Clipping middlemen's wings

FE Team | Published: March 10, 2024 20:33:54

Middlemen, the intermediaries connecting buyers and sellers across various sectors of the economy, are meant to facilitate trade and transactions, and add value to both ends of the spectrum. In theory, their role appears indispensable, yet in practice, they are disdained for their nefarious and deceitful practices. From manipulating food supplies to siphoning off government subsidies and incentives intended for farmers, low-income individuals and expatriate workers, middlemen have become synonymous with exploitation and manipulation. This blatant misappropriation not only undermines the government's social safety net but also deprives the most deserving candidates of much-needed support. Former Bangladesh Bank Governor Mohammad Farashuddin's recent remarks echo this sentiment.
Speaking at a recent event in Dhaka, Mr. Farashuddin strongly voiced his frustration over the misappropriation of government incentives meant for expatriate workers, highlighting how middlemen profit at the expense of those they purportedly serve. He stated that middlemen were giving only a small portion of government incentives to expatriate workers while remitting their money home. Consequently, as he mentioned, the income of the expatriate workers did not increase while middlemen were embezzling and stealing a good portion of remittance and government incentives. He also blamed middlemen and 'big fish' in the market for not reducing the prices of many imported essential goods, even though the government reduced tariffs on their import.
Similarly, numerous other government-induced initiatives to bring down food price inflation and ensure a fair price for farmers are being undermined by dominant and deceitful middlemen. It has been widely discussed that while farmers are not getting a fair price, and in some cases failing to even recoup the production cost of their produce, middlemen never lose and make an exorbitant profit through market manipulation and price syndication. This abhorrent malpractice leaves the country in a peculiar situation. Not only are consumers paying high prices for rice, vegetables, and other farm produce, but farmers are also not getting a fair price for those. Acting as more of a barrier than a benefit between producers and consumers, middlemen are pocketing a hefty profit that should rightfully go to growers. This exploitation not only discourages domestic production but also exacerbates the economic vulnerability of low- and middle-income consumers.
In a mature developing economy, the well-being of its citizens cannot be left at the mercy of unscrupulous middlemen. This begs the question: why is the government seemingly powerless against such exploitation? The government's susceptibility to manipulation in crucial governance areas does not reflect well on its ability to ensure market integrity. If middlemen dictate terms in vital sectors such as food pricing, remittance inflow, and disbursement of social welfare benefits, it raises serious questions about efficacy of governance and the government's commitment to public welfare. Their unchecked manipulation undermines marketing system's fairness and erodes public trust in the system of governance. While middlemen may exploit loopholes, the responsibility lies with the government to bring order in the system by placing it under constant watch and providing legal intervention where necessary.
Farashuddin's reminder of the 1974 famine attributed to middlemen's malpractices serves as a stern warning to policymakers about the potential consequences of neglecting this issue. The growing menace of middlemen, therefore, requires immediate attention from policymakers. It is incumbent upon the government to enact and enforce regulatory frameworks to rein in their exploitative practices and safeguard the interests of consumers and diverse stakeholders. Taming of unscrupulous middlemen can go a long way in improving the market regime and arresting inflation.