Story in: March-2024

Story: Why food prices are still rising despite the full season of food production?

Why food prices are still rising despite the full season of food production?

Rice is the staple food of Bangladesh. The source of rice is paddy. Which is about 75 percent of the crops produced in Bangladesh. The major production of paddy is Aman and it is harvested in the month of Agrahayana Paush. On the other hand, another part of the diet is vegetables and fish. The main season of these two food products is winter. This year the production of rice, vegetables, fish, etc. has been good. Yet the price of everything has gone out of reach.

Contrary to media reports, there is currently no food supply shortage in the country, but, a section of unscrupulous importers and traders are creating an artificial crisis and increasing the prices of essential commodities. The report warned that this trend of price hikes could adversely affect the month of Ramadan. When prices are hiked almost every year using various excuses. With food and overall inflation already near record levels, and traders raising food prices again ahead of Ramadan, how will the common man manage when prices rise again come the fasting month?

According to a previous World Bank report published in December last year, rising food prices are a cause of concern for 71 percent of Bangladeshi households. These numbers will only continue given the current trend. If we compare the prices of some basic items such as sugar, gram, coarse rice, dates, and local onions with their current prices a year ago, we can see that the prices of each of them have gone up significantly - with some items even doubling in price. Analyzing letter of credit (LC) openings for various commodities from July to December 2022 and 2023, the home ministry report said fewer LCs were opened for items such as soybean oil, palm oil, sugar, lentils, chickpeas, and dates in the previous year. However, the rate has increased this January due to the month of Ramadan. As such, if the LC products are offloaded at the right time, "there should be no shortage of supply," it said.

Thus, the recent price hike can only be attributed to the unscrupulous activities of traders and importers, which mainly play a major role in increasing the prices of products due to fierce competition in the import market. This situation did not happen overnight. Presumably, the situation may have arisen because of the increasing competition—and the consequent reduction in the syndicate's collusive power—that no appropriate action could be taken. As a result, food prices have reached very depressing levels, and are one of the main causes of public suffering.

Extortion in transportation of goods is another reason for high prices, some traders complain. The fact that this problem has been going on for years also points to another major failure. The Home Ministry report has made several recommendations such as involving more importers in the import process to prevent syndication among certain business groups, removing complications associated with opening LCs, etc. It is time to seriously implement these solutions and put an end to such unreasonable price hikes. -Editor


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