Prices of essential cooking ingredients in the local market have been soaring for several weeks now, causing immense suffering. At first, it would seem to have been associated with the global rise in prices as economies rebound from the global recession brought on by the COVID-19 pandemic.

Wheat prices in the world market have reached the highest ever level in 14 years amid the ongoing conflict between Russia and Ukraine. The price of wheat hiked by 40% in a week, 62% in a month, and up by 52% in one year in the international market.

The price of wheat shot up to $421.82 per tonne which was $299.83 in the last month, before the starting of the Ukraine-Russia war.

Russia and Ukraine supply nearly 29% of the global demand for wheat, said Trading Economics. Moreover, these two countries are the main source of wheat import for Bangladesh.

Bangladesh's markets also felt the heat of the Russia-Ukraine war as within a week, the prices of packed flour have increased by Tk5 for a kilogram (kg) and by Tk8-10 for 2kg packets in the market.

Consumers are frustrated as the price of flour and atta has surpassed the price of coarse rice, as people are on the brink of losing the alternatives.

Hasan Jamil, owner of Bismillah Traders at Mirpur, said that the price of branded and loose flour has increased by Tk5-8 per kg.

"Currently, 2kg ACI Pure Flour (Atta) is being sold at Tk92, compared to Tk84 a few days ago. Teer Flour (Atta) 2 kg pack now costs Tk92 which was Tk84.50 earlier. Bashundhara Flour (Atta) 2 kg now costs at Tk92 which was Tk82 earlier and 2 kg pack Fresh Flour (Atta) now costs at Tk90 which was Tk82," he added.

Two kg packs of Sunshine flour (Atta) are being sold at Tk90 and 2 kg Sunshine flour (Maida) is being sold at Tk110. Sellers said the price of Sunshine brand flour also rose by Tk5 per 2 kg.

However, according to the data by the Bangladesh Bureau of Statistics (BBS), the country imported 390,000 MT of wheat in the fiscal year 2020-21 as against 450,000 MT in the 2019-20 fiscal.

The whole lot of wheat from Russia and Ukraine has reached the country under the government agreement so there is no fear about wheat import. The private sector has imported 2.1 million MT till February, though they import 5.4 million MT of wheat every year. But even then, some traders in the market are raising the price of wheat on the pretext of Bleeding.

Hitting the plate

Moreover, soybean and palm oil markets have also become volatile along with the prices of agricultural commodities like wheat and maize.

Both soybean and palm oil prices in the international market shot up by 18.13% and 19.39% respectively.

The price of crude soybean oil in the international market shot up to $1797.87 per tonne in the international market which was $1,470 one month back and $1235.68 one year back.

Brazil is the main importing source for soybean for Bangladesh imports.

According to the state-owned organization Trading Corporation of Bangladesh (TCB), in the local market of the country, the bottled soybean of 5 litres is being sold at Tk830, which was Tk800 last week, Tk780 last month, and Tk530 last year.

The bottled soybean of 1 litre is being sold at Tk170, which was Tk165 a month, and Tk135 last year.

TCB on Thursday said that the unpackaged soybean oil was not found on the markets in the city in its daily report.

However, sources from Savar, Manikganj, Dhamrai, and other areas said that loose soybean oil is being sold at Tk190-200 per litre.

They also said that some unscrupulous traders were selling bottled

Oily diets

Bangladesh has to meet the demand for cooking oil by importing from the international market.

"But its price has increased significantly in the international market. Moreover, the freight fares, container fares, shipping costs have also increased significantly due to the pandemic and further, due to the conflict. So, we have been forced to raise prices in coordination with the international market," he added.

He also said that their import global market is running but not at the hefty amount as they are concerned that the consumption may dip due to the high prices.

Bangladesh Edible Oil Ltd (BEOL) officials said that they did not reduce imports that way, but the international market is now volatile, so they are importing as per their capacity.

"There is no shortage of supply of our products, but we are purchasing carefully by observing the circumstances of the global market," he added, requesting anonymity.

He also said that the country's market has not felt the direct impact of the Ukraine crisis yet, but if the war is prolonged, the situation may be changed.

Regarding the continuous hike of the oil price, he said that there are a number of factors that have contributed to the hike of the oil price in the global market.

Brazil is one of the world's largest producers of soybeans, but last year's drought severely hampered their production which led to providing insufficient supply, he added.

Moreover, China imported a hefty quantity of soybeans from the world market and stockpiled them where large palm oil-producing countries like Malaysia and Indonesia experienced severe labour crises and their production didn't meet the expectations, he also said.

In addition, since the beginning of the pandemic, international freight fares have risen about 300% -350%, which has had an impact on cooking oil prices, he added.

All of these above issues have had an impact on soybean and palm oil prices, which have also hit the domestic market.

Towards the end of the week, the government announced it is withdrawing value-added tax (VAT) on edible oil and other essential commodities to keep the prices within the purchasing capacity of the consumers, Finance Minister AHM Mustafa Kamal said today.

The minister said this while placing a proposal in the cabinet committee on purchase for buying essential commodities. Kamal also told the committee that 15 per cent of duty has been waived on the production stage while 5 per cent on the consumer stage. Besides, the people will be provided daily necessities at low prices across the country and one crore family would be brought under the initiative, Touhidul Islam, public relations officer of the Finance Ministry, said quoting the minister.

