Our Pricing Strategy
The Bangladesh Bureau of Statistics reported that per capita income increased from $1,190 USD to $1,314 USD in 2015. We reached out and spoke with Lamia Shama, a member of last year’s winning TFF team from Bangladesh, to receive some advice on our pricing strategy. In regard to our product idea, she commented “We believe your project would be suitable for a flood-prone country like Bangladesh and that this country can benefit from it.” Lamia also emphasized the importance of keeping our barges affordable for subsistence farmers since rural incomes are lower than those of urban people. Given that income on average is $1,314 USD in Bangladesh, we estimate that a majority of our target market earns below this number. Taking into consideration Lamia’s helpful recommendations, we decided to price our barges in accordance with the limited incomes of rural farmers.
Each barge will be priced at 13,000 Bangladeshi takas, or approximately $167 USD. We consider 13,000 takas per barge a sufficient price to cover the costs of hiring different workers and maintaining our company’s base of operations in Dhaka. 13,000 takas is worth about two months of groceries for the average Bangladeshi, but our barge’s life expectancy is much longer than that. Furthermore, our barge is significantly cheaper compared to a competitor’s model, a floating farm with a duck coop, fish enclosure, and a small vegetable garden. Five to ten women currently pool 130,000 Bangladeshi takas ($1,700 USD), per year to purchase and share this expensive product. Even if some rural farmers aren’t able to afford an upfront cost of 13,000 takas per barge, we will allow this sum to be paid in installments over a prolonged period of time to ensure that every individual who wants our product can afford one.
Our Distribution Plan
Barge for Food operates as a for-profit firm in the business of providing floating greenhouses to individuals living in flood-prone regions. Our current business model is catered towards Bangladeshi subsistence farmers suffering from malnutrition during the summer monsoon seasons. These farmers and their families are situated near the major rivers of Bangladesh such as the Padma, Ganges, and Jamuna Rivers. Barge for Food will be headquartered in the Bangladeshi capital of Dhaka since the city is located near many high risk flood zones. Our barges offer farmers greater economic security and nutritional value by providing a safe, long-lasting method for growing fruits and vegetables. We encourage the cultivation of high-value summer crops like beans, spinach, pumpkins, and gourds to increase the market power of these farmers.
Barge for Food’s goals include not only relieving food insecurity in Bangladesh, but also improving the local environment and economic landscape. Our construction and distribution plans achieve these goals by design. First of all, our barges are constructed almost entirely of recyclable or easily replenishable materials. Bangladesh lacks an efficient waste management system, so most trash is openly dumped on the streets, posing a serious threat to human health and the environment. This issue is especially prevalent in Dhaka, where 3,500 tons of trash is produced each day but only half this amount is collected, making the capital the most waste-filled city in all of Bangladesh.
Barge for Food incorporates readily available raw materials in all aspects of our product. Plastic bottles are used to create the foundation and roof of the barge, recycled drum barrels to provide buoyancy, and sturdy bamboo poles to construct the framework. We will employ locals to collect recyclable materials and store these inputs in our Dhaka headquarters. At our headquarters, we will also instruct and train Bangladeshi construction workers to make the barges.
In order to effectively reach our target market of rural subsistence farmers, we plan to employ official Barge for Food “ambassadors.” These ambassadors will hail from rural villages located in flood-prone regions of Bangladesh and will serve as salesmen for our barges. They will perform demonstrations, market our product, and handle transactions in their own home villages. We expect these ambassadors to spread the word about Barge for Food and generate interest and demand around the product. To eliminate shipping difficulties, construction workers will also travel with our delegates to different villages with the raw input materials. These workers will then construct barges at the site of each village to prevent damage during transport and demonstrate proper repair techniques.
Inefficiencies with Current Methods Used to Combat Floods
Rural farmers in Bangladesh have resorted to traditional agricultural methods such as baira to protect their crops from flooding. Baira is a floating farm that is mainly constructed out of bamboo straws, aquatic weeds (water hyacinths), and soil. However, these floating vegetable beds are not a reliable source of produce. First of all, they have to be replaced and cannot be used indefinitely since the weeds gradually decompose underwater. Moreover, baira can only be situated in limited places like still ponds or flooded fields due to a risk of the garden otherwise disintegrating. As climate change intensifies and affects Bangladesh for a prolonged period of time, there will be greater demand for floating farms that are stronger and more durable.
An NGO in Bangladesh developed a floating farm with a duck coop, fish enclosure, and a small vegetable garden. This product is utilized in several villages in Bangladesh but we believe significant improvements could be made to the model. The amount of produce that can be grown is far too little for farmers to subsist on or sell to markets for a profit since vegetables are cultivated on plastic jugs cut in half. These floating plastic jugs are exposed to the river without any form of protection so the produce is likely to be damaged once cyclones accompanying strong winds and currents hit the country.
Interview with Soil & Crop Sciences Professor John Duxbury
While considering Bangladesh as our target market, we met with John Duxbury, a professor at Cornell University who studies agriculture in Bangladesh. He has been to Bangladesh many times to conduct field research and is extremely familiar with the country. Professor Duxbury confirmed much of our initial research by explaining how severe and devastating the floods are. He told us how floods damage the country’s infrastructure and hinder efficient distribution of agricultural produce to rural areas. Professor Duxbury conveyed that a solution for this type of situation is desperately needed.
One piece of valuable advice he offered was to research more about the crops we could grow on the barge. Farmers cannot grow crops that are densely planted (e.g. corn, rice) because those would be too heavy for the barge to hold. Moreover, crops like rice are profitable only when farmers are able to achieve economies of scale. It makes the most sense, therefore, to grow fruits and vegetables that can be easily cultivated on our barge and sold for higher prices in the market. Since the climate in Bangladesh is warm and humid during monsoon seasons, summer vegetables capable of withstanding greater heat and humidity should be grown.
High Future Demand of Barge for Food
According to Bangladesh’s Ministry of Environment & Forests, rising sea levels are expected to destroy 14,000 tons of grain production by 2030 and 252,000 tons of production by 2075 in Eastern Bangladesh alone. Flooding causes not only a severe loss of grain and produce crops, but also a negative effect on GDP that can impact a country for years to come. The CIA World Factbook shows that the agriculture sector contributes 17.2% to total GDP in Bangladesh. Moreover, 47% of the Bangladeshi labor force is involved with the agriculture sector.
Germanwatch, a NGO that releases the Climate Change Performance Index annually, estimates that floods induce a rise in water levels of around 13 centimeters to 2 meters. GDP is expected to decrease anywhere between 28% and 57% following a 1-meter rise in water levels. Bangladesh’s current GDP is valued at $150 billion USD. Thus, in the theoretical situation of a 1-meter rise in water levels in Bangladesh, the country’s GDP would fall 42.5% (halfway between 28% and 57%) to just $86.25 billion USD. The resulting loss in GDP of about $65.75 billion USD is an indicator of how devastating and widespread the effects of flooding can be. Barge for Food’s weather-resistant greenhouses are likely to capture high demand from Bangladesh to make up for its crop losses as the threat of serious flooding becomes a reality.