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What went wrongLachcha semai factory owners in Bogura, in a Samakal report

A 20 kg basket of lachcha from 1,300 taka to 2,400, and orders halved

Inputs rose about 40 percent, so a 20 kg basket of loose lachcha had to go from 1,300 taka to 2,400 — and wholesalers cut their orders. Annual output of about 20,000 tonnes was heading for 12,000 or less, with about 40 of roughly 200 factories already shut.

Bogura's lachcha semai trade used to turn out about 20,000 tonnes a year, worth roughly 260 crore taka, and was heading for 12,000 tonnes or less as costs ran away from it. Palm oil went from 17,000 to 25,000 taka a drum, dalda from 1,600 to 2,800 taka for a 16 kg carton and flour from 3,000 to 4,000 taka for a 74 kg sack, lifting input costs about 40 percent, while the piece wage per sack produced rose from 450 taka to 550-650 and fuel and transport added another 20-25 percent. Owners passed part of it on: a 20 kg basket of loose lachcha went from 1,300 to 2,400 taka and 20 kg of thin semai from 1,200 to 1,900. Wholesalers responded by ordering less, and the market fell to roughly half its former size. About 40 of some 200 small and large factories had closed, leaving around 160.

Lessons

  1. 1.A festival product has one selling window a year, so a cost shock cannot be absorbed slowly: it arrives all at once
  2. 2.Nearly doubling the price to cover a 40 percent cost rise makes wholesalers order less; the volume lost can cost more than the margin saved

Published with the person's permission, without revealing who they are.

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