Dadon: how advance credit traps farmers, and the alternatives

26 October 2026 · 2 min read · Krishoker Thikana desk

Many farmers in Bangladesh cannot get a bank loan when they need seed and fertiliser. Instead they take an advance, known as dadon, from a trader or middleman. The catch comes at harvest.

How the trap works

In return for the advance, the farmer agrees to sell the harvest to the same lender at a price fixed in advance, usually below the market rate. SM Nazer Hossain of the Consumers Association of Bangladesh describes dadon as a primary reason for price disparities, because the farmer cannot shop around for a better buyer.

Jute farmers in Brahmanbaria described a similar pattern in 2026: without a guaranteed price before harvest, many sell freshly harvested jute to middlemen at prices they call unfair, and the middlemen store it and sell later at higher prices.

Alternatives worth asking about

• Bangladesh Krishi Bank: state agricultural loans, often cheaper than an advance tied to your harvest.
• Agritech financing: iFarmer reports facilitating more than BDT 11.5 billion in financing for farmers across 42 districts, and WeGro connects individual and institutional financiers with smallholders.
• Cooperatives and farmer groups: a group can borrow, buy inputs and sell together, which improves bargaining power.
• Government programmes: ask your Upazila agriculture office about current subsidy and loan schemes.

Before you sign anything

• Ask what price you will be paid and how it is set.
• Ask whether you are free to sell elsewhere.
• Compare the cost with a bank or agritech loan over the same period.
• Keep a written record of the agreement.

This article is general information, not financial advice. Terms change, so check directly with any lender before you borrow.