactionary cycle — price hikes lead to shortages, overproduction, and losses. Real-time data can help end this cycle.

Mapping of production throughout the entire nation, via satellite imaging, demand forecasting, and AI-driven analysis, can balance the distribution of crops among farmers. Agritech startups such as iFarmer are already leading the way in stabilising supply and preventing shocks.

Fixing the financing bottleneck: Why traditional financial support fails farmers

Farmers need finance for seeds, fertilisers, and equipment, but traditional loans do not account for seasonal incomes, leading them into costly informal borrowing. Monthly instalment repayment doesn't align with harvest seasons, worsening financial distress.

Innovative financing models like buy-now-pay-later (BNPL) can enable farmers to take inputs on credit and repay after harvest. Financial literacy remains a challenge, though. 

The majority of farmers do not know about structured finance. Agritech startups are bridging this gap through education initiatives so that credit enhances productivity rather than leads to debt traps. 

Transforming farm supply chains for a sustainable future

Agriculture in Bangladesh is held back by systemic inefficiencies, price manipulation, and market barriers at the expense of both farmers and consumers. The answer is direct market linkages, supply chain improvement, and sustainable financial services.

Agri-tech platforms can directly connect farmers with buyers, cutting out intermediaries and offering fair prices. For example: through over 220 collection points created by iFarmer across the country, farmers can sell produce at better prices, buy inputs, and access advisory services. More such collection points and online marketplaces can reduce logistical barriers and improve farmer-buyer access.

Yet, access to the market is not enough. Bangladesh loses 44% of its perishable output annually due to poor storage and transport facilities, which continue to keep food prices unstable. The development of cold storage chains and aggregation centres can prevent wastage, stabilise supply, and cushion farmers against distress sales. Public-private partnerships must invest in such facilities and make them available to small farmers.

Production risk can be reduced by real-time information and advisory services. Lack of proper weather prediction, soil testing, and pest monitoring makes the farmers rely on assumptions, thereby leading to bad harvests and loss of revenue. AI-driven climate intelligence, satellite imaging, and mobile advisory services, like initiatives by iFarmer, may offer farmers proactive measures for the improvement of productivity and climate resilience. 

Farmers also struggle with access to quality inputs and financial tools. Empowering input supply chains, doorstep delivery, and flexible credit will allow them to buy better seeds, fertilisers, and equipment without taking loans. 

A collaborative path forward

Bangladesh's agriculture needs direct market access, supply chain efficiency, financial inclusion, and climate adaptation. Collaboration between agritech startups, government agencies, and private sector stakeholders contains the key to eradicating exploitative regimes, food price stabilisation, and building a resilient food economy.

Mixing technology with policy reform can create a farmer-led agriculture model. Agritech startups are proving that real-time information, digital finance, and direct trade platforms can stabilise food prices.

The cost of inaction is too high. Expanding agritech solutions and implementing reforms now can build a food system where farmers earn a good income, consumers pay reasonable prices, and markets operate transparently. The time to act is now.

Tahmid Hasan is the Vice President of Supply Chain Output Operations at iFarmer.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.