“If the government can control 25% of the market, the influence of large importers will be reduced”
As edible oil prices skyrocket and disappear from store shelves, The Business Standard spoke to Ghulam Rahman, chairman of consumer advocacy body Consumers Association Bangladesh (CAB), to understand the problem. to be resolved and the potential ways out of the crisis.
: Wholesalers as well as retail store owners have taken edible oil off the market in hopes of making more profit. Photo: Mohamed Minhaj Uddin
:Wholesalers as well as retail store owners have taken edible oil off the market in hopes of making more profit. Photo: Mohamed Minhaj Uddin
The government will have to import edible oil and set up refining and storage plants. They will have to develop a distribution network. The government can do this with the help of the state-owned Enterprise Trading Corporation of Bangladesh (TCB).
The Ministry of Food already buys, stores and distributes rice and paddy. The government can also let them do the same with edible oil. We followed the open market economy model. We will have to go back a little and approach a mixed economy model.
It is true that there is a risk of market inefficiency because our public companies are still incurring losses. However, the main reason for this loss is political influence. If public companies are professionally managed, there is no reason for them to become losing companies.
The large private companies in the country are not run by the owners. Businesses are run by professionals. Private companies make profits, but government entities do the opposite. This is because politicians have no stake in public companies and make decisions that help them achieve personal gain. As a result, public companies are losing money.
The government buys food grains like rice and paddy, so mill owners can’t raise the price as much. Rice mill owners cannot manipulate the market if the government warehouse has enough rice. When the amount of rice stored by the government decreases, mill owners try to manipulate the market. But they still can’t raise the price that much.
Do you think transportation costs in the country – which some say are made worse by the presence of extortion rackets – are having an impact on raising the price of basic necessities?
It goes without saying that the cost of a product ultimately rests on the shoulders of consumers. Due to the extortion that takes place on the highways, the cost of products increases dramatically. Traders do not want to suffer losses. As a result, the price of the product increases.
Traders may experience losses once, but they will not experience losses every day. The price of a product increases dramatically when the product arrives in Dhaka from various places in the country.
Can reducing taxes have an impact on product prices, at least in a critical situation like today?
It is not true that the tax exemption always benefits the final consumer. If the government can ensure that the final consumer will reap the benefits, then only the final consumer will have the opportunity to obtain the benefits.
Otherwise, businessmen absorb the profits in their profits. Edible oil is a shining example. The government has reduced the tax on imports of edible oils. The price of edible oil has not fallen. On the contrary, the price of oil has increased.
How can we get out of our current situation?
The government will have to increase its capacity and opt for a mixed economy model. The government will have to increase its ability to intervene directly in the market. It will take time. However, it is also important to note that the whole world is experiencing inflation. And we are also fighting against the impact of this global inflation. The United States, which once had an inflation rate of 1-2%, is now experiencing an inflation rate of 8.5%.
The government should take all necessary measures to control the rise in prices. If the price of gas, electricity and water increases, the price of basic necessities will increase further.