Concerns over supply shortages and price hikes during the holy month of Ramadan still grip markets across the country, despite the recently announced exemption of duty. Consumer demand for dates, chickpeas, sugar and edible oil skyrockets during this period.
According to traders, the worries remain due to a number of reasons, including non-recovery of tariff value in the new decision, high USD value, and very little duty, tax exemptions compared to requirement.
According to market information, the demand for 6-7 essential products including dates, gram, edible oil, sugar, onion, beef and milk increases by 25 per cent – 50 per cent during the month of Ramadan.
Besides, the market of four key products – dates, chickpeas, sugar and edible oil – is 100 per cent import dependent.
As a result, adequate stock, supply and prices of these products depend on international market price, country's tariff value, duty structure and USD rate.
Due to the Russia-Ukraine war, Bangladeshi consumers have been buying imported products at abnormally high prices for the last two years. However, despite the reduction in the prices of all products in the international market this year, Bangladesh’s market did not cool down much.
Due to the increased USD value and the tariff rate, prices of many products have gone up significantly.
Under the circumstances, at the end of January, Prime Minister Sheikh Hasina ordered authorities concerned to reduce the duty of four daily commodities – along with rice – at the end of last month to meet the increased demand of products and reduce prices.
More than a week after issuing this order, the circular was issued by the NBR last Thursday reducing the duty. According to the circular, the average duty-tax per kg of sugar has been reduced by Tk 0.75 from Tk40.35 to Tk 39.55.
Value added tax (VAT) has been reduced from 15 per cent to 10 per cent at the import level of refined and unrefined soybean oil.
Import duty on dates, one of the staples of Ramadan, has been reduced from 25 per cent to 15 per cent. The total duty-tax on imports was 58.60 per cent which has now been increased to 48.60 per cent.
However, traders say that the decision to levy this duty will not have much impact on supply and prices, because it is less than required.
On the issue, Bangladesh Fresh Fruits Importers Association President Sirajul Islam said, “Last year the duty per kg of dates was Tk 10 on average. This year the duty has to be paid Tk 170-270 depending on the standard. The main reason for this is the imaginary tariff value.
“For dates imports costing $500-$600 per tonne, tax is payable on the value of $1,000. At $900 per tonne, the payable duty is on the value of $2,500. So, many importers have reduced date imports. Those who have already imported dates are releasing goods from the port slowly.”
He added, “The customs duty will reduce the price of dates by Tk 10 – Tk 30 only. It is important to reduce the tariff value, as it remains as before. There may be a shortage of 10,000 tonnes of dates in the upcoming Ramadan due to importers not getting the duty exemption as expected.
Among different varieties of dates, Zaidi, Maryam, Nakal, and Dabbas are the most sold in Bangladesh’s market. These were priced at Tk 200 – Tk 600 three months ago. Their price has increased by Tk 200 – Tk 300 per kg, now being sold at Tk 400 – TK 800.
Compared to the last year, the Ajoa date price has increased by nearly Tk 400 per kg, and is being sold for Tk 1,400 per kg.
According to commerce ministry data, the country has an average demand of 1.5-1.75 lakh tonnes of sugar per month, which increases to three lakh tonnes during the month of Ramadan, of which only 30,000 – 35,000 tonnes are produced in the country.
Brig Gen Md Zakir Hossain, additional managing director of Deshbandhu Group – one of the country's sugar producers, said, “The decision of duty exemption of sugar amounts to nothing. This decision will make it possible to reduce sugar prices by only Tk 0.50 per kg.
“So, imports will not increase much. As a result, even if the supply is normal at present, the policymakers will be able to tell what will happen due to the additional demand during Ramadan.”
Currently, sugar is being sold at Tk 140-150 per kg, which was Tk110-120 per kg last year.
Shafiul Athar, the director of TK Group – a leading consumer goods marketing company, said, “Demand for edible oil increases by at least 25 per cent during Ramadan. The price of oil in the market may decrease by Tk 3 – Tk 4 per litres due to the impact of duty reduction.
“But that will be after the arrival of new products.”
He then pointed out, “The rate at which edible oil is being imported will not increase much after the duty exemption. If the tariff is higher, the unit price will be higher as well. This in turn will increase the cost to consumers.
“But what will happen now due to duty exemption is that the price will not increase, the market will remain stable.”
Haji Shafi Mahmud, president of the Wholesale Gram Traders Association of Moulvibazar, said, “The demand for chickpeas in the country during Ramadan is 20 per cent higher than that of the other 11 months.
“This year, there will be no shortage or supply problems in the chickpea market.”
He added, “But last year, we sold chickpeas at wholesale for Tk 60 – Tk 65 per kg, which this year is at Tk 90 – Tk 95 per kg. We have to pay this additional price due to the increase in USD rate. I do not see much chance of this price going down during Ramadan.”
Chickpea is being sold at Tk 100 – Tk 110 per kg at retail, which was Tk 90 – Tk 95 per kg last year.
Market insiders say apart from dates, chickpeas, sugar and edible oil, the supply of remaining products including meat, milk and onions can be met from the local production. The new onion season will start in the country before Ramadan in March.
Besides, hundred per cent of beef and milk is being produced in the country. The price of beef can be fixed at Tk 650 per kg if the government wants to. Beef is currently being sold for Tk 700 – TK 750 per kg.
