Though the traders have been opposing claiming most of the people will be out of business, the government is planning to lessen the supply chain for the welfare of consumers and also to check the unnatural price hike in the market.
A draft regulation prepared by the Department of Commerce, Supply and Consumer Protection has proposed to shorten the layers of intermediaries to three from the current up to seven layers of middlemen. “The goods and services normally pass through up to seven layers of middlemen, each adding a hefty markup, forcing consumers to pay unfairly high prices,” a report prepared by the department reads, adding that multi-layered supply chains are mostly seen in the trade of agricultural goods, which the buyers are paying high price but the farmers get peanuts. “Neither the farmers nor the consumers are benefitting from the current supply chain.”
Generally a product passes from the manufacturer to the dealer, main distributor, national distributor, local distributor, wholesaler and retailer before reaching the final user. But there is no regulation to control the unnecessary layers of middlemen. The department has prepared a preliminary draft of the regulation – in line with the Consumer Protection Act 2018 – which has recommended to fix the market price of all essential goods and services with having only three layers of middlemen between producer and consumer, according to former director general of the Department of Commerce, Supply and Consumer Protection Yogendra Gauchan, who has been hired as an expert member in the task force to prepare the regulations.
The regulation has also recommended legally recognising the layers of middlemen to make the market’s supply chain transparent, he said, adding that such mechanism will ensure that consumers can get quality goods and services at reasonable prices. “The proposed regulations will also include standards of profit margin on essential goods and services.”
The list of essential goods and services is also being revised as there are 29 listed daily essential items, according to the department. “Essential consumer goods or services means goods or services that may be bought or acquired primarily for personal, family or household purposes.”
The traders have, however, opposed the proposed regulations claiming that minimising the layers will put many, who have been acting as a chain to supply goods in the market, out of employment. “It will be difficult to sell goods and services in rural areas without a dealer, distributor, retailer and national distributor,” traders claim.
But, a study of nine edible oil factories revealed that there are six layers of middlemen, a product goes from the producer to the dealer or distributor, and then passes through the wholesaler to semi-wholesaler and retailers before reaching the consumer, according to the department. “Likewise, drinking water factories have five layers of middlemen in the jar and bottled water business.”
There are five layers of middlemen in the medicine business, whereas there are six layers of middlemen in cement factories. “Likewise, there are four layers of middlemen in the steel business,” according to the department's report.
A draft regulation prepared by the Department of Commerce, Supply and Consumer Protection has proposed to shorten the layers of intermediaries to three from the current up to seven layers of middlemen. “The goods and services normally pass through up to seven layers of middlemen, each adding a hefty markup, forcing consumers to pay unfairly high prices,” a report prepared by the department reads, adding that multi-layered supply chains are mostly seen in the trade of agricultural goods, which the buyers are paying high price but the farmers get peanuts. “Neither the farmers nor the consumers are benefitting from the current supply chain.”
Generally a product passes from the manufacturer to the dealer, main distributor, national distributor, local distributor, wholesaler and retailer before reaching the final user. But there is no regulation to control the unnecessary layers of middlemen. The department has prepared a preliminary draft of the regulation – in line with the Consumer Protection Act 2018 – which has recommended to fix the market price of all essential goods and services with having only three layers of middlemen between producer and consumer, according to former director general of the Department of Commerce, Supply and Consumer Protection Yogendra Gauchan, who has been hired as an expert member in the task force to prepare the regulations.
The regulation has also recommended legally recognising the layers of middlemen to make the market’s supply chain transparent, he said, adding that such mechanism will ensure that consumers can get quality goods and services at reasonable prices. “The proposed regulations will also include standards of profit margin on essential goods and services.”
The list of essential goods and services is also being revised as there are 29 listed daily essential items, according to the department. “Essential consumer goods or services means goods or services that may be bought or acquired primarily for personal, family or household purposes.”
The traders have, however, opposed the proposed regulations claiming that minimising the layers will put many, who have been acting as a chain to supply goods in the market, out of employment. “It will be difficult to sell goods and services in rural areas without a dealer, distributor, retailer and national distributor,” traders claim.
But, a study of nine edible oil factories revealed that there are six layers of middlemen, a product goes from the producer to the dealer or distributor, and then passes through the wholesaler to semi-wholesaler and retailers before reaching the consumer, according to the department. “Likewise, drinking water factories have five layers of middlemen in the jar and bottled water business.”
There are five layers of middlemen in the medicine business, whereas there are six layers of middlemen in cement factories. “Likewise, there are four layers of middlemen in the steel business,” according to the department's report.
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