Why are market prices still out of control?

A dozen ripe bananas now cost Tk160-170 and a dozen eggs cost Tk180-190. But bananas and eggs are the only affordable food items that middle class parents can feed their children every day. 

Even in the kitchen market, not a single vegetable is available under Tk100. A bunch of pui shaak (Indian spinach) is priced at Tk50 even though it is currently the vegetable's peak season.   

When we asked the sellers why these basic items are so pricey, they replied, "We have to buy at a high price now. This is how it is."   

On 14 August, Salehuddin Ahmed, finance adviser to the interim government, said that it will take some time but commodity prices will come down. The supply chain will be fixed, monetary policy and fiscal policy will be coordinated, and eventually, the price will decrease. 

It has been two months since that press briefing. 

On 2 October, Bangladesh Bureau of Statistics (BBS) published a report that said overall inflation has decreased 1%, but food inflation is still hovering above 10%, although it has come down from the previous month.

The inflation rate has decreased twice under the reign of the current interim government. Then why is the price still high?

On Friday, Hasnat Abdullah, one of the coordinators of the Anti-discrimination Students Movement, posted on his social media account, "Control commodity prices quickly by cracking down on syndicates. The talk of state reform cannot be carried out on an empty stomach."

Thousands of people reacted to that post and many commented on the reasons behind the high prices. 

For example, an author and researcher, Faiz Ahmad Taiyeb, wrote, "There are floods across the country, we should keep that in mind. Agricultural yields are disrupted. Floods in Feni, Noakhali, Cumilla region, Sylhet and northern areas caused extensive damage to roads and infrastructure, resulting in reduced extortion but increased transport costs. Yes, additional steps can be taken to stop extortion and to break syndicates. As the currency has been stabilised, once the flood situation improves, the commodity prices will also come down."

However, are inflation and floods the two major causes for high commodity prices in Bangladesh?  

One of the reasons why a large number of ordinary people took to the streets during the July Uprising was the abnormally high inflation.

Therefore, one of their expectations from the interim government is price control of daily commodities.

We spoke with Ghulam Rahman, president of the Consumers Association of Bangladesh (CAB), to understand why the commodity price is still high. 

"One of the primary causes is that business owners want to make more profit. If the product can be sold at a higher price, why ask for a lower price? Customers are also buying, ready to pay a higher price," he said. 

According to him, as long as consumer resistance is absent, business owners will continue to do this. 

"The producer or the farmer does not fix the price of the bananas you are buying. Nor does the government. Then, who decides it? Of course there are middlemen here who have a set of data regarding the market demand and this group manipulates the data and controls the price."

Sayed Zubaer Hasan, founder and CEO, Krishi Shopno

"No organisation or association can do this for the consumers. Also, the government has a responsibility to control the law and enforcement situation, extortion, etc. Whether these are under the government's control, we must look into it," he added.   

Sayed Zubaer Hasan, founder, and CEO of Krishi Shopno, an agri startup, talked about how the absence of data creates an information void in the market and a group of stakeholders take advantage of this. 

"The main reason for high prices is the lack of proper data-driven demand and distribution. We do not know what our demand is, how much we need to procure and how we should distribute the products in different markets," Zubaer said.

"The producer or the farmer does not fix the price of the bananas you are buying. Nor does the government. Then, who decides it? Of course, there are middlemen here who have a set of data regarding the market demand and this group manipulates the data and controls the price,"  he explained.

According to the Ministry of Agriculture, in fiscal year 2022-23, one million tonnes of potatoes were produced in the country, which was more than the previous fiscal year. 

However according to information from the cold store owners, they received at least 15 to 20% less potatoes than the previous year. 

This indicates that the government lacks accurate and reliable information about the demand and supply. And this is why the middlemen can manipulate the market. 

For example, all the farmers want to send their produce to the capital's Karwan Bazar. Say the individual market has a demand of six trucks of aubergine, but they receive 10 trucks. 

The surplus of four trucks is wasted, which affects the farmers. 

On the other hand, the markets of Sunamganj and Chattogram have a higher demand for aubergine but they receive a lower supply. 

This happens because a group of traders controls the aubergine market all over Bangladesh. They collect the vegetables through different middlemen who get them from the farmers. 

And these traders decide how many trucks of the produce will reach a market and at what price point they will be sold.      

"And the government cannot control it because they do not have the data or information. The middlemen or the traders know how many trucks of eggplants Karwan Bazar needs today, and not the government," Zubaer said. 

The government should provide proper guidance and knowledge sharing to the farmers on how the produce should be harvested, packaged, and onboarded. But that doesn't happen as well. 

"Due to the lack of training and in-depth knowledge sharing, a lot of produce is wasted. The farmer cannot develop a cost and time-efficient agri business for himself. Hence the middlemen can also manipulate them," he added.

So, it seems that there are multiple issues behind the price hike. Hence the solutions should also be multifaceted. 

According to experts and sellers, these include reducing the price of diesel fuel used in the transportation of goods, stopping extortion, making the use of receipts mandatory in the purchase and sale of goods, etc. 

And most importantly, developing a proper data system of the total market demand and supply. This way the syndicates can also be disintegrated.