<%-- Page Title--%> Cover Story <%-- End Page Title--%>

<%-- Volume Number --%> Vol 1 Num 129 <%-- End Volume Number --%>

November 7 , 2003

<%-- Navigation Bar--%>
<%-- Navigation Bar--%>
<%-- 5% Text Table--%>

Paying More to get Less


Our kitchen markets seem to be forever in the grips of the price monster. Come Ramzan this fiend takes on huge proportions, shooting up the prices of essential food items and making the lives of ordinary people more miserable. But does this phenomenon of price spiral of essentials inevitable? If yes, why? If not, who is responsible?

Tofazzal Hossain and his four-year-old daughter Parul hold up their hands together to say doa as the Magrib Azan wafts into their 10ft by 8ft room. The mother hurriedly enters the room with a bottle of cold water. They sit on the bed forming a circle with a medium sized bowl in the middle for iftar. The menu can't be simpler -- a mixture of some pyaju, boot and muri. A few pieces of khejur (dates) on a separate plate are clearly the special attraction of today's iftar.

“Parul has been hankering for dates for the last two days,” Tofazzal says shyly. A security guard of a fivestoried building in Gopibagh, with a monthly salary of Tk 3,500,Tofazzal cannot afford to buy even 250 gm of dates everyday.

“We don't make iftar at home, it's too expensive,”says Tofazzal's wife Momotaz who works in 3 houses as a chuta bua.“ How could we when 1 kg of soybean oil sells at Tk. 52. Iftar is not for the likes of us,” Tofazzal adds. Tofazzal is not alone in thinking this way. With the wild spiraling of prices of almost all essential food items during the Ramadan, breaking the fast with a variety of tasty tidbits or a wholesome meal, is a far cry.

Ramadan and price hikes of the essentials have become synonymous. The only difference this year is that the prices are increasing at a faster rate and started to spiral much earlier than usual. Ramadan was still three weeks away when suddenly the prices started to rocket in the kitchen market with a record high in the price of onion. Onions being an integral part of Bangladeshi cooking and regarded as an 'essential', are a good indicator of what's happening in the market.

Usually, the price of onion ranges between Tk 8 and 15 per kg, depending on the season. But from the second week of October, the price of onion shot to Tk 32 per kg. Very soon prices of other food items followed suit. In the last 2 weeks preceding the Ramadan prices of lentils, oil, dry chilly, ginger, garlic, meat, powder milk, vegetables and boot (gram) have increased by Tk 4 to Tk 25 per kg. As the Ramadan was approaching, prices of the traditional iftar items also showed marked rise. Prices of khorma (dry date) rose from Tk 100 to 120, dates from Tk 38 to Tk 40, muri from Tk 26 to Tk 28 dabli motor (chickpeas) from Tk 18 to 20, baisan from 20 to 24. Beside, prices of each kg of gram increased Tk 6 to 8 and of chira by Tk 2 to Tk 4. The list doesn't end here. Prices of vegetables and fruits have also been souring and out of the reach of the low income group people, who with their fixed income are being forced to cut off or lessen the different essential food items from their daily menu. Zamila Begum, a widow who lives with her daughter and her son-in-law and works as a domestic maid, says that she hasn't had fish for months and even vegetables are too pricey. Her family eats iftar together, a meal of just rice and lentils.

Most people are not interested in the pros and cons of the tricky question of why prices are soaring this way. The easiest answer by condemning the government. “It is the government's responsibility to keep prices of essentials in check, but they are busy fattening their coffer,” Rasheduddin, a security guard working for Group 4, says bitterly. He reveals that his monthly food charge in the mess, where he lives with two of his co-workers, has already surpassed the usual Tk 800 per month though there are still 5 or 6 days to go. Saiful Islam, a second class employee in the main branch of Bangladesh Krishi Bank, also refuses to analyse who the real culprit is and to what degree others have contributed to this unbearable market condition. “I don't care who are responsible. I just want to see an end to it,” he says impatiently. “Now, as potato is selling at Tk 14 a kg even rice and alu bharta seem to be going beyond the reach of people like us,” Islam says. “It has been almost a month since prices have been increasing rapidly, but the government hasn't done anything at all. Why doesn't it take actions against those who are creating such situations?” says Biplob, another shopper at the vegetables market in Gopibagh. When it comes to finding why prices are increasingly this way or who is/are responsible for it there are various theories. Some reports in various newspapers point to the big gap between wholesale and retail prices and in doing so hold the retailers largely responsible for price hike. But it may not be as simple as that.

Yasin Mollah, a stout middle-aged, retail seller of onion, garlic, ginger, dry chilly and lentils at Gopibagh bazaar intently looks at his daily accounts. When he is asked the question the entire nation is asking he grows a bit glum: “Bhai, it is very easy to accuse the poor sellers like us. But I cannot sell things at lesser prices than I have bought at.” Mollah gives examples. “The wholesale price of the Indian onions is Tk 20 to Tk 22 depending on qualities at Shambazaar. Add to that the transport cost, the rent of this is Tk 1500 a month and also the sizable amount we lose as onions rot very quickly. Now tell me if I am asking too much,” he demands. On 30th October he was selling Indian onions at Tk 26/27.

