The Financial Express

Why does market get jittery?

Evaly and Fianancial Express Evaly and Fianancial Express
Why does market get jittery?

The market is getting jittery as the year draws to a close. Meteoric and record rise in prices of onions - both local and imported varieties -may have shown the way. Even onion flown on cargo planes from overseas could not arrest the price hike. Indeed, the common spice did not return the complement by leaving a sobering impact on market in return for the VIP treatment it was given. What is the gap between import price and selling price here? The imbroglio shows no sign of coming to an end soon -at least not before the early local produce takes over from the old stocks when farmers can once again be delivered a raw deal by abruptly bringing the price down.

At least a dozen essentials have already registered price hike -- a few of those about a couple of weeks ago and the others only this week. Rice, pulse, flour, cooking oil, sugar, salt, zinger, garlic, turmeric, red chilli, cardamom and even the last year's potato have become dearer in the market. An analysis of the report shows that the rise in prices of most of the items is between Tk 3.0 and 10 -- a margin not to be alarmed at if individual commodity is taken into consideration. But together their impact will be telling on low and fixed income groups. In case of cardamom, though, the price has jumped from Tk 2,400 to Tk 3,000 to Tk 3,500 a kilogram within a week.

Who knows what tricks importers/traders have up their sleeves! The onion conundrum is yet to be solved. Peers of onion importers/traders may be biting their nails for not making such undue profits on their commodities. They are becoming increasingly restive and their restiveness is reflected in the jitteriness of the market. The latest price hikes of several items look just part of such an unholy attempt.

Logic and market theories fail to justify any such price hike as there is plenty of supply of all such commodities. Even cardamom for which the country entirely depends on import has, reportedly, registered a price slump in Bhutan which exports the item to both Bangladesh and India. Both the large and small varieties of this spice have registered price decline this year in Bhutan and now sell at an equivalent of Tk 533-45 and Tk 485-515. If this is true, the price rise here certainly defies logic.

The best example of unjustified price hike is that of rice. Farmers are compelled to dispose of their paddy at prices incurring losses. But for no plausible reasons the prices of almost all categories of rice were raised two weeks before. Some spokespersons from the millers and wholesale rice traders tried to put forward as lame an excuse as 'this is pre-Aman paddy harvesting period and price of rice goes up every year around this time'. How atrocious! There's no shortage of supply and farmers do not get fair price of their produce and yet price of rice has to go up.

Clearly, importers/traders are taking the consumers for a ride. All because there is no market monitoring. Why cannot the authorities enlighten the public in clear terms if an essential has abundant supply or market has been manipulated with an ulterior motive? The onion fracas should leave a great lesson. First, it was given to understand that the domestic production of onion fell short of the annual requirement by a small margin. Together with the imported volume, the total far surpassed the required amount.

For sometime now the impression is that there was a miscalculation over domestic production which was shown rather bloated. Investigation found no cases of hoarding of onions. But the latest is that the National Security Intelligence (NSI) has identified 29 businesses (a syndicate of importers, traders and commission agents) behind manipulation of market. What is the message? Whom to believe? People in responsible positions are countering each other's claims. This is no way of dealing with dishonest traders. No loopholes should be left for anyone to make a mess of the market. Monitoring letter of credits (LCs) can keep a tab on the volume of an imported item. Also if the authorities are serious they can find out any illegal storage. Without doing such groundwork, it is impossible to allow the market forces to play their assigned roles.  

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