Price hike of eggs: 10 firms, bodies accused of market manipulation

Bangladesh Competition Commission yesterday lodged complaints against 10 poultry firms and poultry-related organisations for manipulating the egg market in collusion with each other to send egg prices skyrocketing.

The BCC filed 10 separate cases with the commission against Kazi Farms, Paragon Poultry Ltd, Diamond Egg Ltd, Peoples Poultry and Hatchery Ltd, Naba Farm Ltd, Bangladesh Poultry Industries Central Council, Bangladesh Poultry Industries Association, Bangladesh Poultry Farm Protection National Council, Poultry Professionals Bangladesh, and United Egg Sale Point.

The commission operates under the commerce ministry and is empowered to probe, try, and punish errant companies for breaching competition laws. The commission operates under Competition Act, 2012, which allows to dispose of cases without going to a court.

BCC member Hafizur Rahman told The Daily Star that their primary findings show that these companies increased the prices of their products, controlled the market, and created an artificial crisis to destabilise the market through a syndicate.

He said the cases were filed under section 15 of the Competition Act, 2012, and the companies will be issued notices today or tomorrow to respond in 15 days.

A senior official of the commission said if found guilty, the companies could be fined up to 10 percent of their three-year average turnover.

Section 15 of the Competition Act says that no person shall directly or indirectly enter into any agreement or collusion -- in respect of production, supply, distribution, storage or acquisition of any goods or services -- which causes or is likely to cause an adverse effect on competition or creates monopoly or oligopoly in the market.

In mid-August, the price of a dozen farmed brown eggs shot up to Tk 180 from Tk 145, putting many people who rely on the cheapest source of animal protein in trouble.

The BCC, following instructions by the commerce ministry, formed several committees to probe the reasons behind the unusual price hikes.

Prices of broiler chicken, the cheapest source of meat, had also gone up then.

On August 13, Fisheries and Livestock Minister SM Rezaul Karim said the cost of producing an egg in the country was about Tk 10.50. "If it is sold at the retail for Tk 12, then everyone will make a profit," he told reporters.

The prices eventually dropped after the Directorate of National Consumers Right Protection raided markets to bust egg hoarders.

Yesterday, a dozen eggs were being sold for Tk 150, ‍according to the Trading Corporation of Bangladesh. Egg prices have increased 18.39 percent in a year, the TCB says.

Kazi Zahin Hasan, director of Kazi Farms Group, said Kazi Farms is not involved in any cartel or "syndicate" to increase the price of eggs. When the price of eggs goes up, people jump to the conclusion that large companies have formed a cartel, he said.

He said hundreds of traders buy and sell eggs every day and they will obviously buy from whoever offers them a low price. "If Kazi Farms tries to sell at a higher price than small farmers, the traders will buy from the small farmers and not from us.

"Over the last year, many egg farmers stopped producing eggs because the cost of feed was high and they were selling eggs at a loss. This has resulted in reduced supply.

"The hot summer further reduced egg production and reduced supply. The price of fish recently increased, leading many consumers to buy eggs instead of fish."

Nazrul Islam Liton, general manager of People's Poultry and Hatchery Ltd, claimed that the allegations against his company were false.

He cited poor production and high poultry feed prices for the price hike of eggs.

United Egg Sale Point owner Khandaker Md Mohsin, also secretary general of the Bangladesh Poultry Industries Association, said the allegations of the BCC are not logical.

He said over 60,000 poultry farms have closed over the last three years causing a supply dearth. The prices also went up due to high feed prices.

On top of this, heatwaves this year killed layer chickens in many farms across the country, he added.

Amjad Hossain Bokul, a member of the Poultry Professionals Bangladesh, said their main function is to advise farmers on managing their farms in a scientific way.

He said their organisation is a knowledge-sharing platform that connects poultry producers, feed producers, livestock science students, researchers, teachers, and livestock sector stakeholders. They are not responsible for the recent increase in egg prices, he claimed.

The Daily Star could not reach Kayser Ahmed, managing director of Diamond Egg Ltd and Moshiur Rahman, managing director of Paragon Group, for comments despite repeated attempts via phone and texts.

Ghulam Rahman, president of the Consumers Association of Bangladesh, said last year the BCC filed ‍several cases against several companies and organisations for allegedly hiking the prices of essentials, including eggs and broiler chickens, but there has been no outcome.

If the cases are not disposed of quickly and the culprits go unpunished, it will not be possible to stop price gouging and the consumers will continue to suffer.

He expressed hope that this time the commission will hear the cases quickly and take legal action.

In September last year, the BCC filed 44 cases against a host of individuals and organisations, accusing them of creating an artificial crisis that led to abnormal hike in the prices of items like rice, flour, eggs, poultry and toiletries.

Kazi Farms, Paragon Poultry Ltd were also among those sued. The cases are currently being heard by the commission.