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     Volume 8 Issue 79 | July 24, 2009 |

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Cover Story

Markets getting Hotter

Prices of essentials are on the rise again - people have become almost used to this refrain making front-page news. But when something as small as green chillies shooting up to Tk 200 a kilogram (in June it was Tk 48) even the most resigned consumer gets rankled.

Aasha Mehreen Amin and Elita Karim
with additional reporting from Shaheen Molla
Photos: Zahedul I Khan

"I just can't believe it!" says Tajul Islam, a clerk at a government office carrying his shopping bag at Karwan Bazar. "How can chillies cost so much? I was going to buy some fish but they are completely out of my reach."

The story of price-spiralling this season may not be as straightforward as one would think. There seems to be a myriad of reasons why prices of some items, usually considered cheaper than others, are soaring to incredible levels. Vegetables are becoming a luxury item for many lower income groups, one of the most affected. "I really don't know what to buy when I go to the market," says 36-year-old Jamila Begum who works as a part-time maid at a house in Banani DOHS. "Whenever I go to buy some vegetables I come back with only potatoes as that's all I can buy these days. But my daughters keep asking for fish but that is impossible." Price of even katchki fish, a relatively cheap item, has shot up from Tk 120 to Tk 180 per Kg.

In the last one year, the price of fish has increased by 5.51 per cent, meat (beef, chicken etc.) by 4.38 per cent, eggs by 8.23 per cent, spices (masalas) by 6.22 per cent, vegetables by 7.89 per cent, sugar by 21.42 per cent and fruits by 7.94 per cent (Consumer Association of Bangladesh, Cab). Over the last month however, vegetables have risen by 25 to 30 per cent, onions by 10 to 15 per cent and eggs by 15 per cent. As compared to essentials like flour and pulses, there has been rise in price in the case of green vegetables has been tremendous.

One of the major reasons for the price hike of vegetables has been the rainy season causing land to go under water and then the consequent heat after the rains have subsided, make the vegetables rot. Fish too, is short in supply during the flood season making fish such as Hilsa become one of the most expensive items on the menu.

“At least 60 per cent of green vegetables like spinach and brinjals come to Dhaka from Norshindi and 40 percent from other places outside Dhaka,” says Mufazzal Hussain, the Market Monitor officer of Cab. “Most of these areas have been flooded and plenty of damage has been made on the tilling fields because of the heavy showers of rain. Therefore, it is quite natural for the prices of these vegetables to rise.”

Paultry farmers claim that frequent load shedding in poultry farms has also affected chickens, which fall sick because of the heat, and eggs too get rotten creating a shortage of supply in the market and making them pricier. Farm chickens are now 115 per kg and a single egg is about Tk 8. Deshi chickens are Tk 200 per 900 grams.

For people with fixed incomes, price surges of essentials are a terrible burden to bear.

Some of the price increase in poultry can be also attributed to large-scale losses of poultry farmers during the bird flu scare when thousands of chickens had to be culled, putting small farmers in utter disarray. Raising the price of poultry this season is an attempt to recover those losses exacerbated by loans and lack of compensation from the government.

Although the price of some items such as rice have remained stable and edible oil has gone down, the prices of many other items have gone on a roller coaster ride. According to a Daily Star report the price of sugar reached Tk 40 to Tk 44 per kg.

Commerce Minister Faruk Khan has announced that the government will start selling edible oil (an item which has not increased in terms of price) through the TCB from August 10, to keep it at an affordable level during Ramadan.

The report also quotes price rises of other essentials in just the month of April as given by the TCB monitoring report: Price of onions rose by 50 per cent, potatoes 30 per cent, garlic nine per cent and broiler chicken by 13 per cent.

The report also adds that the prices of some essentials such as lentils, powdered milk, and soybean keep fluctuating as their supply depends on imports. Cost of import has gone higher with devaluation of the taka against the US dollar.

According to Consumer Association of Bangladesh, powdered milk for the last six months (January to June 2009) has gone down 7 to 10 per cent. Liquid milk, on the other hand, which is in high demand, has increased by 4.17 per cent over the last six months.

But as usual, prices are artificially shot up by other extraneous factors. With Ramadan knocking at the door and the government's promise to make sure prices of essentials are kept at tolerable levels, many traders wholesalers and middlemen are hiking up the prices in anticipation of such controls to make sure they make good profits in the holy month. “This happens purely out of profit making intentions by business people in the market and nothing else,” says Emdad Hossain, Programme Officer, Cab. “The government says that we have a free market economy, which is not true at all. From what happens in Ramadan every year, it is clear that we have a monopoly economy running in the market.” Hossain further adds that the government can easily regulate and monitor the price rise situation and bring it under control. “All they have to do is monitor and communicate the changes occurring in the wholesale market,” he says. “For instance, the wholesale price of soybean oil has decreased by Tk 6 per litre. But because the authorities do not make this known, consumers are still buying 5 litres of soybean oil at approximately Tk 400 to Tk 420.”

