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The Financial Express

Price debate centres around same recipe

| Updated: January 07, 2021 22:42:02


Evaly and Fianancial Express Evaly and Fianancial Express
Price debate centres around same recipe

The moment the price of cauliflower has come down to a one-third, at Tk 10 a piece, average consumers still tend to bargain. Even when a kilogram onion costs four times higher - Tk 200 or so - quite a number of customers still rush to the market to purchase the essential spice item before, they fear, its stock comes to an end.

That only says one side of the story.

Traders, especially wholesalers but not excluding retailers, raise price upon hearing news of supply shortage or ban on export of an item by a supplier country. Reduction in import duty on an essential commodity is hardly reflected in our market in due time, nor does adequate supply always ensure price stability. But an oversupply situation does enough harm to growers, the large but invisible groups, and sometimes to small traders.

Official actions, and different activities and movements follow once there is kitchen market volatility or crisis of particular food item. As if, the situation, created by a combination of factors and over a period of time, could be resolved overnight.

The result is: Common consumers suffer. And people do business with short-term targets and occasional uncertainties. A major section shows tendency of making windfall profit. They also have to face criticism from all others since consumer rights affairs are a sensitive issue.

In Bangladesh, there is a long-term impact of certain conflicting polarisation involving growers, traders and consumers.

In a supply shortfall situation, farmers get better prices of their produces. They raise production the next year expecting such a high price to continue but the supply glut results in pricefall which leads to decreasing production in the subsequent year, when, the market sees price uptrend. This cycle is called cobweb model.

The Bangladeshi stakeholders witness sudden state intervention into the market, depending on ad hoc arrangements, whenever a crisis has already arisen. The TCB (Trading Corporation of Bangladesh) and such windows are important but other market mechanisms and regulatory organs are hardly utilised in time.

So, in absence of any panacea from excessive price fluctuation oftentimes leading to a crisis, suggestion for fixation of prices of essentials comes sometimes from a section of consumers. No such price is estimated on the basis of production cost of each item, other than paddy price for official procurement, which barely benefits genuine farmers.

Urban opinion leaders, who protest against any price hike of consumer goods, generally ignore the interests of the rural growers who historically are deprived of what is politically called fair price, during the harvesting season.

The recent onion crisis in Bangladesh, following India's ban on exports, is a classic case. Traders have imported a huge quantity of onions and India has withdrawn ban now when Bangladeshi farmers have started harvesting early varieties of onion. Growers have no price insurance in case they lose to market forces this year and in any year.

Commodity price is such an issue in Bangladesh that wherever there is a debate or discussion - be it in television channels, or on newspaper pages - the stakeholders try to offer serious recommendations apparently expecting immediate and sustainable solutions.

The only missing outcome of the discourse on price is a prudent action that can give birth to and establish a system for taking preemptive steps to stop any market crisis. Generating accurate data about production, demand and supply of agricultural produces and taking regulatory measures on time can ensure a competitive market which can serve all - consumers, traders and growers.

Instead, belated actions and steps like open market sales are what are seen as measures to arrest the price spiralling. Some price issues are related to governance and some involves moral values that are not taken into account.

We do the same thing - holding meeting, giving statement and taking a few known actions - over and over again, forgetting that the world has changed. Thus, smart market management remains a far cry.

 

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