11/08/2011 (Asia Times) - High prices, mostly linked to price gauging, are spoiling many Bangladeshi Ramadan celebrations despite government efforts to crack down on unscrupulous traders with mobile courts.

The prices of basic items, often imported, such as pulses, edible oil, palm oil, sugar and onions have increased for the past five years in the run-up to Ramadan, the holy Muslim month of fasting from dawn to dusk that started on August 2. Costs have also surged for other festivals such as the two Eids. The import market is dominated by only five groups.

Two weeks before the onset of Ramadan, the High Court, prompted by a writ filed by the Human Rights and Peace for Bangladesh organization, directed the government to set up mobile courts in the capital Dhaka and the Chittagong metropolis to crack down on unnecessary price increases for essentials. It also directed the government to take legal action against people responsible for hiking prices.

The court asked the government to submit a report on the progress of setting up mobile courts and their functions in seven days and told it to explain in 10 days why its inaction to stop the rising prices in essential commodities should not be declared illegal.

That failed to stop prices continuing to rise in the week before Ramadan for edible oil, onions and pulses that are used in making piaju and beguni, popular dishes eaten at iftar, the breaking of the daily fast in the evening. Chili, onions, potatoes and grams are used to cook boot bhuna, while it takes five kinds of pulses along with edible oil, some rice and masalas to cook halim.

Prime Minister Sheikh Hasina on July 26 directed deputy commissioners in 64 districts to step up vigilance on commodity prices. Vested interests "may become active during Ramadan to make extra profit by hoarding essentials or by other means", she said.

"They want to fill their pockets by increasing the prices of essentials and fleecing people," Hasina said. "This is very unfortunate. So you [deputy commissioners] will have to take action against such unscrupulous people."

That was not enough to prevent price increases by as much as 100% for some items. Although the government fixed the rate of sugar per kilogram at 65 takas (about 85 US cents) prior to Ramadan, it was soon selling at around 75 to 80 takas. A week before Ramadan, sugar, a vital part of Bangladeshi cuisine, became scarce as some retailers began to hang onto their stocks, while others sold it at 80 takas provided the consumer bought a kilogram of flour along with another item.

The price of edible oil jumped from 570 takas in early July to 605 takas for five-liter bottles by the end of the month. Onions increased from 33 to 40 takas, potatoes increased from 12 to 16 takas, gram increased from 58 to 85 takas.

The price of the indispensable chilli almost doubled from 50 to 90-100 takas in the kitchen markets of Dhaka.

"There is almost nothing within our reach," said Salma Ahmed, a resident of Tejgaon in Dhaka, at the Begunbari Bazar trying to buy groceries for her family. "Besides essentials, milk, vegetables, fish and even the price of beef and chicken has increased considerably."

One local factor is recent severe flooding in various parts of Bangladesh, which has hurt food production and supply. Floods, unprecedented for non-cyclone related downpours, have already displaced over 10,000 people. Although the situation did improve after four days of incessant rainfall during the last week of July, most of these districts are still inundated, leading to concerns about crops.

But with prices rising in the run-up to Ramadan for several years, other more powerful factors are believed to be at work. A grocery shopowner denied retailers were gauging their customers.

"We are not the ones increasing the prices," he told Asia Times Online. "The distribution costs have increased as suppliers increased their prices first. Also, transport costs, for bringing the goods from the villages to the city suppliers and then to us, have increased."

For their part, suppliers are claiming that many imported products have not reached Bangladesh on schedule, leading to the scarcity of some, he said.

However, a report by the popular Prothom Alo newspaper on August 1 revealed that the total consumer market is in the hands of five companies - City Group, Meghna Group, T K Group, S Alam Group and Nurjahan Group - which are able to control the market, importing 73% of the total goods during the financial year that ended on June 30, citing National Board of Revenue statistics.

Other companies, such as PHP, KDS, Abul Khair Group and MEB, stopped importing consumer goods two to three years ago, leaving little or no competition for these five players.

S Alam Group vice chairman Abdus Samad attributed recent market instability to "some internal problem", Prothom Alo reported. "A few months back, imports were hindered due to minimal funds in the banks. This was not intentional."

Meghna Group of Industries is to take legal action against an Australian sugar exporter for an alleged failure to supply the commodity to its refinery on time, Financial Express reported on August 1.

The company has been suffering losses due to the delay in shipment of 52,000 tonnes of raw sugar by JK International Pty Ltd, Australia, which was supposed to arrive by May 31, the newspaper reported, citing Meghna officials. The date was rescheduled for June 30 due to the exporter's supposed failure in shipment.

Meghna claimed compensation from the foreign company finally on July 2. Case filings are underway in an international court in London. Similar reasons were provided by other groups.

In addition to its involvement in sugar, tea and spices, Meghna's interests include dockyards, shipping and shipbuilding, poultry and fish feeds, paper, and woven garments.

Economists in Bangladesh have long pressed the government to implement the Competition Act 2010 to ensure fair competition in the commodity market and prevent all forms of anti-competition practices, including collusion and cartels. Finance Minister Abul Maal Abdul Muhith said on June 9 that the law is at its final stage.

The sympathies of the government, however, are less clear. Commerce Minister Faruk Khan suggests consumers "eat less" in order to tackle price increases.

"If we can tame our gluttony, traders will find no profit in this business. They will be bound to lower the prices," he told a seminar on food adulteration organized by the Voluntary Consumers Training and Awareness Society, a non-profit organization, on August 4. "You might get hurt. But as I personally practice, I would suggest you eat less. Everything will be all right."