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The Financial Express

Price hike of the staple may negate economic turnaround


Price hike of the staple may negate economic turnaround

Notwithstanding a very good Aman paddy harvest and plenty of rice import, the staple is becoming dearer in defiance of the demand-supply theory. The medium variety of rice registered the highest price rise by more than Tk 4.0 a kilogram over the past month and the coarse and finer varieties followed suit by Tk1.50-2.0. Rice market has long been jittery and the government is not unaware of where and how this is orchestrated. This is exactly why the food minister has held several rounds of talks with the millers, rice traders and stockists but after each such round, the latter get their way. Even the latest of his requests to millers and warehouse owners at a meeting on December 27 last for maintaining price stability of the staple seems to have fallen on deaf ears.

Market volatility has become the greatest cause for concern the world over. Economists have sounded the warning that governments everywhere will have to make their efforts double quick if they really mean the business of containing inflation. Arresting inflation will be the greatest challenge before them. The trend following the remission of Delta variant of the SARS-CoV-2 and the start of global economic recoveries in general is market volatility triggered by unseen hands from behind the curtain. At a time the majority of people's, particularly the lower segment's, purchasing power has plummeted drastically or hit the nadir, the engineered price hike of almost all things essential for living does indeed stink and prove immoral.

The food minister is on record saying that the staple market has been manipulated in order to raise prices. This country has witnessed low prices of the staple at the growers' level year after year. Farmers incurred losses because they were compelled to dispose of their grains at prices lower than the production costs. Even at that time the middlemen, hoarders and millers had the rein in their hands to ensure their own profits. Now that situation has largely changed for the better for farmers but still the millers and stockists are the ones who control the market to have the best of both worlds.

Clearly, there is an overt effort everywhere to make up for the losses or low profit made during the one and a half years' pandemic-induced market slump. When this influences the staple market right at the harvesting time, there are reasons to be alarmed at what the manipulators have up their sleeves. March and April are the crunch time when the lean season is on in terms of food supply. Although, there should not be a crisis of food grains because the Boro yield was good ---albeit a setback Aus production suffered --- and Aman yield of about 15 million tonnes, contributing 39 per cent of the paddy output has risen the total to nearly 36 million tones. Bangladesh consumes a little over 32 million tones.

But grain loss is a major factor behind the mismatch between production and availability at the consumer level. This explains why the country has to import rice and between December 2020 and October 2021, private importers imported rice taking advantage of the low tariff. Up to June, 2021, they imported a little over 0.78 million tonnes of rice of the total 1.36 million tonnes. Clearly, there should not be a shortfall in supply but no one can be sure of the tricks the millers and traders are up to during the lean season.

The spectre of hunger looms over wide swathes of the globe. Bangladesh certainly does not figure in those dark patches but if the staple price together with those of essentials continues to rise abnormally as it is doing now, there is no knowing how many families left unemployed and otherwise devastated will have to forego one or two square meals. Silent hunger is likely to make its uncanny visitation in this country too. Amartya Sen will prove once again right that adequate food does not mean its availability for all unless their purchasing power can be enhanced and ensured.

The flimsy excuse that higher production cost and transportation expenses on account of hike in fuel price have pushed up staple prices cannot be fully endorsed. The costs on those two heads have gone up but not to the extent where a kilogram of rice will be dearer by Tk 4.0-6.0. Meanwhile some big players have made their entry into rice trade and their procurement drive may have been responsible for not bringing prices of rice down during the Aman harvesting time.

The breakneck pace at which Omicron is spreading in Europe and America, does not augur well for the world economy. Bangladesh cannot be immune from both the Omicron wave and economic repercussions on its shores. It has to tackle the inflation by creating employment or sources of income for the vulnerable in order to maintain the growth of its macro economy. Otherwise, the disparities already enough to tip the socio-economic balance will invite trouble of unprecedented order for the country.

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