Market monitoring amid price-hike riddle
Thursday, 13 August 2009
Shahiduzzaman Khan
Of late, the government has 'ordered' that wholesale and retail price charts must be displayed in all outlets of the market. Some shops were seen hanging such charts immediately after the commerce minister's announcement. Yet until early this week, the city's kitchen markets were not visited by the market monitoring teams formed by the ministry to keep commodity prices in check in the run-up to Ramadan.
According to reports in the media this week, Commerce Minister Faruq Khan is making frantic efforts to make his Ramadan mission successful. Almost everyday, he is meeting representatives of different trade groups and leaders of the business associations and asking them to keep the prices in the market stable during Ramadan. Yet all his efforts appear to have fallen flat as the market is yet to recover from its erratic behaviour.
Market watchers noted that immediately after the minister's announcement that market monitoring would start the following day, the prices of some essential commodities went up without any valid reasons. Retail prices of sugar, garlic, ginger and edible oil had made a considerable jump. As part of market monitoring, the government decided to implement 10 steps with a view to helping to keep the prices stable. Yet on the heels of the Ramadan, why prices of these essential commodities have made unprecedented hike poses a big question. Most of the commodities that saw unusual price spiral are mostly used in the kitchens of the fasting Muslims during Ramadan.
It is worthwhile to mention that the government faces such a price-hike riddle almost every year. No market mechanism appears to work for solving the riddle. A few days back, the commerce minister held separate meetings with the cold storage owners and poultry farm association leaders following steep rise in prices of potatoes and eggs. There is no reason why the buyers should pay Tk 26 for a kilogramme (kg) of potatoes and Tk 30 for four eggs. In neighbouring country India, potatoes sell at Tk 14 a kg and eggs at Tk 12 per four. The cold storage and poultry farm owners cited high prices of electricity tariff and necessary inputs as the reasons for price hike of the two items in Bangladesh. The question thus arises: Given the similar situation, how could buyers in India get these items in their market at affordable prices? The commerce minister had reportedly raised the same question in his meetings with the aggrieved parties. He did not get any fruitful answer. Yet he made a warning if the prices of the two items did not come down immediately, he would lift embargo on import of those commodities.
The cold storage owners and poultry association leaders made a firm commitment in the meetings that they would help lower the prices of the items within a week and appealed to the government not to lift embargo. As makeshift arrangements, the citizens saw some fair price shops selling eggs at Tk 26 but in potato market, there was no marked fall in prices. Despite sale of eggs at fair price shops, its prices did not fall beyond Tk 30 per four at the retail level in the markets. It now appears that the traders associated with trading of these commodities were trying to buy time to escape the 'wrath' of the minister. Even after those meetings that were held early last month, the ministry has yet remained silent on the import issue. One wonders if the businesses cite reasons like rains, deplorable communications, toll etc., one after another, how will the monitoring mission achieve a positive outcome?
The 10 measures that were adopted by the government to help keep the prices at a stable level in the market can be figured out here. Through such steps, the agriculture ministry will move to increase the supply of vegetables in the market; fisheries and livestock ministry will increase its supply of sweat water and sea fish through Bangladesh Fisheries Development Corporation (BFDC), Bangladesh Standard Testing Institute (BSTI) will conduct mobile courts to stop selling of adulterated products. The government also made it mandatory for the traders to exhibit price charts in all wholesale and retail outlets.
Meanwhile, according to reports, the Trading Corporation of Bangladesh (TCB) is still uncertain about starting fair-price sales of essentials from the first day of Ramadan as the state-run organisation is yet to receive consignments of essentials from Malaysia and Thailand. It would take more time for the goods to arrive in government warehouses from the ports of origin. The delayed and inadequate import of goods, according to some market operators, might hamper the purpose of keeping the prices in the market stable, amid high demand for essentials during Ramadan. They say the TCB should have imported the essentials much earlier to leave a positive impact on the local market. On a single occasion, the consumption of edible oil goes up to 1,50,000 tonnes during Ramadan in the city against usual monthly consumption of 100,000 tonnes.
The recent price-hike, ahead of Ramadan, demonstrated the fact that the market does not always suffer due to a lack of adequate supplies; rather some unscrupulous traders get involved with price-fixing mechanism. In order to bring them to justice and restore some semblance of normalcy in market in terms of prices of essentials the government needs to build up an institution like trade commission taking examples from other countries. A strong and efficient institution like trade commission with updated database, capability for prompt investigation and collaborative attitude with consumers can contribute to curbing the price-fixing mechanism. Such an institution needs to be set up as early as possible so that the consumers' rights are no longer compromised.
