Some systematic insight into high prices in Bangladesh

For the past year or more the high price of essential foodstuffs has been on the radar in Bangladesh. Much political capital has been made out of it and much unrealistic expectation has been nurtured concerning it.

So I was interested to read about the PPRC's study of the phenomena. The Power and Participation Research Center is a youngish developmenty thinktank type organisation based directed by Hussein Zillur Rahman.

Here is a paste from tomorrows New Age paper. Unfortunately for me I cannot pop along to the PPRC and get me a copy of the report, they do not have a website that I know of either. However the last report of theirs on 'Unbundling Governence' was an interesting read (very soasy in fact), placed in history and the focus of significant empirical and creative work by a team that included sociologists. The chapter on the media in Bangladesh was lame though and dismissive of anybody of non pragmatomarxist background.

Plenty of buckets of sweat have gone into this work, i hope it somehow wafts the problem further towards solution and infuses discussions with better foundations.

Price-hike caused by bad market management, says PPRC report
Khawaza Main Uddin
The price-hike of essential commodities is a result of inefficient market management and lack of infrastructure for proper trade transactions, said the latest market survey report by a private research organisation.
The report terms the recent demolition of the informal market infrastructure as an ‘ill-conceived initiative’ which exacerbated the problem of the lack of an adequate market infrastructure. An informal market is considered to be the second-best, effective alternative for facilitating trade transactions.
The survey found that farmers, on an average, receive only 47 per cent of the retail price of vegetables while the marketing cost stands at about 27 per cent and the share of the traders at more than 25 per cent.
The survey report, failing to prove the commonly perceived syndication in causing price-hikes, observes that the impact of extra-economic costs appears to be less significant, particularly in the current political period.
However, the most pronounced cost category in terms of incidence is wastage, a point which, according to the report, is ‘clearly indicative of the inefficient nature’ of the prevailing agricultural trade. ‘Wastage adds to market risks for traders.’
‘Popular discourse tends to assign undeserved high margins to traders in general,’ notes the report of the study, titled ‘Exploring Market Dynamics of Essentials through a Triangular Study of Producers, Traders and Consumers’, conducted by Power and Participation Research Centre.
Explaining the income-profile of agricultural traders, it shows that retailers have an average monthly income of Tk 6,285, farias [small traders who collect goods] Tk 4,533, paikers [wholesalers] Tk 14,270 and aratdars [merchants] Tk 24,011.
‘High marketing margins may not be reflective either of market monopoly or of high profits depending on the size of costs, risk coverage associated with price volatility and wastage, types of consumers, as well as the income imperative of petty traders dealing with small volumes,’ said the report.
The report pointed out that agricultural trade is overwhelmingly dependent on personal financing in terms of setting up business and running current operations, since banks are relatively inactive as financiers of agricultural trade which is done mostly by the aratdars.
The research centre, headed by economist Hossain Zillur Rahman, carried out the study in six sites — Mithapukur in Rangpur, Shibganj in Bogra, Jessore Sadar, Jajira in Shariatpur, Shibpur in Narsingdi and Chindina/Burichang in Comilla, besides selecting Dhaka city as the market case, between January and May 2007. The report will be presented at a seminar tomorrow.
The report mentioned that farmers of Jessore were found to have the best marketing outcome with their average share of the retail price being 54.7 per cent of the price because of the better bargaining power in dealing with market. The traders’ share, at 31 per cent, is higher than the average rate in Rangpur. Marketing costs are highest in Pabna at 31.5 per cent, reveals the report explaining the role of market connectivity in determining prices.
Although the global price-hike and the huge shortfall in agricultural products are currently being blamed for the domestic price spiral, there is no comprehensive quantitative estimate of the product-specific consumption levels of the general people in Bangladesh.
According to the survey report which is based on the latest statistics, the country produces 213.75 lakh tonnes of food-grains against the demand of 235.83 lakh tonnes, 52.77 lakh tonnes potatoes against the demand of 25.56 lakh tonnes, 1.31 lakh tonnes of lentil against the demand of 6.17 lakh tonnes, 16.96 lakh tonnes spices against the demand of 25.73 lakh tonnes, 9 lakh tonnes of onions against the demand of 13.49 lakh tonnes and 93.06 lakh tonnes of vegetables against the demand of 134.78 lakh tonnes.