Essential food prices remain high despite duty cuts

Despite the fact that the government has waived customs duties on six essential commodities to curb soaring prices, imports have remained stagnant, leading to only marginal decreases in the prices of a few items.

Importers and traders say the market remains stable due to the government's import permits and duty reductions.

However, Consumer Association of Bangladesh Senior Vice President SM Nazer Hossain, while talking to TBS, argued that importers remain hesitant to bring in more goods due to concerns over profit margins.

He emphasised the need for legal and institutional reforms to increase the number of importers in the market and protect consumer rights.

Rice

The government on 20 October reduced the import duty on rice from 25% to 15%, lowered the regulatory duty from 25% to 5%, and fully withdrew the 5% advance tax in an effort to increase rice imports.

However, although the government approved the import of approximately 15 lakh tonnes of rice, only 15,000 tonnes have been imported.

As a result, over the past month, the price of coarse rice in the market has decreased by Tk2 per kilogram, while the price of medium and fine rice has increased by Tk3-4.

Currently, at the retail level, Paijam and Miniket rice are being sold at Tk70 per kilogram, Bethi at Tk65, Kataribhog at Tk85, and Atash at Tk62-64.

Farid Uddin Ahmed, president of the Chattogram Rice Mill Owners' Association, said the low volume of rice imports is due to higher prices in exporting countries and the rise in the value of the dollar domestically. "As a result, even after reducing tariffs, importing rice is not proving profitable."

Omar Azam, proprietor of rice importing company Afsana Trading, said the cost of importing rice is approximately Tk55 per kilogram, whereas the market price of coarse rice is Tk52-53.

Due to concerns about whether the market price will cover the import cost, there is little enthusiasm for imports, he said.

Azam added that allowing imports is preventing instability in the rice market, but the timeframe for import approvals needs to be extended.

Edible oil

The import duty on edible oil was reduced in two phases. The first reduction was on 17 October, followed by a second on 19 November, bringing the total duty down to just 5%. As a result, the duty on each kilogram of crude soybean and palm oil has decreased from Tk17-18 to Tk7, meaning a reduction of Tk10-11 per kilogram.

According to NBR data, in the first 23 days of November, traders unloaded 65,000 tonnes of soybean and palm oil from the tank terminal at Chattogram Port. Additionally, four ships carrying another 45,000 tonnes of oil arrived. Typically, the monthly demand for edible oil is around 175,000 tonnes.

Currently, unpacked soybean oil is being sold at Tk167 per litre in the market, compared to Tk156 two weeks ago. Similarly, unpacked palm oil is being sold at Tk155 per litre, up from Tk146 two weeks ago. Meanwhile, super palm oil is being sold at Tk158 per litre, which was previously Tk151.

Biswajit Saha, director of corporate affairs at the edible oil importing company City Group, said the price of edible oil in the global market has increased. "However, the reduction in duties and taxes has offset this price hike. Without the duty reduction, prices would have risen by Tk13-14 per litre."

Highlighting the fact that imports had been low due to uncertainty, he noted that supply is expected to increase soon due to the recent tax cuts.

Sugar

The government has also reduced duties and taxes on sugar imports. Previously, importing one kilogram of raw sugar incurred a duty of Tk38-40. Now, it has been reduced to Tk23 per kilogram, meaning a reduction of approximately Tk15-17 per kilogram.

Following the reduction in duties and taxes, 1,81,000 tonnes of sugar were imported between 17 October and 23 November. Of this, 50,000 tonnes have been marketed. Traders have stated that the sugar import situation is satisfactory.

However, the market situation is quite the opposite. Currently, packaged sugar is being sold at Tk140 per kilogram, and unpackaged sugar at Tk135 per kilogram. This is up from Tk130-135 just two weeks ago.

Onion

To increase onion imports, the government reduced duties and taxes in two phases in September and November. As a result, over the past month, more than 77,000 tonnes of onions have been imported, compared to 61,000 tonnes during the same period last year.

Although the reduction in duties has slightly increased imports, the price of imported onions has not dropped below Tk100. Currently, at the retail level, Indian onions are being sold at Tk120 per kilogram, Pakistani onions at Tk105, and Egyptian onions are priced at under Tk100.

Baloy Kumar Poddar, an onion trader at Khatunganj, mentioned that imports fulfil at least 30% of the demand for onions. As a result, imports tend to increase towards the end of the year when the supply of domestic onions decreases.

According to importers, despite the reduction in duties, the increase in onion prices in the Indian market has raised import costs. As a result, the benefits of reduced duties are not being fully realised.

On the other hand, due to concerns about quality, the demand for domestic and Indian onions is higher in the market. Consequently, even though onions are being imported from alternative countries like Pakistan and Egypt, their lower demand is not making a significant impact on the market.

Potato

To control the market, the government granted a duty reduction on potato imports on 5 September.

Although the monthly demand for potatoes in the country exceeds 800,000 tonnes, only 40,000 tonnes of potatoes have been imported so far after the duty reduction, according to official data. As a result, the small volume of imported potatoes is not having a significant impact on the market.

According to the Trading Corporation of Bangladesh (TCB), the price of potatoes in the market has increased by Tk10 per kilogram within a week. Currently, potatoes are being sold at prices ranging from Tk75 to Tk85 per kilogram.

Although new potatoes have started appearing in the market, they have not had any impact on the prices. The new potatoes are being sold at Tk120-150 per kilogram.

Egg

Due to damage to farms from floods, the price of eggs climbed to Tk180-185 per dozen by the end of September. Following this, on 17 October, the government reduced the import duty on eggs from 25% to 5%. Since then, traders have been granted permission to import 55 crore eggs. However, according to NBR data, only 10 lakh eggs have been imported so far.

Traders say after the import permission was granted, the price of eggs dropped slightly, reaching Tk145 per dozen. However, due to slower-than-expected imports, the price has gradually increased and now stands at Tk150-155 per dozen.

Ramadan, the month of fasting, is set to begin in March. Therefore, in addition to reducing duties and taxes, the Bangladesh Bank has also relaxed the terms for letters of credit to increase the import of items needed for Ramadan.

Traders and experts say if more steps are not taken now to boost imports, there could be uncertainty regarding the supply of goods during Ramadan.