Govt to set prices of 9 essentials

As commodity price volatility persists with prices of essential products – either locally produced or imported–- soaring unpredictably due to dollar shortage and fuel price hike, the government has planned to widen its control over the market; it incorporates more items in the list of essentials and attempts to set prices with stern warning against violation.

Rice,egg, cement and rod will now join edible oils, sugar, flour, onion and lentil in the list of nine essentials, whose retail prices will be capped by the government in 15 days on the basis of global price movement and local market supplies, Commerce Minister Tipu Munshi said on Tuesday (30 August).

But experts say even if the initiative is good, there are concerns about how effective it will be, because it has not seen much good results in the past.

On Tuesday, the Ministry of Commerce held a meeting with traders regarding the progress of supply, storage and import process of products in the market. Commerce Minister Tipu Munshi disclosed the decision to set the prices soon after the meeting.

After the meeting with trade bureaucrats and key trade body leaders, the minister said so long, the tariff commission used to set the price of edible oil and sugar only. But in recent times the prices of these products have increased excessively in the local market taking advantage of the global instability and appreciation of the dollar in the domestic market, which, he felt, could have been avoided.

The matters came to the notice of the commerce ministry which has conducted regular operations through various organisations, including the Directorate of Consumer Rights Protection, to keep prices under control, Tipu Munshi said.

For this reason, the government will fix the price of these nine products, taking into consideration the international market price and domestic production and supply situation, he added.

The Bangladesh Trade and Tariff Commission will act as a focal point to analyse global prices and suggest rational prices of imported goods for the local market, while two other government agencies-- the consumer rights protection commission and competition commission-- will see if consumers get essentials at the set prices.

Tipu Munshi said those tasked to monitor the market have been instructed clearly that a case should be filed if any trader manipulates any product or asks an unreasonable price. Punitive measures should not be limited to mere fines.

"The Tariff Commission will determine the reasonable prices of these (nine essential) products within the next 15 days," he said, warning of legal action if anyone was found charging more than the fixed prices. The person or businessman accused in the case can be jailed for three years, the minister noted.

A 1956 act allows the government to intervene in the market to ensure fair prices and smooth supply of essentials.

While the move has been welcomed, consumer rights campaigners are less upbeat about the outcome given the previous instances of prices set by the government being largely ignored and occasional drives by regulators failing to keep retail prices in check.

They said the government is fixing the price of oil and sugar well in advance. Even so, the prices of both commodities often fluctuate as shown during the last Eid.

On the one hand, producers stopped supplying the market, while on the other, retailers did not sell unless they got a higher price.

As the government could not control supply, they then were forced to increase prices before the market returned to normal.

Now, stakeholders say that as the government has failed before, they wonder what can be achieved by fixing prices of so many products.

Ghulam Rahman, president of the Consumers Association of Bangladesh (CAB), said, "The initiative is very good, but the implementation will be very difficult. As the price of oil fluctuates from time to time, the government still wants to control it."

He, however, said the demand for the creation of a separate department in the Ministry of Commerce to work on consumer affairs has become stronger.

In India, the Price Monitoring Division under the consumer affairs department is tasked with keeping watch on 22 selected essential commodities, including sugar, edible oils, tea, milk, potato and tomato on a daily basis. The government agency monitors retail and wholesale prices of selected essentials and informs policymakers of the price situation everyday to help commodity-specific market interventions and give relief to consumers.

Market watchers feel such a separate agency can help discipline the commodity market in Bangladesh.

 Set prices for 9 products

The Ministry of Commerce says if the price of any product beyond these nine products is increased, the government will also fix their price.

Failure to comply with the price announced in the market will lead to strict legal action against the person or trader concerned.

According to the current law, there is a provision of maximum three years rigorous imprisonment in case of charging higher prices by hoarding, market manipulating or creating artificial crises.

So far, the government has fixed the price of sugar only once, but even that had a negligible effect.

The government had fixed the price of open and packet sugar at Tk74-Tk75.

But sugar is now being sold in the market at the rate of Tk88-90 per kg.

Although keeping the market stable and selling products at fixed prices are some other tools at the government's disposal, those are not very effective.

For example, the city corporations provide a price list of products in different markets of Dhaka but it is not followed.

When it comes to sales through the Trading Corporation of Bangladesh, price volatility defeats its purpose too.

The government has instructed shops to hang a price list of essentials in the market, but even that has always failed.

First Vice President of the FBCCI, Mustafa Azam Chowdhury Babu, said the Tariff Commission has been given the responsibility to determine reasonable prices by comparing the international market with the local market within 15 days.

"Now let's see what their capacity is, whether they can do the work within this time or not."

He said, "Although the implementation is challenging, there is an opportunity for everyone to work together."

Md Shahidullah, first vice president of the Bangladesh Cement Manufacturers Association and managing director of Metrocem told TBS, 'We are now forced to sell rod and cement at a loss due to various reasons. It will be good for us if the government fixes reasonable prices."

In a presentation by the Tariff Commission at the meeting of the Ministry of Commerce, the local and international market conditions of the products, local stocks and production issues were highlighted before prices were set.

General Secretary of Bangladesh Auto Major and Husking Mill Owners Association Layek Ali told TBS, "We have no problem selling rice at the price set by the government. But before fixing the price of rice, the price of paddy must be fixed. If not, it will not have an effect."