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The Financial Express
Swasti Lankabangla Swasti Lankabangla

Price volatility defies market theory

| Updated: October 22, 2017 13:19:42


Price volatility defies market theory

The country's market is as unpredictable as the capricious weather. If there is any perceptible difference it is the rise and fall in temperature, leading to unpredictability of weather but in case of market temperature, the price barometer is always on the rise with rare exception. Or, else no market theory can explain the rise in rice price right at this moment. It is the post-harvest period of Aman. Logic dictates that rice prices of all varieties go down at this time of the year. Instead, prices of the coarse varieties of rice in particular are going up by Tk 2.0 to 3.0 over the past months.
One report holds that the coarse varieties are short in supply because farmers have opted more for cultivation of finer varieties because those bring them more profit than the coarse varieties. But other reports are unanimous that it is the millers' intrigue that is responsible for the price spurt this time. Their ploy is simple. What they do is collect as much paddy as they can and hoard the grains in godowns. When they purchased paddy during harvesting, prices of all varieties were the lowest possible. Since the majority of farmers are compelled to sell their crop immediately in order to meet their long postponed requirements and large farmers have to dispose of their extra produces on account of lack of store facilities, the urgency is on their side. Rice millers with huge store capacity take full advantage of this urgency.
It is against this background, rice price is recording an unusual rise at this time, courtesy of the rice millers. But it is not rice, the staple of this nation, alone that is witnessing price instability. Other commodities are equally jittery. Already cooking oil, spices except mercifully onion, fish and meat have become dearer. The reason is not far to seek. Defying all religious and market norms and rules, traders are in the act again. They are holding dress rehearsals for the final act of coup d'etat. Indeed, it has now become a notorious practice on the part of traders to fleece consumers as much as possible during the holy month. 
Every year traders declare that they would not raise prices of commodities irrationally only not to keep the promise. From the point of market ethics, any such shady business is unacceptable.  And moral and religious justification for such dubiously engineered price volatility is nowhere to be found. The pattern traders follow each year this time is quite familiar. Only they target different commodities in different years. If one or more spices are earmarked for making the most of the artificially created crisis this year, next year some other items are targeted for realising outrageously high profit. 
Clearly, a segment of businesspeople has invented a way of holding the public a hostage. To them profit is the last word. During festival time, the usual practice in most other countries of the world is to bring down the profit margin because mass sale more than makes up for the smaller profit margin. In this country, the business community has other ideas. The governing motive seems to be that members are keen to do a year's business in a month. 
Business cannot sustain without profit on commodities. But there are few places under the sun where sellers enjoy so much sway over the market. Consumers find themselves at the mercy of traders. This is intolerable. Let the government face the challenge boldly in order to make the market consumer-friendly.

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