Price rise amid overflowing supplies

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The markets in Bangladesh can indeed defy all economic laws and dictums. The simplest of the economic laws says that the more the supplies of a commodity the less would be its price as abundance of the good in the market pushes down its price. The economic law says that the less the supplies of a good, the higher would be its price as price is bidded up from the relative scarcity of it.

But do these laws apply at all in the Bangladesh context ? If not, then are there other extra-economic manipulations to explain the price aberrations ? Let us take a look. First, the boro rice yields this year has surpassed all previous records. There is no shortage of rice or its supply snags in the markets from transportation bottlenecks and other factors. From the wholesalers down to the retailers, a smooth supply chain is noted. Therefore, there can be no argument for prices rising from disrupted supply or stresses on the supply system. One may assume, stating economic laws again, that a surplus supply situation exists in the market in relation to rice and this should have a lowering effect on its price. But the prices of all varieties of rice have only moved upwards in the last week. Even the price of coarse rise moved up by at least Taka 3 per kg.

Similar is the experience with potato. This year the harvests of potatoes in the country surpassed all records of high production. A potato glut occurred from lack of conservation facilities and potato price was seen sliding and then stabilized at some Taka 14 per kg. But notwithstanding the abundance of its supply, price of potato has also marked a rise to Taka 18 per kg recently.

The rise in the price of these two edibles would not matter but for the fact that the two are considered as the food of the common man. A recent study showed that the poor in Bangladesh spend nearly 86 per cent of their food budgets on rice. From awareness building this year, they are also expected to change eating habits and switch over partly to potatoes which can be both a substitute and complementary food item for rice. The lower price of potatoes is supposed to encourage the eating of more potatoes. But the stresses on the poor in consuming these two staples could not be reduced because their prices could not be stabilized in the first place not to speak of reducing the prices. The affluent sections of people feel no pinch if the price of staple foods shoot up by 20 or 30 per cent at one go. They have their purchasing power to absorb such price escalations. But for the vast number of the poor, a further rise of even one taka per kilogram of the staple foods can mean hardship when prices of staple foods have been rising without a pause for the last two years and their purchasing power in general did not improve notably.

Thus, one wonders what had happened to the vaunted price monitoring activities pledged by the commerce adviser when he joined office some months ago. He promised a revolution of sorts and raised much expectation for consumers by stating that a price monitoring and controlling mechanism would be set up immediately. But a report in this paper last week focused on how this plan is going nowhere. There is not even a permanent price monitoring cell and an ad hoc one that functions by arranging its meeting by switching venues at different government offices, is finding the going very difficult. No one knows when a regular and permanent price monitoring cell will come into existence along with supporting apparatuses and laws. Therefore, it is no wonder that market manipulators are having their heyday in the absence of effective price monitoring and taking of appropriate actions. We realize that the adviser who should be concerned, is now burdened by political tasks that cannot wait. But his pledged fast action programme for price monitoring also cannot wait considering the hardships of the common man and the cardinal requirement of not allowing further unjustified rise in the prices of basic foods.

Meanwhile, it was credibly reported that powerful syndicates are at work which are bent on frustrating both the food procurement drive of the government and price stabilisation. The syndicate operators have set up a vast network of warehouses across the country and are buying up rice from the farmers with the express aims of hoarding and then releasing the rice into markets in a calculated manner to raise prices for raking in maximum unearned profits. The rice markets have practically gone under the control of such syndicated operators. Should not the government apply the emergency powers it wields to deliver the consumer from the clutches of these syndicate operators ? One understands that the emergency powers are there to be applied to address issues which are of most concern to people such as food which also justify the retention of such powers by the government.