Factors responsible

The following factors seem to be hindering the stability of price of food items:

Decline in supply due to import of less amount of food commodities by the traders. Despite withdrawal of duties and taxes on some food items in the national budget of 2007-2008, food imports seem not to have increased. The reasons may be due to the measures taken against corruption and adulteration of food and collection of information about the source money used for opening letter of credit, many not so honest traders are fearing to utilise their capital freely and adequately in imports.

Due to dishonesty of a few traders whose food commodities were found rotten and adulterated in their go-downs and who were punished, some supposedly honest traders as well are fearing to import food items lest by any chance any defect is found in their imported products.

There were no bumper crops in the country during the last two years .Moreover mechanised cultivation methods are yet to be applied adequately in our farming like in neighbouring countries India, Myanmar, Thailand.

Increase in the prices of fuel (diesel, kerosene etc) and electricity directly and indirectly add to the cost of production and distribution of paddy, rice and other agricultural products.

Measures suggested
Supply must be increased in relation to or even in excess of the demand of food commodities in the market in compliance with the theory of economics while elimination of syndicated hoardings, cartelling and excessive profiteering must be ensured. The following measures are suggested to achieve the goals:

Duty-taxes-VAT on rice, pulses, edible oil, onion, garlic etc should be totally withdrawn.

Nil margin for opening L/C of food items, decrease in interest rate on loans, longer period for repayment of T.R, elimination of complications in assessment of and payment of duty, taxes, VAT (where applicable) , preference in clearing of containers for food items at the port should be allowed by a government order.

When any food item is scarce the government itself should import it through its agencies like TCB.

No question about the experience of the importer, amount of LC, amount of capital used by the importer should be raised and banks should be ordered to give priority to opening of LCs for food items.

In order to prevent and stop hoarding, syndicated or otherwise, clear guidelines should be given as to the period of how many days a food item may be allowed to be stored with importers and wholesalers after its arrival and stringent punishment should be provided for in the laws for any deviation. Law enforcing agencies should be vigilant to look for deviations in storage periods.

TCB should be given responsibility to import and distribute food items in bulk aside the private importers. This will create competition among the importers to sell them at lower prices. In the past as well TCB has played a vital role in importing items supply of which went short in the market. Last political government prevented TCB from importing perhaps with a view to benefiting the favoured importers. TCB may be converted into a public company as proposed, but it should be done quickly. TCB's capital or loan and manpower may also be increased to cater for mass distribution of imported and other agricultural items throughout the country by minimising the profits made by the middlemen.

Agricultural Corporation and Agricultural Department of the government themselves should be more trained, made active and efficient in training the farmers in mechanised, scientific and modern cultivation like in neighbouring India, Thailand, Myanmar etc so that bumper crops can be harvested. Agricultural equipment, fertilizers, seeds, pesticides etc should be subsidised by the government. Farmers should be specially trained to face the aftermath of current flood damage.

Subsidy must be given to farmers if the prices of diesel, rural electricity, gas, kerosene etc are increased. But since subsidy does not reach the real needy, prices of diesel, kerosene, gas, fertilizers, seeds etc should not be increased at all.

It is observed that when BDR sells commodities at selected centres, the prices remain lower than in market. But this system is not permanent and enough for the whole country. Hence Food or Agricultural Deptt or TCB should open centres throughout the country for purchasing and selling agricultural produce. This will eliminate profiteering by the middlemen, and the produce will be selling at reasonable prices to the ultimate consumers.

The vivid examples of how price drops when supply is adequate are (i) the price of sugar was Tk 65 per kg about six months ago; now, since its supply has in creased, it sells at Tk 25 per kg, and (ii) due to abundant supply of lemon in the market it sells at Tk 10 per score.

Conclusion
The noble task of eliminating grafts and corruption undertaken by the caretaker government must be successful in order to clean the garbage of past 36 years, but controlling inflation of food items is also a vital issue for the low and middle income group who constitute about 90 percent of the population. So I urge the government to give equal importance to controlling and stabilizing the prices of food items.

Ali Idris FCA is a company executive.