Mystery In Kitchen Market

We are taken aback by mystery in kitchen market, Addressing grey issues could make it perfect.

Last week Bangladesh Competition Commission(BCC) fined around taka 85 million some poultry farms, of which two are corporate farms, for influencing the prices in poultry market. The decision however makes no difference at the ground level. Prices of poultry meat and eggs are on the rise. The import of Indian egg encounters problem as importers are busy lobbying to remove 33% duties. In general, all types of vegetables register high prices. The reason put forward is that 72-hour-long rain earlier this October casts shadow over supply of vegetables. 20 or 30 years ago our link between consumer markets and agricultural area was very weak compared to the present day. Moreover, information took a long time to reach at consumer's end. And consumers are not familiar with supply-demand concepts. So consumer could not get a clear picture about the general condition of the agricultural produce. Not only that storage and preservation facilities were very limited back then. Yet unusual hike of agricultural produce was rare. And I cannot figure it out how on earth perishable items which have short span of existence could register such an unusual rise in prices. It is not even a difference of taka 4 or 5. In some cases , price increases by taka 40 or 50!

Information reach very quickly at the consumer's end. More storage facilities and seed varieties were developed to ensure year-long supply. But we see at whimsical pretext ,prices are increased by unreasonable level. Export possibility of potato prompted storage spree by certain quarter, pushing the potato prices up. As I mentioned in an earlier piece, kitchen market requires no documentation and regulatory grip is very weak in this market. In a press conference, one big poultry farmer admitted that they forced to raise the prices as they incurred extra money for customs delay in clearing poultry feed ingredient from the warehouse. So they just passed the burden to consumers.

Less documentation and rent-plus-extortion-seeking culture in local market also aggravated the matter. Money receipt, transaction through MFS or asking info about the origin of money invested at the wholesale level could drastically improve the situation. Higher prices only work as a reference point for some quarter to bring their money into the system. Flow of information is also exploited to a great extent in kitchen market. For example, it is reported that 72-hour-long rainfall caused widespread price hike in the vegetable market as vendors anticipate supply disruption. Autumn is about to start. Flash flood is very rare in this time of the year and water cannot clog vegetable plot for a very long time. On top of that, season-defying seeds make sure year-long supply of winter vegetables like cauliflower, cabbage, tomatoes etc. So there is hardly any uncertainty looming over the vegetable market. Yet we are witnessing unusual hike. But the news report of price hike and unusual rain works as a reference to raise the prices. Another example is the hike in egg prices. It has been reported that egg prices increase as there is a stalemate over duty waiver on import. But there is also a report that says that researchers found presence of nefarious ingredients in farm eggs. Earlier, we witnessed how dissemination of such research findings dropped milk sale in the market. Yet in this case egg prices remain less responsive to such news. Stakeholders controlling the market often yield news reports to raise the price level at unprecedented level. Election and local level election is knocking on the door. For them, kitchen market is a source to raise money for financing the election. I touched the issue in one of my previous pieces.

Ordinary citizens expect that Bangladesh Competition Commission intervenes more in the future. I think it is inappropriate to allow consumer good and real estate companies run media outlet or run for MP election. Because such companies will have enormous power to shape narrative to influence the prices. And being a law-maker he may engage in activities that block entry of competitors and deprive consumers availing goods at a competitive price. In real estate,NBR does not ask the origin of money invested. It allows the real-estate company to take new investment projects at ease. Now think it has a paper plant to feed its own broadsheet newspaper. Later it uses its paper production capacity to capture market share of exercise book/copy book. Its significant market share of copy book allows it to influence the price. Similarly, its news outlets shape the narrative to influence the consumer goods' prices. Now think another media conglomerate which has news outlets, publication house and digital streaming platforms. It has significant market shares in all the industries. On top of that it hosts every year award show for entertainment industry. Such influence gives it overwhelming power to influence the product prices in respective industries and shapes narrative to its end. Advertisement industry and many other industries vie for BCC intervention. BCC should intervene to curb these influences and capabilities. Unfortunately, dedicated market research organizations snooze their activities or wind up business. That is why there is some difficulty in ascertaining true market share of these companies based on market data.

Kitchen market mystery will not wither away overnight if grey areas and issues mentioned remain unaddressed. Introduction of corporate bond in financing electoral campaign, documentation, more competition and free flow of untampered information could give a sigh of relief to the consumers. For the moment, best strategy is to slash the purchase or stop purchasing. This passive resistance is the best response against anarchy.