Shambazaar, the biggest wholesale market for spices, vegetables and fish, stands along with the Buriganga. Inside the scores of quite large shops known as aarat sacks filled with onions, garlic, ginger are stacked neatly. The long rows of trucks standing almost in the middle of the road are being unloaded. The large sacks are then weighed in the giant scale under the close scrutiny of the aarat manager.

Shouting of the labourers from all around mixing with the roaring from the tired engines of the trucks create the soundscape of Shambazaar, noisy but characteristic of the place.

Retail sellers do not usually buy from the aarat. There are wholesale shops a little further down the road who buy goods in sacks and then sell them to the retailers in pallas. Each palla is equivalent to 5kg. Enamul Mia, one of the wholesale businessmen, is seen spreading out onions across his tiny 4ft by 6ft place. Onions tend to rot in the damp weather, he says. When he is asked about their role in pushing up the price of onions and other things Enamul doesn't protest. Instead he explains how things happen in the wholesale business: “My selling price is higher by Tk 1 per palla from my buying price. Besides there is no scope to lie about my buying price because buyers (that is the retailers) come to us after checking with the aaratdar.” The aaratdar in his turn does business on commission. In the case of spices an aaratdar gets 30 paisa per every kg sold. “So it is of no consequence if we sell something at Tk 20 or Tk 50 per kg,” Khairuzzaman, an aaratdar in Shambazaar, says. When asked about the allegation labelled against them that they stock up goods to create crisis he protests : “ We can sell things at whatever prices we want. We cannot sell it except at the price fixed by the importer who is owner of the goods.” One widely believed theory regarding the suspicious price hikes has been that of goods being stocked for longer periods to create an artificial crisis. Majed Mia, an importer who also owns Raj Traders, an Aarat, in Shambazaar, scoffs at such an idea. “If I keep onions for more than 3 to 4 days they will start rotting” he says after pointing to the stacked onions. Besides the earlier I sell the better price I will get, he adds. Then why did the price of onions shoot up to Tk 32 per kg? “Because the supply was much lower than the demand,” he reasons. Normally it takes 5 to 6 days to get things from Kolkata to Dhaka. But sometimes rush in the borders or delay in custom formalities take up extra time.” Other factors are at work too. “Often we cannot sell onions or garlic of the same shipment (chalan) at the same price; by the time we receive them, a large amount has lost its original freshness.”

If we closely examine the ways retail or wholesale business works it is clear that they simply don't have much control of the market. It is only the importers who have the means and scope to manipulate the market. Because it is the importers who set the price in the first place. Sometimes before they finish a particular chalan prices go up in the country from where the goods were imported. They immediately raise the price though they are actually selling from the same chalan. Sometimes they intentionally make delays in placing orders or keep stocks for longer periods than they should to create an artificial crisis. “Sometimes they exploit their own created crisis to force the government to withdraw taxes on imported goods to multiply their profit,” he explains. Maleque alludes to a 'plot' of the edible oil importers who are lobbying with the government so that it lifts taxes despite the fact that they already have millions of tonnes in their stocks that were bought at Tk 39 to Tk 41 with the L/C opened in July-August.

By forming trade associations like onion importers' association or dal importers' association, these importers cum businessmen have established such absolute control over the market that the government play hostage in their hands.,” points out Emdad Hossain Maleque, Programme Officer, Research and Information Cell, Consumers' Association of Bangladesh (CAB).

“And it is the wrong policy of the government that has given these greedy dishonest businessmen the scope to exploit the situation to their advantage,” he adds. In the name of free market economy the government (who is not supposed to either intervene or influence the market) has made people dependent, for many of the essential food items, on the business people.

If a section of businessmen are behind the price spiral the government is guilty of letting them go unchallenged. Inspite of the continuous media uproar Commerce Minister Amir Khosru Mahmud Chowdhury chose to ignore the whole issue uttering what seems to be his dearest doctrine : “ In a free market economy prices are determined by the market force, the Government cannot control it.” He however had to eat his words when the Government cut down 29% tariff on onions to 7%. Why didn't the government do this earlier? Don't they know there are price hikes during every Ramadan?” Mizanur Rahman, a doctor working at the Monowara Hospital, wonders.

The reason the government couldn't act on time is because it doesn't have any mechanism to monitor the market and get up--to--date information about the demand and supply of various items, day to day retail or wholesale market price, market prices in the country from where goods are being imported, transportation costs, approximate time period for transport and other related issues, so that it can work out a reasonable price policy and then bargain with the business people, Maleque suggests. Such information would give the Government the opportunity to pre-judge the market condition and take measures accordingly. The government moreover, must have a substitute arrangement ready so that it can import during emergency situations. The government can easily use the TCB (Trading Corporation of Bangladesh) for this purpose.

Whatever is said about a 'free market economy,' the Government cannot shrug off its responsibility and must do everything necessary to bring back normalcy in the market. But for that general people need to be aware of their rights as consumers so that they can make the government perform its duties in this regard.



(C) Copyright The Daily Star. The Daily Star Internet Edition, is published by The Daily Star