No leniency, but market regulation is needed

Updated at 01:03am on November 19, 2019

ONION prices went through the roof after September, belying any market intervention mechanism that should have been there. Now, rice prices have increased. This yet again proves that the government’s initiative to control prices of essential goods has been unsuccessful. The prices of rice increased by up to Tk 8 a kilogram in a week with the prices having increased Tk 2 a kilogram on a single day on Sunday. The fine variety of Miniket sold for Tk 55–62 a kilogram while the coarse variety was retailed for Tk 53–54 a kilogram in the capital city that day. While onion is an essential kitchen item and an increase in its prices has been a serious cause of concern, the soaring price of rice has greater consequences as it is the staple food and constitutes a dominant portion of a standard diet. In the context of sudden price increase, the food minister asked rice millers to keep the prices stable. He also gave an assurance of an adequate rice stock, but said that with a sharp increase in people’s purchasing capacity, the demand for fine rice has gone up. Such a comment indirectly hints at a ‘probable supply shortage’ and contradicts his own statement on the rice stock. Mill owners, on the other hand, anticipated a supply shortage and a subsequent price increase because of a ‘possible transport strike’ in view of the enforcement of the Road Transport Act 2018. All the authorities concerned should know that what is now needed is the strict regulation of the market and no lenient approach that can leave room for market manipulation by unscrupulous traders.

Rice prices have increased when farmers do not have any stock. It, therefore, is only the middlemen, traders and millers who would make profit of the situation. Earlier this year, rice prices fell to a nearly three-year low, caused by downturn in paddy prices at farmer’s level in the wake of a good harvest and higher private and public stocks of the food grain. Farmers incurred huge losses as the middlemen had been in total control of the procurement process. One of the allegations that surfaced that time was that farmers had no way of directly selling the produce to the government because of the presence of local influential politicians. Because of pressure from powerful syndicates, farmers are alleged to have been forced to sell their paddy at throwaway prices, at a cost lower than that of the production. What has become abundantly clear is that the rice market is not controlled by the government but by syndicates, leaving farmers and consumers to suffer in the end.

The government must, therefore, abandon its lenient approach that has allowed syndicates, backed by influential quarters, to exploit farmers and to manipulate the market. It must assess the real situation of rice market and make early interventions to control the price.