Dhaka, Bangladesh
Addressing 'agflation' imperative to augment consumption, economic growth

Addressing 'agflation' imperative to augment consumption, economic growth

Wayward market overrides rules, supply crunch ready reason

News Report One-kilogram onion costs the previous price of five kilos, the current price of a kg of potato equals to that of seven while chili turned hottest at Tk 300 few days back--a wayward market that suppressed consumption. Prices of other items of agricultural produce also remained high, including that of staple like rice, while there is a rise in general inflation by official account. And the inflation is stoked by what is defined as 'agflation' or agricultural inflation which reflects a general increase in prices of agricultural goods. The price rises are attributed by trade associations to supply crunch by corona disruptions to the internal and external supply chains as well recurrent spells of cataclysmic flooding. But both government ministries and agencies and consumers take it with a grain of sault. "It's extremely abnormal by all account...there must be market manipulation by oligopolies," said many an analyst, as ministers concerned also suspected unholy market play as the wayward market overrides set rules and interventions. Anyway, economists and consumer-rights groups say, the government authorities ought to get to grips with the market situation to salvage the sagging state of consumption to spur economic growth. With global trade remaining all but stalled yet, consumption-led economic growth through price management and job generation is being preferred by countries, particularly China. Price rises amid the corona crisis made living costlier in August with the internal and external supply chains both having been constrained, as is reflected in inflation upturn. By official calculation the general point-to-point inflation increased to 5.68 percent in August from 5.53 percent in the previous month "due to rise in food inflation". According to the monthly consumer- price index provided by Bangladesh Bureau of Statistics (BBS), the food inflation rose to 6.08 percent in August from 5.70 percent in July, but the non-food inflation rate declined to 5.05 percent in the last month from 5.28 percent in July. "In the rural areas, the general inflation rate slightly went up to 5.60 percent in the last month from 5.43 percent in July," said the BBS. On the other hand, the general inflation rate increased to 5.81 percent in August from 5.72 percent in the previous month in the urban areas. The point-to-point national wage index witnessed a slight upward trend with 5.91 percent in August against 5.82 percent in July 2020. The current rates assumed to be much higher. Market surveys showed prices of consumer goods, including kitchen items, much higher particularly in the capital and other cities. Rice price also increased. "Apart from the disruptions caused by the pandemic, prolonged devastating monsoon floods in many districts was another major cause of the price rises," says a firsthand report. On the other hand, real income of many fell for job losses and pay cuts or irregular payments amid shutdowns or restrictions. Job generation and consumption augmentation are being seen as two main drivers of economic growth in the present context of corona hangover. But consumption has taken a knock for job losses and pay cuts of many and the current 'agflation' defined by some economists in view of a general increase in prices of agricultural products. So, job creation to stimulate consumption and controlling the inflation are seen as a cardinal economic task. China, an economic superpower, just took this line of economic priority, and decided to secure jobs and create employment for students. Floods, meanwhile, extensively damaged crops in agrarian belts. It looked like a great deluge as surging water from across the border coupled with downpour burst Atrai riverbank and kept flooding croplands, roads and villages around. Most parts of the districts under Rajshahi division were hit by the latest spell of flooding coming through the bordering northern Naogaon district, but the situation looked fearsome in areas close by the Atrai river, including Baghmara, Durgapur and Puthia upazilas of Rajshahi and parts of Bogura, Natore and Sirajganj districts. "Water level was swelling by a cubit every day. Fishes from ponds were washed away, crops submerged and roads inundated. People from distant areas are flocking in for fishing shoals of fish washed away," narrates Abdur Rahman of Ratugram in Durgapur, a Malaysia-returnee and local Awami Leaguer, how the latest flood hit when people were reeling from previous spells. He said the floodwater is receding now and felt that massive agricultural rehabilitation programme should be taken under government initiative and supervision for this belt surrounding Taherpur, a river-port on the Baranoi River which is famous for best-quality farm products. Defying the government- fixed rate of Tk 30 per kg, traders are selling potatoes at double prices in the kitchen markets of the capital, pinching the pockets of customers, says a UNB report. Visiting several retail markets in the city, including Jatrabari, Demra, Bangshal and Moghbazar areas, on Friday, a UNB correspondent saw potatoes selling at Tk 50-60 per kg based on quality, turning the government measure to check the surging vegetable prices into a futile exercise. Earlier, the Department of Agricultural Marketing (DAM) under the Agriculture Ministry had fixed the maximum retail price of potato at Tk 30. DAM also fixed its wholesale price at Tk 25 per kg while the gate price (cold storage) at Tk 23 per kg mentioning the cost of potato production per kg was Tk 8.32 for a farmer. According to the state-run Trading Corporation of Bangladesh (TCB) data, the potato prices surged by 111.11 percent on October 16 compared to the same period of the previous year when it was sold at Tk 20-Tk25 a kg. The price jumped by 28.38 percent just within two weeks as the item was sold at Tk 34-40 per kg on October 1, the data shows. Sources at DAM said there is no deficit of potato in Bangladesh as the country has surplus of 31.91 lakh tonnes of potato against the annual demand for 77.09 lakh tonnes and the total production of 1.09 crore tonnes in the last harvesting season. Almas Hossain, a potato wholesaler at Shyambazar, said the prices have gone up due to supply crunch. “If any product is found in plenty in the market, then its price comes down. Today each kg of potato is selling at Tk 40-45 here. We hope the price will come down soon,” he added. President of Bangladesh Cold Storage Association Mosharraf Hossain said there is a production shortage of around 20 lakh tonnes of potato this year and that is why the prices have shot up. “Many farmers abstained from potato cultivation following huge losses in the last few years. So, the government should take initiatives so that famers cultivate it and they can earn profit properly,” he also said. Director General of DAM Mohammad Yousuf said the prices of potatoes on the wholesale market started coming down

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