Affordability, rather than availability, of foodstuff is the real issue
Tuesday, 18 March 2008
Syed Fattahul Alim
SOARING prices of essential commodities is going fast beyond the reach of the people living in the limited income bracket. Recently, rise in the price level has become extremely erratic so much so that according to a study published in the print media, the price of soybean oil has risen by 7.0 per cent, while that of coarse flour by 8.0 per cent just in a week's time. The same study has shown that within one years' time the prices of the mentioned items have shot up by 72 per cent and 80 per cent respectively.
Obviously, the low and fixed income groups of people are the hardest hit ones by the runaway price hike of essentials. For though the prices of the essential food items have increased twofold compared to their price one year back, income levels of the people have remained more or less static. That in other words means that their real incomes have gone down in an inverse ratio vis-à-vis the price hike of the essential commodities.
In the face of this galloping price of essentials and falling value of the real income, words of assurance are being heard from the government. The words of reassurance are about the availability of the essential commodities, especially food grains. The Food and Disaster Management Adviser AMM Shawkat Ali has assured all concerned that the government will be importing one mullion metric tonnes of rice by June through government and private channels from India and Myanmar. He further stated that till date during this fiscal the volume of rice import stands at around three million metric tonnes. And with this fresh import, the total amount of import over the current fiscal will reach four million metric tonnes. What is more, within one and a half months, the farmers will harvest their Boro rice. So, if it is a question of the availability of food grains, especially rice, the public should not be overly concerned about the supply of their staple food item in the market.
So, at the moment, to all appearances, the availability of the essentials is not a problem. But how will the consumers buy these essential food items, if their prices remain beyond their reach? Is there any mechanism in place whereby the consumers belonging to the aforementioned income groups might also get the benefit of the availability of these food grains and other essential commodities?
However, to the majority section of the population, the price of rice is the cause for utmost concern. As all are aware of, the poorest section of the people consume rice in greater quantity than any other of the nine items listed by the Trading Corporation of Bangladesh (TCB) as the most essential ones. The poorest section of the population that comprises the rural poor and the labouring people in the urban areas consume rice in greater quantity because they have little choice. In fact, they cannot simply afford to buy meat, fish, vegetables and other essentials items to supplement their nutritional needs. So they eat more rice to fill their belly, whether this additional consumption of rice meets their nutritional gap or not. But the problem is quite different in the case of the middle or higher income people. Unsurprisingly, the price of rice has always remained the most sensitive issue before all the governments that had taken office after independence.
Understandably, the chief adviser, too, has expressed his deep concern over the steep rise in the prices of the essential items including rice. At a special meeting attended by the various stakeholders in the government and some representatives of the business community with the chief adviser in the chair, the government has taken certain strategies to increase supply of the essential commodities in the domestic market, and keep the prices under control. But if our memory is not short, similar steps are already in force to rein in the mad horse of essentials price. Prices of all the food-related essentials have remained as unstable as ever.
The edible oil is one such example. The price of edible oil has never come down in defiance of various government measures including monitoring to control it. The price of soybean oil has even refused to respond to its recent fall in the international market. Though the commerce adviser has time and again said that the state should have an effective role to play in controlling price, the measures taken so far have failed to produce any tangible result. So all concerned would be eagerly waiting to see the outcome of the fresh strategy adopted by the government in its latest move towards controlling the essentials, price.
One may not even fail to recall that the authorities have often mentioned the high prices of rice and other food-related commodities in the international market as the reason behind the crazy and relentless price hike of essential commodities in the domestic market. The corollary of this argument is that the price of rice and other imported items will not come down, unless government intervenes in a big way through providing a huge amount of subsidy to the importers. But that again is a question of affordability by the government which has always been walking a tight rope due to serious resource constraints. Otherwise, under a free market dispensation, the price level of the commodities with high import cost cannot be brought down, even though there is no shortage of those commodities in the local market. Under the circumstances, even after the harvest of Boro when locally grown rice enters the market one cannot expect the price level of the food grains to come down. For even then, the traders cannot be asked to sell their goods bought earlier at a price lower than their import costs.
Reports from the international market are hardly reassuring. Drought in Australia, large scale use of food grains and oil seeds for purposes other than consumption and various other factors of global dimension will have their part to play to push the prices of food-related essential commodities further upwards. From this consideration, the argument of availability of food grains in the domestic market does hardly stand on a strong footing, though it may dispel some of the fears spread by the alarmists. Again, the contention of availability, too, will soon lose its ground once the unscrupulous section of traders start to hoard the goods in spite of all the exhortations of the chief adviser and other government leaders.
So, to fight the evil of price-hike of food-related essential commodities, despite their availability, no short term measures would remain effective for long. The strategies have to be very-long term ones, which include creating a large buffer stock of food grains. The phenomena of hoarding and smuggling of food grains and other essential commodities have to be dealt with severely and without any mercy by the law enforcers. Erratic behaviour of prices in the retail market, too, has to be controlled through strong monitoring and necessary punitive measures. The other measures to regulate the market as done by the fair price shop run by the BDR should continue. The Vulnerable Group Feeding (VGF) scheme should be further strengthened. Last but not least, it is also time the government introduced food rationing system in the country.
At the moment, the bigger issue before the general public is affordability of essential commodities than their availability in the market. So, all efforts of the government should be to create the condition so that the fixed and limited income group, the labouring masses and the most vulnerable groups are not forced to starve amidst the supposed abundance of food all around.
