Autocracy in food market due to lack of regulation: Moazzem
Government failing to regulate the market effectively due to a lack of adequate market data, says the CPD research director
What speakers said about Bangladesh's market:
- Blames lack of regulation for autocracy in food market.
- Says govt lacks real-time data on daily production and supply.
- Suggests a commission headed by an agricultural economist.
- Blames ex-regime's policies for devaluation of taka and food price surge.
- Warns of VAT increase driving consumers from supermarkets to retail markets.
- Says infrastructural development is needed for reasonable prices.
- Stresses need for government plan and effective market control.
A number of areas need more scrutiny to ensure proper market regulation, especially ahead of the upcoming Ramadan, speakers at an event said today (2 February).
An autocracy exists in the country's food market due to a lack of regulation, said Dr Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD).
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Speaking at the "Strategies for Monitoring Food Prices: Exploring Market Oversight Mechanisms" organised by Bonik Barta at the capital's Pan Pacific Sonargaon.
Moazzem's suggestions include the establishment of a commission headed by an agricultural economist and ensuring that every business obtains a business identification number (BIN).
"We hope that such autocracy will no longer exist in the market," he added.
The CPD research director said the government cannot regulate the market effectively due to a lack of adequate market data.
"While the government may have information on annual production and supply, it lacks real-time data on daily production and supply. Even local-level data on distributors and supply chains is often unavailable, though such information is accessible internationally or to businesspersons.
"With such limited data, it is impossible for the government to regulate the market effectively," he said.
He said the inflation rate was shown at around 6% during the Hasina regime.
"However, when the government signed a deal with the IMF to secure a budgetary support loan, they were forced to disclose the real data. As a result, the inflation rate was revealed to be rising significantly."
Presenting the keynote paper, titled "Integration of Food Supply Chains in Bangladesh: Digitalization for Efficiency, Transparency, Traceability, Legal Accountability, and Accessibility," Moazzem said, "Food inflation is merely a symptom, not the root problem. Even with sufficient production, market crises sometimes persist."
"Our demand assessment is often flawed, and this needs to be addressed within the government framework. A comprehensive and integrated database is essential for effective market oversight," he added.
Moazzem further emphasised the need for legal reforms in market regulation and suggested changing the current system, where a distributor supplies goods exclusively for a single company.
He said Bangladesh's commodity price trends are not aligned with global market trends due to local factors such as the failure of regulatory authorities and syndication.
However, SM Nazir Hossain, vice president of the Consumers Association of Bangladesh (CAB), said there was no lack of information and blamed the syndicate behind price hikes.
"We observed that when they [traders] see rice stock is decreasing in government warehouses, they increase the prices. We also noticed that wheat prices are lower in the global market, yet they remain higher in the local market," he said.
Nazir also said when global prices increase, local market prices rise within a day.
"These practices occur due to unholy syndication. Sometimes, we feel that the real problem lies in the governance of this country," he added.
While some of our expectations have already faded, we still want to place our hopes in the interim government. We believe they will be able to meet our expectations due to competent individuals in the advisory council
The CAB vice president suggested the government set a limit on business profits, which could help regulate prices.
"Consumers are paying VAT, but it is not being deposited in the government exchequer," he added.
"We hope the next Ramadan will be a month of relief for everyone," Nazir concluded.
The conclave, moderated by Bonik Barta Editor Dewan Hanif Mahmud, featured Sheikh Bashir Uddin, adviser to the Ministry of Commerce, as the chief guest.
Other prominent attendees included National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan; Anu Muhammad, former professor of Jahangirnagar University and economist; and Additional Secretary (export) Md Abdur Rahim Khan, who currently serves as the acting secretary of the Ministry of Commerce.
Kazi Farms' director blames ex-regime's flawed policies
At the event, Kazi Zahin Hasan, director of Kazi Farms, said the previous government's flawed policies led to the devaluation of the taka.
"As a result, the entire economy faced a crisis, and food prices surged."
We are not in business to exploit people. We care about consumers. Millers are not the only ones raising prices…Farmers also stockpile.
He explained that the price of imported feed rose significantly and went beyond the control of the poultry industry and the government after the start of the Russia-Ukraine war.
"Simultaneously, the devaluation of the taka persisted. The rapid increase in printing money under the previous government contributed to this devaluation," he added.
Citing Bangladesh Bank data, Kazi Zahin noted the broad money supply stood at Tk13.7 trillion in June 2020, rising to Tk18.9 trillion by June 2023.
"Broad money increased by Tk5.2 trillion over 3 years," he said.
He also pointed out that the demand for eggs declines during winter, while chickens consume less feed and produce fewer eggs in summer, leading to price hikes.
Mentioning that prices of eggs, chicken, and fish increase primarily due to market demand, he stressed that the market dynamics must be analysed before accusing any company.
