Factors behind rising vegetable costs in Kartik

The month of Kartik is upon us, a time often associated with crisis in rural Bengal. In the northern regions of the country, this period is referred to as "Monga kal," or the season of famine. During this time, agricultural activities decrease, leading to a reduction in the earnings of farm laborers. The Aman rice is in its growing stage, and there is less variety of other crops available. The supply of summer vegetables significantly diminishes, hitting rock bottom. Seasonal vegetables begin to appear only towards the end of Kartik, with their supply increasing in late Hemanta, or early Agrahayan.

During this period, the prices of agricultural products remain high, causing increased hardship for the common people. They often struggle to make ends meet, sometimes leading to an increase in the prices of essential goods. Additionally, excessive rain and flooding can exacerbate people's suffering, making their struggles even more pronounced. The scream of the poor during this time can feel like the mournful lament of dead Kartik.

This Kartik month has come bearing messages of skyrocketing prices for essential goods. The list includes rice, lentils, oil, potatoes, chickpeas, onions, garlic, cumin, cinnamon, coriander, beef, and eggs. Currently, the highest prices are for vegetables, with a bundle of greens costing between 30 to 40 taka. Most vegetables are priced over 80 taka per kilogram, and some have even exceeded 150 taka. The price of green chilies varies between 300 to 400 taka per kilogram. Except for raw papaya and green bananas, no vegetable can be bought for less than 50 taka per kilogram. There is a severe shortage in the vegetable market, and one can hear the frustration and complaints of ordinary buyers when visiting the market. We are currently enduring a significant food inflation crisis.

Silent yet deadly inflation is a scourge on the economy. Over the past two years, the people of the country have felt this acutely, with the lowest-income groups suffering the most. The ongoing inflation is attributed to the consecutive mismanagement of policies by the previous Awami League government. Frequent increases in the prices of oil and gas, flawed monetary and revenue policies, the influence of business syndicates, and economic malpractice have all fueled inflation. The massive support and engagement of the public during the student protests in July-August last year were largely driven by these issues. In July 2024, the general inflation rate was 11.66 percent, while food inflation stood at 14.10 percent—marking the highest inflation in a decade.

Since the interim government took office in August, there has been a slight decrease in the inflation rate, with general and food inflation dropping to 10.49 and 11.36 percent, respectively. By September, these figures further declined to 9.92 and 10.40 percent. However, inflation remains high, and when one visits the market, the recent decline in inflation feels hard to believe. It appears that the current rate of inflation is heading upstream against the trend. The primary reason for this is the reduced supply of goods in the market, stemming from low production and a decrease in imports, alongside the manipulations of unscrupulous traders and their syndicates. When supply is low, traders take advantage of the situation, driving prices up for greater profit. Without sufficient government intervention, it becomes impossible to curb price increases, exacerbating the suffering of ordinary consumers.

For example, the price of eggs has skyrocketed, with each egg costing 15 taka and a dozen reaching up to 180 taka. On the morning of October 21, eggs were sold at this price in the Mirpur Rainkhola market. The main reason for such high prices is the supply crisis. Initially, devastating floods in the eastern part of the country affected poultry farms in at least 11 districts. Later, numerous poultry farms and traditional chicken farming systems were impacted by floods in 16 districts, including Mymensingh and Sherpur in the northern region. This disruption has affected egg production and reduced supply. Unscrupulous traders have seized this opportunity to raise egg prices.

To curb this chaos, the government’s Agricultural Marketing Department has set reasonable prices for eggs. At the production level, the price of each egg is determined to be 10.58 taka, at the wholesale level it’s 11.01 taka, and at the retail level it’s 11.87 taka. However, these prices have not been effectively implemented. The reasons behind this are the supply crisis and manipulations by traders. Without alternatives, 15 egg-producing companies in Dhaka’s Tejgaon and Kaptan Bazar were directed to supply 1 million and 2 million eggs, respectively, at the fixed price. Yet, this is not proving very effective.

Daily demand for eggs in the country is around 4.5 crore, while production is only about 3.5 crore, indicating a significant shortfall. The government has imported eggs multiple times from India, but the quantity is minimal. Even this small amount fails to meet daily needs.

The purchase price of eggs imported from India, including transportation costs and duties, totals a maximum of 7.5 taka each. These can easily be sold at retail for 8 taka. In contrast, the price of domestically produced eggs is almost double due to higher production costs and collusion among large producers to raise prices. According to one estimate, large egg-producing companies have an average production cost of 8.40 taka per egg, while smaller producers face costs of about 10.30 taka.

