Rice millers and wholesalers are manipulating rice price by stockpiling the staple as the government failed to take timely measures to keep the rice market under control, agriculture minister Muhammad Abdur Razzaque said on Tuesday.
He made the comment at a workshop where a government-commissioned study revealed that millers and wholesalers manipulate the prices of essentials such as rice, potato and onion by creating an artificial crisis and making the market volatile.
‘People need to know who are responsible for making the rice market volatile despite a bumper production,’ said Razzaque.
‘Millers and wholesalers are stockpiling rice and controlling the market. The failure of the government to keep enough rice in stock also advantaged the rice millers and wholesalers,’ he said.
He said that the prices of essentials such as rice, potato and onion continued to remain high despite his initiatives to bring down the prices.
Bangladesh’s rice stock fell to merely 5.38 lakh tonnes on January 20, the last date the stock status was updated, while a kilogram of coarse rice cost over 40 per cent more than the corresponding day of the last year on January 26.
The study also revealed that the prices of rice and potato were increased by millers and wholesalers at a certain time of every year or after every natural disaster despite their bumper production.
The government can never make timely and appropriate interventions needed to keep businessmen from manipulating prices of essentials.
The government rather ended up worsening the situation by taking decisions such as importing rice and onion during harvest, the study said.
‘The invisible hands of millers and wholesalers are behind artificial price hike of rice, potato and onion,’ said professor Jahangir Alam, who led the study, while presenting the excerpts of the research at the workshop at Bangladesh Agricultural Research Council in the afternoon.
The average growth of rice production in Bangladesh over the last five decades have been above the world average and in the past two years there was more than two million tonnes of surplus of rice but still the rice price increased abnormally, the study revealed.
The rice price began increasing after the spread of the coronavirus crisis in March last year and has been very high throughout 2020 compared with that of the year before, according to the study.
The price increase dealt a severe blow after subsequent disasters like cyclone Amphan and prolonged flood left a negative impact on people’s life, especially the low-income group people, said the study.
Bangladesh Rice Research Institute economist Abdur Rouf said that millers and wholesalers had stored 95 per cent of boro rice within three months of its harvest, controlling the market as they slowly released stored rice creating an impression that there was a crisis.
‘Bangladesh is a strange case where price increase does not follow the demand-supply relationship. Here price increases despite surplus supply,’ said Rouf.
The study revealed that the actual price of rice decreased by 2 to 3 per cent every year between 1972 and 2020 though its production cost increased over time, particularly by almost 3 per cent since 2009.
There has been a surplus in the production of rice since 2010 but the rice market repeatedly turned volatile during the same period.
The study suggested that the government should buy from farmers 10 per cent of paddy annually and have them crushed at mills and also emphasised that the paddy procurement price should be 20 per cent higher than its production cost.
The study also said that the rice stock of the country should never fall below 12.5 lakh tonnes a month while the government must not import rice or any other agricultural product during harvest, especially not before or after the harvest.
The price of potato also increased due to manipulation by wholesalers, said the study.
Last year, there was at least 3.5 lakh tonnes of excess potato but still the potato price increased as the business syndicate took advantage of the prolonged flood.
The potato price increased more than 100 per cent last year compared with the price the year before.
The potato production increased by 6.5 per cent every year after the independence of Bangladesh but the actual price decreased by 2.4 per cent, said the study.
The government intervention to bring the potato price under control was very insignificant with the Trading Corporation of Bangladesh selling only 215.5 tonnes through open market sale in 2020 against an annual demand of about 1 crore tonnes, said professor Sheikh Abdus Sabur of Bangladesh Agricultural University, a member of the study team.
The study also suggested that the government should begin storing potatoes and diversify its consumption.
Razzaque said that the onion market turns volatile because of excessive dependence on imports from India.
He said that they were working on increasing domestic production to reduce import dependency while at the same time trying to source onion from multiple import sources.
Bangladesh meets 90 per cent of its onion demand through import from India, a country that often slaps a ban on its export, making the market volatile.
The onion price increased by 50 per cent overnight after India suddenly banned its export last year, said the study.
The study showed that the supply of onion was greater than the demand in 2019 and 2020, but its price suddenly saw a sudden hike at a certain time in the past two years.
Abdur Rashid, a member of the study team, also a senior scientific officer of Bangladesh Agricultural Research Institute, said that the price of onion in the domestic market remained very high though the international market was largely stable since 2017.
The study recommended that the government fix a minimum and maximum price for every essential product and form a pricing commission for agricultural products to control their market.