Will the new egg price cap hold?
We are worried about the persistent failure of government interventions in controlling the prices of eggs, vegetables, and other staples. The escalating prices of eggs, in particular, have drawn concern of late, with many wholesalers in Dhaka and Chattogram halting sales early this week to avoid being fined for exceeding government-fixed prices. Despite past failures of such price-cap regulations, however, the government again set new prices for eggs on Tuesday, following discussions with producers and suppliers.
Under the new pricing structure, which takes effect Wednesday, each egg is priced at Tk 10.91 at the producer level, Tk 11.01 at the wholesale level, and Tk 11.87 at retail. That means consumers should, in theory, be able to buy a dozen eggs for Tk 142.44. However, this is nearly the same price structure fixed by the Department of Agricultural Marketing on September 15. We all know how that directive fared, with eggs selling at Tk 180-190 per dozen as recently as Monday. Whether the new regulation will fare any better remains to be seen.
The government seems desperate to make an impact amid criticism of its failure in price control. To ensure uninterrupted supply and price compliance this time, it has decided that corporate poultry producers and small farmers will supply eggs directly to the wholesale markets, bypassing the middlemen. This is a pragmatic decision. But as experts have warned previously, regulating prices without addressing supply-chain bottlenecks and dismantling market syndicates cannot solve the problem. Rather, we've seen how mobile raids to enforce price caps have backfired, creating panic among wholesalers, exacerbating supply shortages, and pushing prices even higher. In addition to wholesalers' refusal to comply with official prices, there are other factors responsible for the crisis, including recent floods, extreme heat, and frequent load-shedding, all of which disrupted egg production.
Furthermore, rising prices of poultry feed, hatchlings, and other inputs have driven up production costs and eventually market prices. Can we lower egg prices significantly without addressing the rising costs of production or increasing supply? The commerce adviser has acknowledged that daily egg production has fallen from 4.5-5 crore eggs to around 3-3.5 crore. Increasing egg imports can help, and the government recently granted permission to import over 4.5 crore eggs, but bureaucratic delays in issuing duty exemptions have stalled the process.
So to stabilise the market, there is no alternative to resolving these underlying challenges and production-market cost disparities. Price caps can only work as a temporary fix. It is important that the government prioritises structural reforms aimed at lowering production costs and increasing competition within the poultry sector. Reducing tariffs on imported poultry feed and other essential inputs would help lower costs, while fostering competition in the domestic market would prevent price manipulation by major companies. Enhancing local production efficiency is the key to long-term stability in the egg market.
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