An institutional study found that the average production cost in both large and small egg farms is around 8.01 taka per egg, yet farmers claim production costs are much higher. However, the production cost of each imported egg from India is about 5 taka. This inefficiency falls on Bangladeshi egg producers, and it is their inability that forces our poor consumers to pay exorbitant prices for each egg.

To address this inefficiency, the production cost of each egg needs to be reduced. It is essential to encourage egg production at the grassroots level and in traditional rural farms. This will ensure a necessary supply of eggs and create competition in the market.

Our main staple, rice, is also experiencing skyrocketing prices. For some time now, coarse rice has been selling for around 60-65 taka per kilogram, medium rice for about 70-75 taka, and fine rice for 80-90 taka per kilogram. In the last year (2023-2024), the production was 40.7 million tons, with Boro rice accounting for 21 million tons. The government's procurement of rice was also satisfactory. However, recent floods have damaged Aus rice, and the area cultivated for Aman rice is less than targeted. The planting of transplanted Aman seedlings was delayed, which will lead to a reduction in total production. Against a target of nearly 20 million tons, only about 15 million tons may be achieved. Meanwhile, the stock of rice in government warehouses is decreasing. If rice is not imported, the price per kilogram may increase further. When there are fears of future supply shortages, our rice traders tend to act swiftly to raise prices.

Currently, the most discussed issue is the high price of vegetables. Initially, the cultivation of vegetables was disrupted due to continuous drought, followed by damage from persistent rain and floods. Additionally, until mid-Kartik, the supply of vegetables in the market is naturally low, leading to increased prices. However, this rise is expected to be temporary. By the end of Kartik and the beginning of Agrahayan, winter vegetables will arrive in the market, which will lower prices. Alongside this, the prices of eggs, potatoes, onions, and other essentials will also decrease, providing relief to consumers.

The government has already taken initiatives to sell ten agricultural products at affordable prices to the public. This initiative will involve the distribution of these products at low prices in 20 areas of the capital via trucks. The selling locations include the Khadya Bhaban, Manik Mia Avenue, Mirpur-10, Basabo, Basila, Rayer Bazar, Rajabazar, Mohammadpur, Gabtali, Mohakhali Bus Stand, Begunbari, Uttarkhan, Dakkhinkhan, Kamrangirchar, Rampura, and Jigatala. Available products include eggs, potatoes, onions, and various types of vegetables. In this initiative, a customer can buy one kilogram of potatoes for 30 taka, one dozen eggs for 130 taka, one kilogram of onions for 70 taka, one kilogram of green papaya for 20 taka, and a package of five kilograms of various green and leafy vegetables.

This is a positive initiative. If a significant quantity of these agricultural products is distributed daily through truck sales at affordable prices, it will have a positive impact on the market prices.

The Agricultural Marketing Department has already determined reasonable prices for various essential goods, including eggs, potatoes, and onions, based on production costs. This also takes into account marketing expenses and the profits of traders at different levels. When the supply is adequate, products are often sold at the designated price or below. Conversely, when supply is low, prices exceed the reasonable value. Some believe that in a free market system, determining a reasonable price is unnecessary because it is not being adhered to. Nevertheless, this approach allows consumers to understand the true value of products and track price fluctuations over time, enabling the government to intervene appropriately. This is incorporated into the Agricultural Marketing Department's policies.

In both our country and abroad, the maximum retail prices of various products are recorded, which also reflect reasonable prices. Sometimes, based on demand and supply, these prices may vary slightly in practice.

The high prices of agricultural products we are currently witnessing are temporary and largely natural for this time of year. When the agricultural production season returns to normal, this inflation will decrease. However, we need to become self-sufficient in production. We must enhance production efficiency per unit and reduce production costs. We need to address market inefficiencies and foster competition among sellers. If production is low, prompt arrangements for imports must be made. In summary, the supply of products must be kept stable. The agricultural information database must be accurate and reliable. Traders should be held accountable, and extortion must be eliminated while improving law and order. Above all, a coherent monetary and revenue policy is essential. The government has already taken several positive steps in these areas, and we hope to see the benefits in the near future, alleviating people's hardships.

Dr. Jahangir Alam: Agricultural economist, researcher, and educator. Former Director General of the Bangladesh Livestock Research Institute and former Vice-Chancellor of the University of Global Village.