A Country For Speculators And Profiteers

Recent price overshoot in kitchen item, Sign that black money enters the system.

World Bank in one of its report "Atlas Of Sustainable Development Goals 2023" observes that two-thirds of Bangladeshis cannot afford healthy foods. This lays bare the fall in purchasing power of the Bangladeshis. I have also read a report of a local daily that says Bangladeshis in general lags behind other countries in the ranking of countries based on meat consumption¹. India is at the bottom segment of that ranking and in South Asia Bangladesh is ahead of India. Belief/choice is a factor that puts India in that position. But for Bangladesh it is obviously the falling purchasing power.

This bakri eid is another testament of this dwindling purchasing power. Many households abstained from observing the ritual of sacrificing an animal. Meanwhile, bovine market registered a decline in prices in recent years. Many bovine dealers preferred to withdraw their animals from the market as they did not get the anticipated price. This tells how households are coping with the rising inflation.

Few days before bakri eid chili price soared to an unprecedented level,leaving everyone flabbergasted. Earlier onion, soybean oil, broiler, egg had also shown unprecedented volatility. Now as the chili price is being normalized, potato price tends to show unusual hike. During the festival season like bakri eid when more and more people eat meat,a little bit of price increase is justified. However, chili was sold over Taka 700/kg for several days². Reason put forward was the lack of supply. However, other essential items(i.e, cinnamon, clove,black pepper, cumin,zinger, garlic) that are quintessential in cooking meat did not register such unusual hike.Chili is harvested here and even grown in pots. Excess demand is being met by importing from neighboring countries. But one thing that keeps chili, onion separate from others is that these things shrink in volume over times and one cannot store them long. Onion can be stored by making chips. Potato can be stored in cold storage. Even temperature variation could ruin the whole stock. Low quality fetches low prices. Moreover, these items have elastic demand unlike rice and wheat. People can prepare their meal without chili or onion. People will stop buying potato if it shows unusual price hike. They will rot if people stop buying them. This is not true for rice or wheat. People have to fill their stomach.

What is interesting no sooner had the trucks reached Indo-Bangladesh border chili prices dropped to normal level. Speculative role played some part here. Earlier, broiler meat and egg market showed this tendency. Consumer rights' body even fined few wholesalers for not furnishing any receipt/ for selling at prices above the set price. Long before that soybean oil market registered unusual hike and wholesalers denied outright to give any receipt to the retailers. Even before that in the name of e-commerce motorcycles, soybean oil were being sold at discounted price and many people lost their money in this fraudulent multilevel marketing scheme. Recently, we see how metro fare is inflated above the bus fare to give favor to the transport businessmen. According to a report by a local daily, metro fare is cheap compared to bus fare and varies during weekdays and the weekends in neighboring countries³. This is not the case here. In our metro there is a concept of peak and off peak hour but there is no change in fare. More recently, during the last one year as government followed multiple exchange rates while certain quarter laundered money abroad and delayed bringing export proceeds in time to gain later from further depreciation of Taka.

This is all happening ahead of next election when clandestine cash will come into play. Since less paperwork is needed, cost of legalizing black money is pretty low in the kitchen market. One can introduce huge sum of money into the mainstream through price variation in kitchen items.

Bangladesh has slipped into such a situation where regulatory grip is weak and privileged quarter indulges in swelling their wealth through profiteering.

Notes And References

1. "Bangladesh Soho Bisher Dosh Desh Jekhaney Sobchey Kom Mangsho Khawa Hoi(Bangladesh And Ten Other Countries Where Meat Is Consumed Less)",The Business Standard,June 30,2023. For more read at https://www.tbsnews.net/bangla/%E0%A6%AB%E0%A6%BF%E0%A6%9A%E0%A6%BE%E0%A6%B0/news-details-154686
2. "Ekta Kancha Moricher Daam Ektaka,Daam Barar Karon Ki?(One Chili Costs One Taka,What Is The Reason Behind Price Increase?",Sanjana Chowdhury,BBC Bangla,July 02,2023. For more read at https://www.bbc.com/bengali/articles/cw4vzd21e2do
3. "Metro Rail:Passengers' Welfare Association Demands 50% Reduction In Fare",Dhaka Tribune,December 17,2022. For more read at https://www.dhakatribune.com/bangladesh/2022/12/17/passengers-welfare-association-demands-reducing-50-fare-rate-of-metro-rail

[Update: This piece has been updated on July 09,2023 at 12:20 Bangladesh Standard Time(BST).Update includes insertion of references.
---Rezaul Hoque]