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Volatile kitchen market in most difficult time

SM Jahangir | December 07, 2020 00:00:00

There remain some usual ups and downs of prices in kitchen markets. Prices of essential commodities may fluctuate from time to time depending on their supply and demand.

This is simply the general economics principle - There's a direct relation between demand for goods or services and their prices. Demand theory in economics describes that changes in the demand for any good or services affects its price in the market. 'The more demand that occurs, the greater the price will be for a given supply,' reads the theory.

However, it seems, neither such theory nor any other logic is applicable for essential markets in Bangladesh. And unlike many other countries, commodities markets in Bangladesh are unpredictable ones. This perhaps happens mainly because neither the concept of the free market economy nor any controlled marketing system does work here.

Essential markets often become volatile in the country but the recent surges in prices of almost all the essential items, especially vegetables, can be described as very 'unusual situation'.

This may be considered as one of the worst times as the prices of many essential items recorded abnormal rise within a short span of time, to be specific, in recent months.

About the price hike of grocery items, the skyrocketing of the last year's prices of onion can be mentioned. The price of onion, one of the key kitchen items in Bangladesh, hit all-time high in 2019 in the local market within a few days. The price then crossed Tk 300 a kilogram in the local kitchen markets after India had imposed a ban on its exports.

Before the Indian ban, onion was selling at prices between Tk 35 a kg and Tk 40 a kg at retail level in September 2019.

Although the sudden surge in the onion prices necessitated the government to take some measures to contain the price hike, those hardly yielded visible impact on the market. General consumers had to bear the brunt of such abnormal price hikes of the daily essential item.

The consumers saw repetition of the same thing this year - the onion price jumped to Tk 110-Tk 120 a kg in September 2020 in the wake of export ban by India.

Before the hike, the spice was selling at Tk 40-Tk 50 a kg in the retail markets. The prices of onion more than doubled in Dhaka city's kitchen markets within a few days.

However, the government agencies concerned had to start open market sales (OMS) of onion through trucks across the country, at a subsidised rate of Tk 30 a kg to help ease the price.

The government also strengthened its monitoring to check any artificial supply crisis and unusual hoarding of the commodity.

The central bank instructed commercial banks to charge minimum margin on opening letters of credit (L/Cs) for importing onion in a bid to help stabilise onion prices in the local market through ensuring adequate supply of the key spice.

In the wake of onion price hike following India's decision, the commerce ministry sat with traders and importers and encouraged them to import volume of onion from other markets.

The ministry also instructed the deputy commissioners of administrative districts, especially onion producing hubs, to take necessary steps in this regard.

Following crackdowns launched by the government agencies, district administrations and law enforces, the sales of onion remained suspended at different wholesale markets including the city's Shyambazar for hours for couple of days. Like all the previous occasions, the government and traders blamed each other for the price hikes.

Bangladesh Trade and Tariff Commission (BTTC) had also came up with a suggestion that the government should import onions from alternative sources including Myanmar, Afghanistan, Egypt, Turkey, China, Malaysia, Pakistan and the Netherlands.

Not only the price-hike of onion, prices of most of the key vegetables rose abnormally, especially at Dhaka kitchen markets, in recent past. Prices of 16 different types of vegetables witnessed 70-100 per cent rise since June 2020 until October, according to media reports.

Such sharp upward trends in the prices of vegetables were, however, attributed to a more than two-month flooding that damaged standing crops in many places causing a plunge in supply.

Among the key vegetable items, the recent price surge of potato also raised the eyebrows of the commoners.

Within a short span of time, potato prices hit a record high at Tk 50 a kg at the retail markets from its previous prices of Tk 20-Tk 25 a kg.

The government had termed such 'unusual' price hikes of potato an 'artificial' crisis while the traders had, as usual, came up with their own arguments with regard to such price spirals.

Although the government said there was no valid reason behind such price hikes of potato as the supply of the key vegetable was sufficient, traders attributed such price increase to fall in the domestic production of the item.

Some traders and market analysts claimed that higher prices of other vegetables had been fuelled by the demand for potatoes, which resulted in the surge of potato prices.

The potato prices shot up in the backdrop of a steep rise in the prices of most of the vegetables' prices in the local markets.

The price of aubergine had shot up to Tk 80-90 a kg from Tk40-50 a kg, bitter gourds to Tk 90-Tk 100 a kg from Tk 50-60 a kg and papaya prices to Tk 70-Tk 80 a kg from Tk 30-40 a kg.

Other vegetables namely pointed gourds, sponge, ridge, teasel, snake and bitter gourds were also selling between Tk 60 a kg and Tk 80 a kg, yard-long bean between Tk 80 a kg and Tk 100 a kg, cucumber between Tk 70 a kg and Tk 80 a kg and prices of leafy species were ranging between Tk 20-30 a bunch in different kitchen markets of the capital Dhaka.

On the other hand, tomato was also selling at Tk 120-140 a kg while potato prices increased to Tk 40-45 a kg.

The price of rice - the staple in Bangladesh - had also gone up by Tk 5.0 -Tk 7.0 per kg at the retail level despite having a bumper Boro harvest in the country the previous season.

According to media reports, one of the main reasons for the price hikes of rice could be that the millers were sensing a less-than-expected output in the current Aman cropping season.

Also, a poor rice stock at the government silos - estimated to be around 0.7 million tonnes against required stock of over 1.3 million tones - was also blamed for the price hikes of rice.

On its part, the government had tried to ease the rice prices through fixing the price of a certain variety of rice, but such initiative hardly made any visible impact on the market.

However, the Consumer Price Index (CPI) data released by the national statistical organisation - Bangladesh Bureau of Statistics (BBS) - on a monthly basis do corroborate the uptrend in prices of most essentials in the local markets.

The rate of inflation in September last, as show the BBS data, was 5.97 per cent compared to 5.54 per cent in the corresponding month of 2019.

Commodities market often becomes volatile in Bangladesh and accordingly, prices of some essential commodities go up.

Although such unusual priced-hike forces the government to take some steps for stabilising the market, those apparently go in vain most of the time.

Market analysts, however, observe that usually the government acts when the crises arise. As a result, it is unable to deal with the situation on most of the occasions.

The government's poor planning, supervision and monitoring on the commodities market are also blamed for the situation.

Experts also expressed their views that absence of sufficient and reliable statistics on demand, supply and production of essential commodities also makes the situation more complicated.

Given the prevailing situation, one can suggest that the relevant government agencies should act properly to help keep essentials market stable.

Although it is not the task of the government alone to control the prices/markets, it has certainly effective roles to play in keeping the commodities prices at reasonable levels.

In fact, the government needs to act in such a manner that consumers are able to buy their desired commodities at reasonable prices and vested quarters cannot create any artificial crises in the market.


The writer is Chief Reporter at The Financial Express.

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