SOARING prices of essential commodities is going fast beyond the reach of the people living in the limited income bracket. Recently, rise in the price level has become extremely erratic so much so that according to a study published in the print media, the price of soybean oil has risen by 7.0 per cent, while that of coarse flour by 8.0 per cent just in a week's time. The same study has shown that within one years' time the prices of the mentioned items have shot up by 72 per cent and 80 per cent respectively.
Obviously, the low and fixed income groups of people are the hardest hit ones by the runaway price hike of essentials. For though the prices of the essential food items have increased twofold compared to their price one year back, income levels of the people have remained more or less static. That in other words means that their real incomes have gone down in an inverse ratio vis-à-vis the price hike of the essential commodities.
In the face of this galloping price of essentials and falling value of the real income, words of assurance are being heard from the government. The words of reassurance are about the availability of the essential commodities, especially food grains. The Food and Disaster Management Adviser AMM Shawkat Ali has assured all concerned that the government will be importing one mullion metric tonnes of rice by June through government and private channels from India and Myanmar. He further stated that till date during this fiscal the volume of rice import stands at around three million metric tonnes. And with this fresh import, the total amount of import over the current fiscal will reach four million metric tonnes. What is more, within one and a half months, the farmers will harvest their Boro rice. So, if it is a question of the availability of food grains, especially rice, the public should not be overly concerned about the supply of their staple food item in the market.
So, at the moment, to all appearances, the availability of the essentials is not a problem. But how will the consumers buy these essential food items, if their prices remain beyond their reach? Is there any mechanism in place whereby the consumers belonging to the aforementioned income groups might also get the benefit of the availability of these food grains and other essential commodities?
However, to the majority section of the population, the price of rice is the cause for utmost concern. As all are aware of, the poorest section of the people consume rice in greater quantity than any other of the nine items listed by the Trading Corporation of Bangladesh (TCB) as the most essential ones. The poorest section of the population that comprises the rural poor and the labouring people in the urban areas consume rice in greater quantity because they have little choice. In fact, they cannot simply afford to buy meat, fish, vegetables and other essentials items to supplement their nutritional needs. So they eat more rice to fill their belly, whether this additional consumption of rice meets their nutritional gap or not. But the problem is quite different in the case of the middle or higher income people. Unsurprisingly, the price of rice has always remained the most sensitive issue before all the governments that had taken office after independence.
Understandably, the chief adviser, too, has expressed his deep concern over the steep rise in the prices of the essential items including rice. At a special meeting attended by the various stakeholders in the government and some representatives of the business community with the chief adviser in the chair, the government has taken certain strategies to increase supply of the essential commodities in the domestic market, and keep the prices under control. But if our memory is not short, similar steps are already in force to rein in the mad horse of essentials price. Prices of all the food-related essentials have remained as unstable as ever.
The edible oil is one such example. The price of edible oil has never come down in defiance of various government measures including monitoring to control it. The price of soybean oil has even refused to respond to its recent fall in the international market. Though the commerce adviser has time and again said that the state should have an effective role to play in controlling price, the measures taken so far have failed to produce any tangible result. So all concerned would be eagerly waiting to see the outcome of the fresh strategy adopted by the government in its latest move towards controlling the essentials, price.
One may not even fail to recall that the authorities have often mentioned the high prices of rice and other food-related commodities in the international market as the reason behind the crazy and relentless price hike of essential commodities in the domestic market. The corollary of this argument is that the price of rice and other imported items will not come down, unless government intervenes in a big way through providing a huge amount of subsidy to the importers. But that again is a question of affordability by the government which has always been walking a tight rope due to serious resource constraints. Otherwise, under a free market dispensation, the price level of the commodities with high import cost cannot be brought down, even though there is no shortage of those commodities in the local market. Under the circumstances, even after the harvest of Boro when locally grown rice enters the market one cannot expect the price level of the food grains to come down. For even then, the traders cannot be asked to sell their goods bought earlier at a price lower than their import costs.
Reports from the international market are hardly reassuring. Drought in Australia, large scale use of food grains and oil seeds for purposes other than consumption and various other factors of global dimension will have their part to play to push the prices of food-related essential commodities further upwards. From this consideration, the argument of availability of food grains in the domestic market does hardly stand on a strong footing, though it may dispel some of the fears spread by the alarmists. Again, the contention of availability, too, will soon lose its ground once the unscrupulous section of traders start to hoard the goods in spite of all the exhortations of the chief adviser and other government leaders.
So, to fight the evil of price-hike of food-related essential commodities, despite their availability, no short term measures would remain effective for long. The strategies have to be very-long term ones, which include creating a large buffer stock of food grains. The phenomena of hoarding and smuggling of food grains and other essential commodities have to be dealt with severely and without any mercy by the law enforcers. Erratic behaviour of prices in the retail market, too, has to be controlled through strong monitoring and necessary punitive measures. The other measures to regulate the market as done by the fair price shop run by the BDR should continue. The Vulnerable Group Feeding (VGF) scheme should be further strengthened. Last but not least, it is also time the government introduced food rationing system in the country.
At the moment, the bigger issue before the general public is affordability of essential commodities than their availability in the market. So, all efforts of the government should be to create the condition so that the fixed and limited income group, the labouring masses and the most vulnerable groups are not forced to starve amidst the supposed abundance of food all around.