Supply of Hilsa increases, but price does too. Why?
The macroeconomic law of supply and demand says the price of a good is inversely related to the quantity demanded. This means, if a price rises, demand falls.
Conversely, if supply rises, prices should also fall, provided the former doesn't outpace demand.
This theory, however, falls flat when it comes to the price of hilsa fish, or so it seems.
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Data says the production of hilsa has increased, nearly doubling in the last 25 years. Prices, however, have ranged between Tk800-Tk1,000 per kg.
Even accounting for a spike in population size or demand, hilsa prices do not decrease – suggesting a stickiness unexplored.
"I have doubts about the official statistics of the increase in the production of hilsa. Do they collect this data by going to the market and measuring it correctly, or is it based on guesswork?"
Mizanur Rahman, associate professor and chairman of the marketing department at Barishal's BM College, is also stumped at this anomaly.
"No market theory says that if the production and supply of any product increases, the prices will also increase. You will not find such a market system in any other country. Only in Bangladesh has such a system been developed by breaking all principles of economics. Large syndicates have been formed around the hilsa market," he said.
What does the data show?
According to the fisheries department's Barishal Divisional Office the country's hilsa production was 2,19,532 metric tonnes in the fiscal year 1999-2000.
By 2022-23, this had risen to 5,71,342 metric tonnes.
The Department of Fisheries expects to break last year's record production in the current (2023-24) fiscal year.
On the market side, it seems that as production rose, so did the prices.
In the last seven years, the price of hilsa has increased from Tk800 to Tk1000 per kg.
According to traders, in 2018, a kg of 600-800 grams sized hilsa was sold at Tk550 to Tk600.
For a larger size of 1200grams, a kilogram was sold at Tk1,100, while for those weighing 1.5kg, the price was Tk1,500 per kg. Jatka - hilsa fries - were sold at Tk200.
Fast forward to 2024, the price for the small hilsa is Tk1,650 per kg, while the largest reaches Tk1,950. The price of Jatka has risen to Tk600-700 per kg.
From river to market
Masum Sikder, a hilsa trader from Barishal Port Road, said wholesalers buy hilsa from fishermen in different areas and bring those to the Barishal market.
Prices of jatka and hilsa remain high regardless of the catch, Masum said, adding there were two main reasons for this.
"We also export hilsa abroad. If you look at the supply, you'll see that it's not even a third of the demand," he said.
Abu Yusuf, a dealer at Patharghata BFDC fish landing centre of Barguna District, said the supply of hilsa this year was less than last year and gave another reason.
"Fishing trawlers are unable to operate due to hostile weather in the sea. That's why the business depends only on river fish," Yusuf said.
Explaining prices, Yasin Mollah, a fisherman at Dhalchar in Bhola Charfassion upazila, said they could no longer go to the sea for their cost, while the haul from rivers barely covered the engine costs, resulting in fishermen charging more, as well.
A data dilemma, or changing tastes?
Speaking to The Business Standard, Apurbo Roy, associate professor of Economics at the Barishal University, said, "I have doubts about the official statistics of the increase in the production of hilsa. Do they collect this data by going to the market and measuring it correctly, or is it based on guesswork?"
He said a rise in production should be reflected in the decrease of prices.
"But the price is not going down. Another thing may be that there is a flaw somewhere in the marketing channel from the fisher to the buyer. If someone has stockpiled in excess quantity then an artificial crisis will be created at the consumer level. It is natural that the price will go out of control," Apurbo added.
He urged for marketing monitoring and halting manipulation to rein in the prices.
Meanwhile, Bimal Chandra Das, Barishal District Fisheries officer (Hilsa), gave another reason.
He noted that as the production has increased in the past year, the price has also increased.
"This is because people's interest in hilsa has increased. Those who did not eat hilsa in the past are now buying the fish. So, the number of buyers has also increased manifold. As buyers increased, prices and demand increased," Bimal said.
"Not only the people of the country are eating but our more than one crore expatriates are buying from the country through various means. Our hilsa is available at foreign showrooms. As a result, an international market for our hilsa has been created. Prices cannot be controlled based on this demand," Bimal added.