The CPD's view

Protecting purchasing power of the left behind and financially insolvent people is the prime concern and for that the government should stabilise prices of basic necessities and improve employment opportunities, said economist Debapriya Bhattacharya.

"Many people, including lower income groups, middle class, informal sector ones, returnee migrants, the left behind, have lost purchasing power due to high price rise and there is a lack of employment opportunity for them," he said.

Bhattacharya was addressing a briefing and review session on a study on "What Impact will the Pandemic have in SDG Delivery in Bangladesh" organised by the Citizen's Platform for SDGs at Brac Centre Inn.

For them, it is utmost crucial to deliver Sustainable Development Goals (SDGs) as it provides more importance to the development of the left behind rather than the high economic achievement indicators, he said.

Bhattacharya, convener of Citizen's Platform for SDGs, Bangladesh and a distinguished fellow at the Centre for Policy Dialogue (CPD), proposed two policy supports to tackle the crisis.

One, from the macroeconomic perspective, is taking measures so that the taka does not depreciate for its effects on imported inflation alongside interest rate management so that loan pressure gets reduced for the low-income and left behind.

The other is to protect the purchasing power by lowering soaring prices by slashing tariffs on products of daily necessity.

He said the government should immediately reduce duties, tariffs and taxes to make essentials more affordable and provide access to basic commodities at "fair prices" by expanding open market sale (OMS) operations of the Trading Corporation of Bangladesh (TCB).

"The number of products of the TCB have to increase and this supply should be expanded to different areas outside Dhaka," said Bhattacharya.

The government should expand public works, social protection programmes and food assistance and increase tax rebates for job creation. Public resources will need to be redirected for subsidy to protect prices of electricity, fuel, food and fertiliser, he said.

"Given the resource constraint, the government will need to use public money under ADP more efficiently and accelerate investment in the rural public health system and address education loss," he added.

Bhattacharya said the upcoming national budget of fiscal year 2022-23 should be designed in context to recent developments which threaten to raise vulnerabilities of the disadvantaged.

"Overall policy approach should be towards using the SDG as a framework for post-pandemic recovery by prioritising public expenditure on education and health in view of Covid losses. Additionally, the SDG tracker should be updated urgently," he said.

The study pointed out that the Covid-19 pandemic had superimposed on preexisting disparities and affected almost all the SDG indicators.

It said the repercussions for the SDGs have been channelled to vulnerable groups, exposing them to a disproportionate burden and risking the core principle of the agenda of leaving no one behind.

Amongst all the SDG development targets related to the economy and society have been the most affected. Covid-19 had a more intensified impact on poverty, inequality and employment related areas, it said.

Education, child marriage and violence against women will continue to have an impact in the medium term.

According to the study, tracking mechanisms to capture the pandemic's impacts on the SDGs were severely affected due to a dearth of data. There is hardly any up-to-date data to capture the impact of Covid-19 on the SDG targets.

Maleka Banu, general secretary of Bangladesh Mahila Parishad, stressed that the pandemic increased inequality, including that over gender, and a lack of good governance has further constrained addressing this issue.

Syeda Rizwana Hasan, chief executive, Bangladesh Environmental Lawyers Association, said Covid-19 has deprioritised environmental issues for the government. She said Bangladesh, as a climate vulnerable country, cannot afford this.

Professor Mustafizur Rahman, a distinguished fellow at the CPD, said social protection should be expanded adequately in urban and peri-urban areas.

"Lack of data and information for the urban poor is obstructing the government from reaching the people in need," he said.

Intervening in the market

Amid soaring prices of daily essentials, the government has decided to deliver 61,000 tonnes of soybean oil, sugar, chickpea and lentil to five crore people through the Trading Corporation of Bangladesh.

TCB will purchase the essentials from 18 local companies for Tk 690 crore and sell them to people at subsidised prices.

"We want to expand the activities of TCB to the union level for helping poor people," Finance Minister AHM Mustafa Kamal said while announcing the decision. Besides, the government has decided to lower the VAT on the essentials to keep the market stable, he said. The decisions were made at a meeting of the Cabinet Committee on Government Purchase.

Speaking to reporters after the meeting, the minister mainly blamed the Ukraine-Russia War for the price hike.

"Wars are not in our hands. In such situation, imports face hurdles and prices become dearer. Sometimes, importers also take advantage of this ... That's why we have decided to deploy TCB," he said.

"We believe we will be able to tackle this situation, like the way we handled the situation after the pandemic."

Admitting that people were being severely affected by the soaring prices, he said at least one crore families would be benefitted if the essentials were delivered properly.

Currently, TCB trucks sell essentials at subsidised prices in metropolitan areas. Sometimes, the truck sale continues at the district level. The government has for the first time decided to take the trucks into unions.

Contacted, Shafiq Zaman, additional secretary of the Commerce Ministry, said that the decision was made after the Prime Minister's Office instructed to help five crore people by providing them with the commodities.

"With the help of deputy commissioners and UNOs, we have already prepared a list of one crore families. The essentials will be distributed in two phases," he said.

The phase-1 distribution is expected to begin on March 15 ahead of Ramadan. The second phase will be launched during the Holy month.