Originally posted in New Age on 16 September 2023
Govt moves fail to break syndicates, curb prices
The stabilisation of commodity markets can’t be achieved by fixing prices or holding drives without ensuring a balance between supply and demand, experts said.
To keep prices low, the government must break the syndicates accused of manipulating prices and promote formal transactions at both supply and production levels, they added.
They blamed the government’s lenient attitude towards market syndicates for making the kitchen market volatile.
They recommended implementing strict measures against manipulative practices through intensified monitoring at the grassroots level and ensuring an ample supply of essential products.
Centre for Policy Dialogue research director Khandaker Golam Moazzem suggested promoting formal transactions at the supply chain level to tackle market manipulation.
‘To tackle inflation, the pricing mechanism is acceptable, but it should be reviewed from time to time to reduce the risk for businesses,’ Moazzem told New Age.
‘The market monitoring authorities should focus more on production and supply chain rather than looking at the retail stage,’ he added.
Consumers Association of Bangladesh president Ghulam Rahman said that in the open market concept, fixing the prices might not be that effective in controlling the commodity market.
‘Everyone is trying to make extra profit amid high inflation,’ he said.
‘In this situation, ensuring a smooth supply chain for commodities to fulfil the demand of consumers is the easiest solution to overcome rising inflation,’ he added.
Consumers were unable to get onion, egg and potato at government-set prices on Sunday, the second day after the prices of three locally produced food items were fixed by the commerce ministry amid market volatility.
Several consumers on Saturday reported purchasing these products at higher prices, contrary to the government’s commitment to price reduction.
The government on Thursday set the maximum retail prices for egg at Tk 12 a piece, potato at Tk 35–36 a kilogram and locally grown onion at Tk 64-65 a kilogram for the first time against the backdrop of soaring prices of the commodities.
It also announced a reduction in the price of soya bean oil by Tk 5 per litre and palm oil by Tk 4 per litre.
Visiting five kitchen markets in the capital, it was found that the prices of potato, onion and egg decreased slightly from their earlier prices, but still remained high.
On Saturday, an egg was sold for Tk 12-13 per piece, potato for Tk 45-50 a kilogram and the locally produced onion for Tk 75-80 a kilogram at the markets.
Retailers claimed that while the wholesale prices of these commodities had marginally decreased on Saturday, they were still higher than government-fixed prices.
Since Thursday, the Directorate of National Consumer Rights Protection has been conducting countrywide drives to implement the government-fixed prices of essential items.
A total of 51 teams conducted drives at 74 markets in 49 districts, including the capital Dhaka, and fined 144 traders Tk 4.62 lakh on Friday.
A total of 41 teams conducted drives at 53 markets in 39 districts, including the capital Dhaka, and fined 90 traders Tk 2.37 lakh on Saturday, according to a DNCRP press release.
According to Trading Corporation of Bangladesh data, the price of potatoes increased by 72.22 per cent in the past year, while the price increased by 22.37 per cent in one month.
The data also showed that the price of locally produced onion and egg increased by 76.47 per cent and 27 per cent in the past year.
DNCRP director general AHM Shafiquzzaman visited a number of cold storages at Munshiganj on Saturday and also attended a meeting with traders to raise awareness among businesses about implementing the government fixed price.
New Age Munshiganj correspondent reported that the DNCRP asked the businesses to sell potatoes at a maximum of Tk 27 a kilogram at the cold storage level.
‘The price of onion, potato, and egg is still higher than the government’s fixed price, but we hope the prices will come down. Our drives will continue until the new prices are implemented,’ Shafiquzzaman told New Age.
‘If we find any complaint of potato being sold at cold storage level over Tk 27 a kilogram we will take immediate action,’ he said, adding that there is enough supply of potato to meet the local demand up to December.
He fined a cold storage at Munshiganj for failing to show receipts for 10,000 sacks of potatoes.
CAB general secretary Humayun Kabir Bhuiyan said that the wholesale drive to implement the government fixed price was ineffective under the open market concept.
‘It is true that a group of middlemen always try to keep the commodity market volatile for extra profits. The government should identify them and take exemplary action,’ he said.
‘There is enough stock of potatoes, and the government should ensure a smooth supply chain to deal with market manipulation,’ he said.
Md Zabbar, a retailer at Mohakhali Kachabazar, said that if he followed the prices set by the government, he would incur losses.
‘I bought those products at higher prices before the government set the prices,’ he said.
He said that he had bought a total of 150 kilograms of potatoes and 75 kilograms of onions on September 12 at Tk 6,900 and 5,250 respectively, but 45 kilograms of potatoes and 32 kilograms of onions remained unsold.
‘If I follow the government price rate, the amount of losses will be around Tk 12 for each kilogram of potato and Tk 5 for each kilogram of onion,’ he said.
Bangladesh Cold Storage Association director Md Fazlur Rahman, also the managing director of Rahman Brothers Cold Storage, said that around 60 per cent of the potatoes remained unsold at his cold storage.
‘A total of 12,000 metric tonnes of potatoes were stored at the cold storage during the last season, of which 40 per cent have already been sold,’ he said.
‘A group of traders are manipulating the prices of potatoes,’ he said.
‘Every day, around 600 to 1,000 sacks of potatoes are loaded in trucks from the cold storage gate and transported to Dhaka and other wholesale markets in the country,’ he added.
According to the commerce ministry, the price of egg has been set at Tk 10.50 a piece at the production level and Tk 12 a piece at the retail level; the price of potatoes has been set at Tk 26–27 a kilogram at the cold storage level and Tk 35–36 a kilogram at the retail level; and the price of locally produced onion has been set at Tk 53–54 a kilogram at the wholesale level and Tk 64–65 a kilogram at the retail level.