EDEN BUILDING TO STOCK EXCHANGE

Published: 12:07 AM, 09 February 2020

Onions, syndicates and prices https://dailyasianage.com/news/217835/onions-syndicates-and-prices M S Siddiqui The responsibility of Competition Commission of Bangladesh is to look after the market to prevent monopoly and Ministry of Commerce has a department to monitor situation of price of commodities and others. "To tame the market volatility", Bangladesh Competition Commission put a 'public notice' in different newspapers warning that alleged oligopoly or collusion in onion market is unlawful and a punishable offence. The National Security Intelligence (NSI), the country's major civilian intelligence agency, has identified some 29 businesses who were allegedly behind the recent rise in onion prices in the country. After thorough investigation at field-level, NSI submitted a report in this regard to the Ministry of Commerce (MoC) on November 27, 2019 to take necessary actions by the government. According to the report, some 16 onion importers and traders are allegedly involved in the price hike of the essential spice. Besides, some 13 commission agents, who purchase onion from the importers and supply to the wholesalers-retailers, are also involved in the price manipulation of the widely consumed spice. The NSI also commented that trade policy wing of the Bangladesh Tariff Commission (BTC) as well as import and internal trade wing of the MoC had been indifferent the developments over the onion market. It opined that market monitoring cell of the MoC failed to identify whether the importers are really supplying the spice to the retail market or not. They even instructed the wholesalers over mobile phones to sell onion at higher prices at retail level. The law enforcing agencies have stepped in by arresting a number of traders. Mobile courts have also fined some wholesale and retail traders in Dhaka and Chittagong. Although there is no authority to investigate the activities of after import trade, the Customs Intelligence and Investigation Directorate (CIID) had summoned four dozens of onion importers to check their import and trade trend during the end of 2019. They had also quizzed 14 onion importers to "gather information" on sales and stock of the cooking ingredient. The CIID, a field office under the National Board of Revenue (NBR) asked a total of 47 onion importers to appear in its office with information on the quantity of onions they sold, their proceeds from sales as well as names and addresses of the persons to whom the onions were sold. Conscious Consumer Society (CCS), a consumer rights organization, made the allegation at a press conference at claimed that a syndicate of traders has pocketed around Tk3,180 crore in the last four months by manipulating the onion market and prices. Bangladesh authorities did not take in to consideration of the global market prediction but India has withdrawn incentive on export of onion. All the countries in the world noted the global

situation and took initiative to find alternate source of onion from early this year but Bangladesh authorities and business persons failed to take note of production and market forecast and consumers are worse sufferer of the short sightless of all stakeholders. The blame entirely shifted to so-called trade syndicates by the end of October even when the gross mismatch between supply and demand of onion in the market was clear to all. Both print and electronic media, coupled with social media, squarely blamed the so-called market syndicate or cartel for pushing the price of onion. Even the siting Minister of Commerce has echoed the same blame on so-called syndicate. At this stage the veteran politician and ex-Commerce Minister Tofail Ahmed, Chairman of the parliamentary standing committee on Commerce said there was no syndicate in the onion market and that the prices of the bulb could not be brought down by force. "Government will have to bring down the prices of onions through a concerted effort," the senior AL lawmaker said while briefing the reporters after a meeting of the committee at the Jatiya Sangsad Bhaban. He also said there was nothing called market syndication behind price hike of commodities rather the businessmen were friends of the government. He also said it was not the responsibility of the government to determine the prices of essential commodities in an open market economy. The businessmen were friends of the government. The business community came forward to tackle the onion crisis and decided to import onion on urgent basis and sell at import cost to bring down the price. According to statistics, four Industrial groups Meghna, BSM, S. Alam and City Group of Bangladesh imported 37% of the total import of onion after crisis arises due to ban of export of onion by India according to statistics of Chittagong customs authority. Since 1st October 2019 to 25th January 2020 the total onion imported through Chittagong port was 62,400 mt and about 158 importers from 8 countries. These 4 groups imported 23,288 mt being the 37% of total import. Meghna Group alone imported 9,394 mt from Turkey. They have also imported onion through airlift to meet the immediate demands at the request of the government. The second biggest importer was BSM group with quantity of 5,966 mt. they have imported from some countries including The Netherlands in Europe. They have handed over some onion to Police Women Welfare Association at cost price. Meghna Group and S. Alam group sold these imported onions to TCB at breakeven price to serve the nation and meet the immediate crisis. S Alam group upon request of government open L/c for 60,000 mt and some of their consignment is at the port for clearance and already released 5,061 mt. City group imported 2,867 mt from Turkey and China. Another 134 importers also imported onion during these period and even some importers imported about 30 mt in one container and contributed a lots to meet up the demand of the markets. There is more import of about 16,000 mt by middle size importers. Among the source of onion, Myanmar was the largest source of import for about 68,000 mt and airlifted consignment came from Pakistan, Turkey and Egypt. The total more than 1,30,000 mt imported from eight countries after banning by India. Import from easier from Myanmar as shipment through border and against payment without L/c. These importers explored global market and imported from new sources and imported 1st time from new sources and faces a lots of hassle to develop the sources and incurred losses due high price, test of onion and longer shipment time etc. The market situation improved and businessmen also learn of the global onion market. The knowledge will help to serve the market efficiently. Unfortunately, due to planned publicity of a section of policy makers and government officials, citizens perceived an idea that a "syndicate" prevails in the market, without even understanding

what syndication means. According to character of the market, syndication is possible if 4 or 5 business house can control about 40% of the total market. At present there are 500 importers of onion and there is no practical situation of act of syndicate. Moreover, according to a study conducted by the Bangladesh Institute of Development Studies (BIDS) with support from the Competition Commission, collusion or so called "syndication" is not possible in the onion market. The study, carried out in 2018, reveals that around 60 percent of the yearly consumption of onion is locally produced and the remaining 40 percent is imported. Around 80 percent of the imported onion comes from India by 500 importers. It appears that there were significant number of buyers and sellers in the market and entry into the market is not prohibitively costly in most of the stages in the supply chain. The report observed that neither is there any strong evidence of collusive price-setting in major markets, nor does it turn out that traders are information-constrained regarding the essentials of the market. The role of traders' association is largely non-existent. In brief, the onion market appears to hold most of the pre-conditions for a competitive market. Rather,there was clear lack in such monitoring and forecasting on part of the government. Government didn't properly monitor the production and price in the global market and failed to take effective role to prevent the shortage of onion. It has proven that intervention of government agency like Trading Corporation of Bangladesh (TCB), action of Mobile Court, activities of intelligence agencies and shifting blame of failure of certain departments on so-called syndicate could not resolve the crisis. The right intervention of higher political level and right decision and immediate action of business community indicate the maturity of the government in a market economy. It is the time to understand that the cooperation between private sector and government is key to handle the market economy. The writer is a legal economist Email: mssiddiqui2035@gmail.com