"Appropriate policies are crucial to curb inflation," he added.
Supermarkets' VAT to drive consumers away
Sabbir Hasan Nasir, managing director of the superstore chain Shwapno, warned that further increases in VAT would drive consumers away from supermarkets to retail markets.
"While retail markets do not impose VAT, supermarkets now face an increase from 5% to 7.5%, discouraging institutional businesses," he explained.
Controlling retail sellers while exempting businesses from accountability, as done by the previous government, will not work.
"We are not in business to exploit people. We care about consumers. Millers are not the only ones raising prices. While rice prices have increased by 34%, the mill gate price rose by only 20%. So, who is responsible for the rest? Farmers also stockpile," he added.
Receipts for every transaction
Farid Ahmed Russell, acting president of the Karwan Bazar No 2 Raw Materials Wholesale Market Cooperative Society, emphasised the need for a policy mandating price receipts for every transaction.
"The government puts pressure on traders when prices rise, but storage owners often fail to provide proper price receipts," he said.
Infrastructural development needed for reasonable prices
Mohammad Hasan, managing director of City Group, said infrastructural development is needed to ensure reasonable prices for consumers.
"We often hear about reasonable prices. But how can it be determined is also our question. I believe infrastructural improvements are essential. If achieved, business costs can be reduced," he added.
"When we procure goods, we incur various costs, which are factored into product prices. Since we import products, we must purchase at global market rates, which vary by country."
"Additionally, the raw materials for our products are sourced internationally, where only a few companies control the market based on global ratings. This makes determining reasonable prices challenging," Hasan further said.
Speaking at the event, TCB Chairman Brigadier General Mohammad Faisal Azad observed a disconnect between consumers and suppliers. He noted that TCB's promotional efforts are insufficient, and the long supply chain poses operational challenges.
Student body expresses concern over Ramadan prices
Umama Fatema, spokesperson for the Anti-Discrimination Student Movement, expressed concerns over rising prices of essential commodities over the past five to six months.
"We need to investigate why prices are increasing like this. The government must have a proper and comprehensive plan to address the country's problems," she said.
Raising concerns centring price hikes during Ramadan, Fatema said, "We don't know what price trends to expect for essential goods during Ramadan. In the past, prices have risen in anticipation of Ramadan.
"The government needs to monitor and control the market effectively. A proper plan is crucial for market regulation."
Mentioning that the market has operated under a particular system for the past 15 years, the student body spokesperson said, "Now that the interim government has taken charge and announced its year-long tenure, it must clearly outline plans for market regulation. Fruits, a crucial commodity during Ramadan, now face higher tariffs. Increasing tariffs will raise fruit prices, placing a burden on consumers."
Speaking on agricultural subsidies, Fatema said, "Subsidies intended for farmers often do not reach them directly. Instead, they are used to purchase agricultural inputs, which means farmers do not benefit significantly.
"The government needs a proper plan. Controlling retail sellers while exempting businesses from accountability, as done by the previous government, will not work. Effective monitoring is necessary to manage this."
Controlling commodity prices requires political decisions
Sarjis Alam, chief organiser of the National Citizens' Committee, said controlling commodity prices requires political decisions.
"As we have observed, any attempts to stabilise prices will fail without strong political commitment," he said.
Mentioning that the market remained unchanged even after the fall of the Hasina government, he said the same patterns persist across all sectors.
"While some of our expectations have already faded, we still want to place our hopes in the interim government. We believe they will be able to meet our expectations due to competent individuals in the advisory council," said the Anti-Discrimination Student Movement leader.
Claiming that the large companies that controlled the market for several years are still in the driving seat, Sarjis said, "These companies are frequently accused of manipulating prices to maintain dominance over the market. These conglomerates have essentially turned the market into their own kingdoms, carving out territories to avoid conflicts among themselves."
He said it is time for these major corporations to curb their greed and contribute to the greater good as the government works to reduce inflation.
"We hope large businesses will embrace philanthropic practices to secure their legacy for generations. Globally, the private sector has set positive examples, and we believe they can do the same here," said Sarjis.
Mohammed Alim Akhter Khan, the director general of the Directorate of National Consumers' Rights Protection, said, "During our observation, we noticed that the price of one medicine increased by about 60% in a month. Any enforcement drive will not yield positive results if pharmaceutical companies continue to disregard ethical practices."
Moinul Khan, chairman of the Bangladesh Trade and Tariff Commission, said, "We found that farmers sell vegetables at Tk4, but consumers pay Tk40 for the same product. When the vegetable reaches Karwan Bazar, its price rises to Tk10.
"After that, several middlemen become involved in the supply chain, with each taking at least a 20% profit. These informal business practices place significant pressure on consumers."
