Is war alone to blame for costlier Ramadan?

Infographic: TBS

The announcement of at least Tk30 per kg cut in chicken price comes as a small relief as Ramadan begins with consumers struggling to cope with the soaring prices of major food products-- both imported and local. 

Big players in the poultry market agreed to reduce farm level prices only after the consumer protection agency termed their rate irrationally inflated and a demand from businesses to allow meat import.  

Though hikes in prices of imported goods such as sugar, edible oil and flour are attributed to steep fall in value of taka against the dollar caused by the war, local chicken, egg, beef and cucumber and watermelon followed suit.

For chicken, the high price of poultry feed is blamed.

But there are lingering factors that have not been addressed for years and highway extortion of goods-laden trucks is one of them.

Keeping prices in check of essential commodities during Ramadan will not be possible "if police continue to extort money from goods-laden trucks," a trade leader told a meeting chaired by Commerce Minister Tipu Munshi on 19 March.

The same allegations were made in pre-Ramadan meetings in the previous two years, but there has been no action.

Market monitoring by the apex trade body's committee along with different government agencies are promised ahead of Ramadan, but it can not make a dent on prices.

Higher cost of gas, fuel oil and electricity – all contributed to the costs of production and transportation – making this Ramadan costlier for consumers than the last year.

The president of the Consumers Association of Bangladesh, Ghulam Rahman acknowledged that being an import-dependent country, Bangladesh would naturally suffer from the war-induced global price shocks. "But it remains to be seen how much the price rises. That should be monitored strictly as it is a common practice that traders take advantage of a surge in demand for certain products and hike their prices."

In the UAE, where almost all food items are imported, traders announced a 75% discount to help shoppers save on more than 10,000 food and non-food items during the holy month of fasting. Supermarket groups announced 'price lock' for selected products meaning that groceries, food and fresh produce will remain the same throughout Ramadan irrespective of market conditions.

But traders at home have ready reasons to explain why consumers have to pay higher.

"Traders import goods by buying dollars at Tk110 but the government-fixed rate is Tk106. So, this additional Tk4 per dollar will be taken from consumers," said Mostofa Azad Chowdhury Babu, senior vice president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), arguing at Sunday's meeting with the commerce minister.

Even while agreeing to reduce chicken price to Tk190 from Tk220 at producer level, major poultry farm owners, who command 15-20% market share, Thursday explained to the consumer protection agency how 137% rise in poultry feed ingredients -- soybean and maize – has raised the cost of their business and price hike inevitable.

However, the consumer protection agency calculated that production cost is Tk130-135 per kg for corporate poultry groups, so consumers having to pay Tk280 is irrational.

AHM Shafiquzzaman, chief of Directorate of National Consumer Rights Protection, hoped that consumer level price would drop by Tk30-40 per kg in a day or two.

"We will monitor the market. Hopefully, the prices will come down," he sounded optimistic.

The announcement of farm price cuts coincided with the call made in a meeting Thursday for opening meat imports to cool prices as both chicken and beef prices soared much before Ramadan.

Similar warning by the commerce minister saw egg prices fall instantly from a sudden rise in August last year.

Imported food items bore the full brunt of the impact of the Russia-Ukraine war, which sent global commodity and fuel prices soaring and made the dollar strongest in decades. The government restricted imports from the middle of last year to save the reserve.

Importers say losing value of taka against dollar makes imported items costlier when dollar rate is adjusted to local currency and duty reduction by the government is far from offsetting the gap.

Customs data show imports dropped over 5% in volume eight months to February this fiscal year compared to a year-ago period, though value rose 12%. This means importers had to pay higher for lesser quantities of products. They had to pay a higher rate for dollars to settle import bills. Dollar surged to Tk115 for imports from Tk85 in less than a year, even then banks ran short of the greenback to open LCs, they said.   

Chattogram Chamber president Mahbubul Alam told The Business Standard that the high rate of dollar and global price hike pushed up prices of imported goods much higher than those of last year.

Retail price chart shows almost all the imported food items, whose consumption increases during Ramadan are costlier by at least Tk15-20 per kg than a year ago.

But lax market monitoring is also blamed for sudden hikes in prices of locally produced fresh items including beef, fish and vegetables.
State Minister for Industries Kamal Ahmed Majumder, at his ministry's meeting on Ramadan essentials' supply on Wednesday, blamed a 'cartel of traders' for hiking local prices citing Russia-Ukraine war and dollar crisis as excuses. He mentioned that fish taken from his own farm was being sold in the market at prices three to four times higher.  "If these cartels are not broken, they will continue to do this," the state minister said, pledging to strengthen the market drive by his ministries agency BSTI.

Market observers said in the last 45-90 days, broiler chicken prices have gone out of reach of the average consumer with prices soaring by nearly Tk120.

Beef prices had already gone through the roof as prices jumped from Tk675-700 to Tk780-800 in over a month.

High cost of feed, chicks and electricity threw many small poultry farmers out of business in the last couple of years, while corporate groups took the lead. Citing high cost, leading breeders scaled down the production of chicks, which ultimately led to short supply of day-old chicks for marginal farmers. All these resulted in the decline in poultry output and sudden hike in prices against a surge in demand, market sources said.

Though beef demand is met fully by local supplies, its price shot to Tk800 per kg from a week-ago price of Tk720-750 as traders are cashing in on an increased demand ahead of Ramadan.

The same reason has been cited for sudden rise in prices of tilapia and pangas fish, mostly consumed by low-income people, as well as for lemon and brinjal. A common vegetable for iftar item, brinjal is produced in abundance and its price shot to Tk85 per kg on Thursday from Tk60 just a couple of days ago. Price of lemon more than doubled to Tk50-Tk70 per four pieces.