Indeed, there are reasons to strengthen market monitoring in the Bangladesh context because prices here rise not only due to mismatch between demand and supply but also from the profit maximisation or unethical profiteering instincts of a section of traders. Market monitoring and regulatory measures including the introduction of consumer-friendly legislation, are needed with a view to addressing the problems of markets imperfections.
szkhan@thefinancialexpress-bd.com
Of late, the government has 'ordered' that wholesale and retail price charts must be displayed in all outlets of the market. Some shops were seen hanging such charts immediately after the commerce minister's announcement. Yet until early this week, the city's kitchen markets were not visited by the market monitoring teams formed by the ministry to keep commodity prices in check in the run-up to Ramadan.
According to reports in the media this week, Commerce Minister Faruq Khan is making frantic efforts to make his Ramadan mission successful. Almost everyday, he is meeting representatives of different trade groups and leaders of the business associations and asking them to keep the prices in the market stable during Ramadan. Yet all his efforts appear to have fallen flat as the market is yet to recover from its erratic behaviour.
Market watchers noted that immediately after the minister's announcement that market monitoring would start the following day, the prices of some essential commodities went up without any valid reasons. Retail prices of sugar, garlic, ginger and edible oil had made a considerable jump. As part of market monitoring, the government decided to implement 10 steps with a view to helping to keep the prices stable. Yet on the heels of the Ramadan, why prices of these essential commodities have made unprecedented hike poses a big question. Most of the commodities that saw unusual price spiral are mostly used in the kitchens of the fasting Muslims during Ramadan.
It is worthwhile to mention that the government faces such a price-hike riddle almost every year. No market mechanism appears to work for solving the riddle. A few days back, the commerce minister held separate meetings with the cold storage owners and poultry farm association leaders following steep rise in prices of potatoes and eggs. There is no reason why the buyers should pay Tk 26 for a kilogramme (kg) of potatoes and Tk 30 for four eggs. In neighbouring country India, potatoes sell at Tk 14 a kg and eggs at Tk 12 per four. The cold storage and poultry farm owners cited high prices of electricity tariff and necessary inputs as the reasons for price hike of the two items in Bangladesh. The question thus arises: Given the similar situation, how could buyers in India get these items in their market at affordable prices? The commerce minister had reportedly raised the same question in his meetings with the aggrieved parties. He did not get any fruitful answer. Yet he made a warning if the prices of the two items did not come down immediately, he would lift embargo on import of those commodities.
The cold storage owners and poultry association leaders made a firm commitment in the meetings that they would help lower the prices of the items within a week and appealed to the government not to lift embargo. As makeshift arrangements, the citizens saw some fair price shops selling eggs at Tk 26 but in potato market, there was no marked fall in prices. Despite sale of eggs at fair price shops, its prices did not fall beyond Tk 30 per four at the retail level in the markets. It now appears that the traders associated with trading of these commodities were trying to buy time to escape the 'wrath' of the minister. Even after those meetings that were held early last month, the ministry has yet remained silent on the import issue. One wonders if the businesses cite reasons like rains, deplorable communications, toll etc., one after another, how will the monitoring mission achieve a positive outcome?
The 10 measures that were adopted by the government to help keep the prices at a stable level in the market can be figured out here. Through such steps, the agriculture ministry will move to increase the supply of vegetables in the market; fisheries and livestock ministry will increase its supply of sweat water and sea fish through Bangladesh Fisheries Development Corporation (BFDC), Bangladesh Standard Testing Institute (BSTI) will conduct mobile courts to stop selling of adulterated products. The government also made it mandatory for the traders to exhibit price charts in all wholesale and retail outlets.
Meanwhile, according to reports, the Trading Corporation of Bangladesh (TCB) is still uncertain about starting fair-price sales of essentials from the first day of Ramadan as the state-run organisation is yet to receive consignments of essentials from Malaysia and Thailand. It would take more time for the goods to arrive in government warehouses from the ports of origin. The delayed and inadequate import of goods, according to some market operators, might hamper the purpose of keeping the prices in the market stable, amid high demand for essentials during Ramadan. They say the TCB should have imported the essentials much earlier to leave a positive impact on the local market. On a single occasion, the consumption of edible oil goes up to 1,50,000 tonnes during Ramadan in the city against usual monthly consumption of 100,000 tonnes.
The recent price-hike, ahead of Ramadan, demonstrated the fact that the market does not always suffer due to a lack of adequate supplies; rather some unscrupulous traders get involved with price-fixing mechanism. In order to bring them to justice and restore some semblance of normalcy in market in terms of prices of essentials the government needs to build up an institution like trade commission taking examples from other countries. A strong and efficient institution like trade commission with updated database, capability for prompt investigation and collaborative attitude with consumers can contribute to curbing the price-fixing mechanism. Such an institution needs to be set up as early as possible so that the consumers' rights are no longer compromised.
Indeed, there are reasons to strengthen market monitoring in the Bangladesh context because prices here rise not only due to mismatch between demand and supply but also from the profit maximisation or unethical profiteering instincts of a section of traders. Market monitoring and regulatory measures including the introduction of consumer-friendly legislation, are needed with a view to addressing the problems of markets imperfections.
szkhan@thefinancialexpress-bd.com