Curbing price manipulation: Mechanism there for 11 yrs but not in use

More than 11 years ago, the government issued an order for the trade of essential commodities, aimed at controlling their prices and curbing price manipulation by unscrupulous businesses through hoarding and other unfair means.

But the "Essential Commodities Distribution and Distributor Recruitment Order, 2011" remains only on paper due to apathy of the authorities concerned and non-compliance by importers and producers.

The commerce ministry issued it on March 16, 2011, under the "Control of Essential Commodities Act, 1956".

Dishonest businesspeople have been taking advantage of its nonenforcement, manipulating the supply of essential items to raise prices on different occasions.

The recent price hike of edible oil is a glaring example as traders created an artificial crisis to make a fast buck, putting the consumers in distress.

Consumer rights campaigners say the government has failed to tackle the recent edible oil crisis for not having any list of distributors and supply data of importers and refiners as prescribed in the order.

They also say that had the order been implemented, those responsible for the artificial crisis could have been identified and punished.

According to the order, importers or producers of essentials will designate one or more distributors in every upazila, city corporation and district and send their lists to a national committee.

It also states that importers or producers will send information on monthly supply of the products to the committee through fax, email or post.

Besides, the millers will issue SO (supply order) to their designated dealers, mentioning the prices and quantities of the items. The non-transferrable SO will be valid for 15 days, the order says.

The national committee, headed by the secretary of the commerce ministry, will collect data from field levels -- upazilas and districts -- and sit at least once every month to assess the stock, supply, sale and price situation of essentials and act accordingly to ensure the availability of the goods in the market.

The committee is comprised of representatives of government and trade bodies, including the director general of the Directorate of National Consumer Rights Protection (DNCRP), and presidents of the refinery owners' association, distributors' association, Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), Dhaka Chamber of Commerce and Industry (DCCI) and Metropolitan Chamber of Commerce and Industry (MCCI).

However, every stakeholder disregards the order, which was issued following the volatility in edible oil and sugar markets in the country in 2008-09.

The millers don't mention the prices of items in the SO and also avoid providing lists of distributors and data on monthly supply.

The national committee, on the other hand, has not taken any measures to enforce the order; it rarely meets to assess the market situation.

Asked why the order has not been implemented in more than 11 years, AHM Safiquzzaman, additional secretary at the commerce ministry, said, "I don't know … But we are now implementing the law [order]."

He said they found irregularities such as millers not mentioning prices and expiry dates in SO slips.

Besides, a broker was found collecting oil from a mill gate against an SO, which was issued one and a half years ago though the validity of an SO is only 15 days.

According to the rules, only a dealer, not a broker, is entitled to get an SO which is not transferrable.

Through such manipulations, the price of edible oil was hiked artificially several times before it reached the market from the mill gate, he said.

Shafiquzzaman, also DG of DNCRP, said the order is meant for all essential commodities, including edible oil, sugar, wheat, rice and onion.

"The order has not been followed for any of the essentials. We, however, started following it recently for edible oil and wheat to overcome the crisis."

Following the edible oil crisis, a similar situation was created in the wheat market, he told this newspaper.

"We are collecting information on the wheat crisis from the field level and if any irregularities are found, those will be dealt with in line with the order."

SM Nazer Hossain, vice president of Consumers' Association Bangladesh, said, the order must be implemented to control prices of essentials.

"The millers must provide information as prescribed in the order. The administration should regularly monitor it and bring the violators to book. Otherwise, it will not be possible to control the prices of essentials."

DCCI President Rizwan Rahman said, "The 2011 order has not played any significant role in controlling the market and price shocks or in easing the sufferings of the end-users as the national committee for market monitoring hardly meets."

Monjur Mohammad Shariar, director of DNCRP, said they didn't have any list of dealers before the Eid when the edible oil crisis was at its peak.

"After the Eid vacation, we collected a list of dealers from the edible oil companies and sent it to the offices of deputy commissioners across the country. Now no one can hide information and create an artificial crisis … ," he claimed.

Md Shafiul Ather Taslim, director for finance and operations of TK Group, leading importer of edible oil, said the current pricing system of essentials is unsustainable.

"I don't know if any other country in the world sets commodity prices the way the government in Bangladesh does," he told The Daily Star.

"Letters of credit (LCs) are opened almost every week to bring in products ... But if the price is adjusted after three months, how will it be possible to do business?"

According to the 2011 order, manufacturers, refineries and importers will fix the prices of essentials, but they need to submit to the government the proposal for price change 15 days before it takes effect, subject to government approval.

Talking to this newspaper, Taslim Shahriar, senior assistant general manager of the Meghna Group of Industries, said, "Nothing in our business is outside the law.

"We have kept a steady supply of edible oil in the market. But some dealers may have created a crisis by not delivering the products, which is a bad practice."

Meanwhile, Bangladesh Competition Commission sued eight edible oil firms on May 12 for manipulating supply and local production of the essential cooking ingredient.

The move came more than a month after the DNCRP found that the edible oil refiners and importers reduced supply in the market in March to increase prices through an artificial shortage.

Section 6 of the Control of Essential Commodities Act, 1956, says violators face up to three years in prison or a fine or both.