The practice of toll-collecting by mastaans at the open markets from wholesalers (10 per cent for the total amount sold) and from Tk 2 to Tk 10 for every per palla (5kg) that is being sold compels the small traders to increase the prices. Meanwhile wholesalers often take advantage of a crisis in supply by dictating the price according to their whim. The DCC is supposed to put up charts on the market prices of items in each kitchen market but without proper enforcement the wholesalers and retailers do not pay heed to it. The burden naturally falls on the hapless consumer. Police too extract tolls from supply trucks thus adding to the cost.

"During the caretaker government all this toll collecting had been stopped, says Ahsan, a local trader. “But now the toll collectors have come back as is the case after each elected government."

Prices also vary from market to market and are determined by a mix of variables - how much rent the shopkeeper has to pay, how costly it is to transport the goods, the level of influence of local mastaans and their 'rates' of toll. At New Market and Karwan Bazar, for instance, prices are higher than many small kitchen markets because of the pressures from all these factors are higher.

Going to the bazaar has become a stressful affair.
For people with fixed incomes price surges are having a toll on the quality of life.

In a so-called free economy, the government claims that it cannot interfere with demand and supply forces although it is trying to make some interventions. Experts have suggested that a revamping of the Trading Corporation of Bangladesh (TCB) will be a major step in keeping prices of essentials down.

Commerce Minister Faruk Khan has announced that the government will start selling edible oil (an item which has not increased in terms of price) through the TCB from August 10, to keep it at an affordable level during Ramadan when the demand for edible oil is at its peak. Prices of edible oil will be lower as there is less likely to be a crisis as businessmen have already made huge stocks of edible oil, besides the government initiative.

The recently reopened Prime Edible Oil Ltd. at Megnaghat in Narayanganj by the commerce minister, is expected to supply 12,500 tonnes of palm oil to TCB at TK 57 per kg. Another company will supply 12,500 of soybean oil to TCB.

The TCB was established to keep prices of basic commodities at an affordable level and also help increase exports. But various policies and regulations of previous governments kept the organisation less effective than it should have been.

For people with fixed incomes price surges are having a toll on the quality of life. The poor, lower-middle class and middleclass are the most vulnerable.

Prime Minister Sheikh Hasina has asked the ministry and authorities concerned to take immediate steps to keep essentials within the buying capacity of people during Ramadan. She has directed the authorities of the Trading Corporation of Bangladesh to import essentials as soon as possible to supply them to the open market before Ramadan.

Vegetables are becoming luxury items for money.
Price of rice has been relatively stable.

Mariam Iqbal a housewife who shops at the Kochukhet market every week says that she has to sit down and review her monthly budget since prices have gone up in the last few weeks. “I have to buy food and essentials every week for at least 7 people in the family, which includes my two sons, husband, myself, our two house help and our chauffer,” she says. “Usually in a week I would spend around Tk 1,500 or a little more, depending on my requirements. But now, with Tk 32 for one haali of eggs (4 eggs), the price rise in fish and green vegetables, I think I will have to cut down on plenty of the items. This only shows that the coming month of Ramadan is going to be worse.”

26-year-old Laili Begum says that her family has stopped buying eggs altogether. She lives in Shewra Bajaar, with her parents, brother, sister and her two-year-old daughter. Working as part time house help at several homes every day, Laili says that her cleaning and washing do not pay her enough to cope with the rising prices in the market. “We used to buy vegetables regularly, since we could not afford meat,” says Laili. “But now it is equally difficult to buy vegetables.” Laili and her siblings also bear the costs of medicine for their diabetic mother. “Even with all of us working, it is becoming extremely difficult to run the family in a healthy manner. It will become worse in Ramadan, because that is when everything will cost at least two times more than what they cost now.”

Hilsa has become an out of reach item for most people.
The price of a basic item like onion is always one of the first ones to soar.

While it is believed that in a free market economy, the forces of the market should be allowed to work their own course to determine prices, it is obvious that some intervention is essential to lessen the unbearable burden that price hikes of essentials have on the majority of people. This is a season when many perishable items are naturally in short supply with predictable rise in prices; thus keeping prices at a reasonable level falls on the government's shoulders. The old system of ration cards that allow people of low or middle income groups, to buy essentials at reasonable rates, needs to be revived. TCB's monitoring mechanism has to be a lot more intense in terms of enforcing its fixed prices of items in the markets. The practice of toll collecting has to be eliminated to allow the market to operate normally. With the coming of Ramadan, consumers should be free to observe the holy month, without the gnawing fear that essentials will be costlier than ever.


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