The rice market is unstable. I hope everyone knows how much discomfort an unstable market can cause in the end. Even after November, the stock of rice in the government warehouse is not increasing. The price did not decrease in November either.
This is a matter of concern. In the meantime, I was teaching in class how uncertainty in market prices affects the production system. In the course of the conversation, it came to whether uncertainty in production also affects the market? I said how any uncertainty in the economy affects the market. I proved theoretically - how uncertainty also reduces production.
Meanwhile, I saw in the morning newspaper that food inflation did not decrease in November either. The month of Navanna has passed. Now is the time for the new rice cake festival. Yet the price of rice in the market has not decreased. How is this possible? Leaving the question aside, I asked the students what is the meaning of Adam Smith's 'invisible hand of the market'? The students explained. Someone said that the price in the market is determined through this hand. Someone said that through this, the maximum utilization of resources is ensured in the market.
When I asked the world-renowned ChatGPT, he also told me that five tasks are completed in the market through the invisible hand. One. Competition is maintained in the market, two. As a result, the interests of the individual are protected, etc. I understood that ChatGPT is not yet that wise. I said that the product comes to the market through many steps. At each step, the price is determined independently by demand and supply.
But each market is related to each other. This relationship is what Smith called the invisible hand. That is, the fact that the price of rice has not decreased in November. That means that one market is telling the other market what is going to happen. The price is not decreasing, which means that the rice harvest has been disrupted in the world this time. Therefore, the price is not decreasing in the market. The price is not decreasing due to the fear that the price may increase further in the future.
When I got home, the first thing I did was to go to the website of the Department of Agricultural Marketing. In our country, the Department of Agricultural Marketing publishes the market price every day. According to their calculations, the average market price of rice is around Tk 47 to Tk 52 today, December 6. A month ago, on the same day, it was around Tk 62 to Tk 66. A month later, in October, it was Tk 47-53.
That is, the price decreased in December. But other sources of market prices say that is not correct. The price of rice has not decreased. I checked the price in Agora. The price of miniket rice is Tk 90 per kg. Something is wrong. I thought I would check the September price. According to the Department of Agricultural Marketing, it was Tk 47-52 per kg. I was a little surprised. But what mistake did I see? I see less with my eyes these days! I didn't see it. It's not a mistake of the eyes.
The marketing department has ordered the market price to be displayed in all the markets of the city corporation. I don't know what you are thinking, but this number of 47-52 has aroused suspicion. I will leave the matter aside for now.
Rice is a product that is produced only twice a year. So I thought I would see if there is any provision in the Hoarding Act on what to do to become a hoarder. The Agricultural Marketing Act of 2018 was found. It is written there that if a seller fails to show a receipt for the purchase of a product, there is a provision of a fine of 1 lakh taka and a one-year imprisonment.
It is a bit of a sloppy read. It is also written that a license is mandatory to sell any agricultural product in the market. Otherwise, a fine of 1 lakh taka and a one-year imprisonment. What a surprise! When our Mohar Ali takes his chicken or his eggs to the market, will he take a receipt from the chicken?
Doesn't the farmer have the right to sell his products in the market? It is also said that if the nutritional value is not mentioned on the packaging of the product, he will be fined 1 lakh taka and imprisoned for a year. But is it possible for Mohar Ali to do that? Is he educated? Does he have a packaging?
Fortunately, in 1953, the 1987 amendment to the Daily Necessities Act of the then Pakistan period was found. What I saw was also sloppy read. According to the law, a wholesaler does not have the right to store more than 5,000 maunds of food and a retailer does not have the right to store more than 250 maunds of food. According to this, the country needs one lakh rice stockholders every season, meaning that there should be 1,500 licensed rice wholesalers in each district. Along with this, according to the law, they cannot keep any stock for more than 20 days and ‘cannot keep stock for more than seven days in the same place’.
It is also mentioned that no importer can store the product for more than 30 days. I also saw an amendment in 2011. In the case of importers, the rice stock has been increased from 30 days to 100 days. Everything seems like a fairy tale. After November, Boro rice will be harvested in May. That is, after 180 days. But the stock can be kept for only 30 days.
Then this rice will have to be sold about six times. You buy it once and sell it once. Each time the price will only increase. Otherwise, there is that famous magistrate! He will come with a camera and ask, “Where is the receipt?” Show the receipt. Not to mention a fine. I wondered what will happen to our farmer Mohar Ali? Will he come to the market with a receipt from his chicken!
Tell me, if you buy paddy in November, you have to keep it for a maximum of 180 days, otherwise there will be no rice in the market. But the law says to keep it for 30 days. If you violate it, you will be fined 1 lakh taka and imprisoned for a month! What to do now? You have to sell your rice to your friend after 30 days. You will not get new paddy in the market then. The next harvest will be in May. So? This time you will buy your friend's paddy.
Because it has also been 30 days. There will be a swap. Trucks will be needed to change the paddy husks. Manpower will be needed. Costs will increase. Prices will increase further. This will happen four more times. Whose fertile brain made this law? A grand plan has been made to increase the bribery fleet of government employees and increase the price of rice.
Not only government employees, but politicians will also get a share. Where the gap between one crop season and another is 180 days, how can stocks be kept for a maximum of 30 days? I don't understand. There are similar rules for importers too. I thought I would look at the import market.
Rice prices in India have increased by about 10-15 percent in the last one month. So how come the prices have come down in our country? Has the agricultural marketing department given true data? The production data has not come yet. However, looking at the market price, it can be assumed that production in India has not been promising. It will happen or not. Many provinces of India were affected by heavy rains and floods. There was flooding in Assam. There was flooding in West Bengal too. There was flooding in Gujarat.
There was flooding in Karnataka. Even Bihar had flooding. All of them were during the paddy sowing season. So, production will be affected. The second place affected by the floods was Thailand. It was also at about the same time. There was flooding in Vietnam too. About two lakh houses were destroyed there. When houses are damaged, the crop will be damaged. That is, almost every rice-producing country has been damaged by floods.
Meanwhile, an estimate of global rice demand was obtained. It was found that demand will increase this year. Now let's talk about when and where rice is produced. The main production season for Thailand, India, Vietnam, and Indonesia is October-November, the next season is April-May. In all countries, prices are low in the production month and then prices increase. So, if you want to import, the cheapest import month is November-December.
Prices will continue to increase thereafter. If there is a production shortage, a food crisis will occur in March-April or September-October. The same thing will happen in India or Vietnam at the same time. Because the food shortage will occur before the next crop is harvested. So, if India imposes an export ban by then, will the price in the world market decrease or increase? What is the right time to import? If there is a fear of food shortage, India or any other country can impose an export ban.
That too could be in February or March. On top of that, there is tension in relations with India. However, if the importer imports in advance, there is a fine of one lakh taka every 30 days. Will he import now in December? Or will he import in March?
You understand. Only a corrupt society can make such an irrevocable law that increases the price of goods by tying up people and their work. The purpose of the law is not to control the country's trade and commerce, but to open the door to new bribery. Making the residents of the relevant departments rich by trapping the businessmen. Making the government helpless by imprisoning people and making them earn crores of taka. Needless to say, this system is not limited to the rice market alone.
Do you understand why the price of rice is not decreasing? It is not the manipulation of the businessmen, but the planned manipulation of the government's corrupt departments. Manipulation to become a millionaire without capital.
Manipulation to buy a house in Begumpara. It is December. Soon the prevailing system will affect the price of goods in the market. The government will be in trouble. I hope the necessary changes will come before that. There is not much time.
Dr. AK Enamul Haque: Economist and Director, Economic Research Group (ERG)
