Recently, Dhaka Chamber of Commerce and Industry (DCCI) has conducted a research to find out the reasons for the increase in the prices of daily necessities.
In order to analyze the dynamics of the price of daily necessities, the research focuses on supply chain management, local market management etc.
In order to review the results obtained in the study, DCCI organized a seminar titled 'Food Inflation, Motion-Nature Analysis in Pricing of Daily Necessary Products' at the auditorium of Dhaka Chamber of Commerce and Industry (DCCI) on Thursday (October 17).
Ashraf Ahmed, president of Dhaka Chamber said in the event that even if the price increases from the producer to the consumer level, the producers do not get the fair price. Sometimes raising prices involves indirect costs, he noted. If we can reduce the cost of production at storage, transportation and product processing stage, then the price will come down comparatively, opined the DCCI president. Moreover, he points out the wastage of perishable products, saying that only processing can be a good solution to prevent this huge loss. He also emphasized the importance of proper supply and demand-based data acquisition, data analysis and evaluation for sound policy decisions. He proposed the formulation of a tariff calendar. Through this, the import duty can be reduced or increased according to the pre-announced period apart from the domestic season.
He said that the overall coordination of the concerned government agencies is very important for a coordinated effort in this regard. He also called for initiatives to identify agricultural production using satellite technology.
It should be noted that this research was conducted in 49 districts of 8 divisions of the country on August 20-29 of this year, where data was collected from 600 people. These include manufacturers, importers, wholesalers and retailers. The study collected data on a total of 21 food products, of which 12 were locally produced, 5 were imported and the remaining 4 were locally produced and imported. It was conducted as a baseline survey, where samples were collected at various stages from manufacturers, importers, wholesalers and retailers.
Constantly high cost of production of goods, inefficient market system, high rate of transportation of goods, market dominance and limited access of producers to retail market etc. affect the price of commodities in our local market. Also, factors such as artificial crises, obstacles in opening credit, devaluation of currency, inefficiencies in the supply chain system are contributing to product price fluctuations. According to the survey, prices of most products such as coarse rice, refined rice, onion, rice fish and potato, lentil, green chilli, turmeric, red chilli, ginger and garlic are increasing at the producer level due to the pressure of increase in the cost of production materials.
In many cases, prices of goods are also rising due to mismatch in demand, production, supply and imports. However, inefficient market systems, information asymmetry, reduced local production, high prices of fertilisers, seeds, oil and pesticides and district-based business activities also play a contributing role. To prevent price inflation, the government should take effective decisions by increasing data collection activities, increase investment in the development of transport systems to ensure timely transportation of goods, increase storage facilities in remote areas of the country to increase storage of goods, and development of supply chain system is essential, DCCI said.
Dhaka Chamber Executive Secretary (Research) AKM Asadujan Patwari presented the keynote at the seminar. He said, the increase in production cost, low supply, inefficient market system, high transportation cost and market dominance, limited bargaining power are behind the increase in commodity prices. Factors such as artificial crises, LC opening issues, seasonal commodity price fluctuations, currency devaluation, supply chain inefficiencies, inadequate storage facilities and limited market access of producers are responsible for commodity price fluctuations. The main cause of current food inflation is lack of coordination between demand, production and import of essential commodities. In addition, inefficient market systems and information asymmetry, reduced local production and high transportation costs, high prices of fertilizers, seeds, oils and medicines including pesticides are contributing factors. It is recommended to conduct effective data-based research to control inflation, so that the government is able to take effective decisions. Emphasis is placed on increasing investment in developing better transportation systems to ensure even supply of food products, expanding more storage facilities to prevent wastage of products.
In the scheduled discussion of the seminar, the executive director of Bangladesh Bank. Saira Yunus, Joint Secretary, Trade Support Measures Wing, Ministry of Commerce. Saif Uddin Ahmed, Bangladesh Trade and Tariff Commission Joint Chief Mashiul Alam and Bangladesh Bureau of Statistics Deputy Director (Census Wing) Swajan Haider will participate.
Executive Director of Bangladesh Bank Dr. Saira Yunus said that it is not possible to reduce the price of products only through monetary policy, therefore the government should strengthen the monitoring program at the marginal level. He also said that although the central bank has changed the policy rate about 9 times, its impact on the market is not significant. He pointed out that imports are also very important behind the rise in commodity prices, as the post-Covid Russia-Ukraine war and the recent instability in the Middle East have severely disrupted supply chains in international trade, affecting our local manufacturing and overall economy.
Joint Secretary of Trade Support Measures Wing of the Ministry of Commerce. Saif Uddin Ahmed said, we don't have any 'product calendar' based on annual products, but if there was one based on statistics, it would have been much easier for the government to take other decisions including product import duties. He pointed out that every year our arable land is decreasing at the rate of 1 percent, as a result of which the production of agricultural products is decreasing at a constant rate, due to which import dependence is increasing. He said, currently our subsidy in agriculture sector is 4-5 percent, if it can be increased to 10 percent like other countries of the world, local productivity will increase further. Besides, he emphasized on changes in cross border trade process, reduction of import cost, expansion of bonded warehouse facility, extension of back-to-back LC facility etc.
Joint Head of Bangladesh Trade and Tariff Commission Moshiul Alam said, we meet the demand of products through local production and import, but the introduction of 'Seasonal Tariff' or 'Tariff Calendar' can be actively considered, through which the tariff of locally produced products can be reduced or can be increased, thereby benefiting our producers as well as simplifying the importation process.
Bangladesh Bureau of Statistics Deputy Director (Census Wing) Swajan Haider said, according to international standards, the Bureau of Statistics collects data on about 342 products across the country to determine inflation, in this case, an effective link between product supply and prices is strongly evident.
