The price spike of essential foodstuff exists as a dominant and unsolvable problem in Bangladesh decade after decade. Continuous, unprecedented, and excessive rise in the price level of essential foodstuffs is highly detrimental especially to the low-income[1] poor people for their socio-economic interest, both in terms of current wellbeing and future economic development. The real disposable personal income of the poor household and consequently their spending capacity is significantly affected by the shock of price hikes.
The present study was undertaken to understand the effects of price hikes on ‘RTFN’ of the low-income people of Bangladesh as well as reveal the root causes of such price hikes and find out the possible solutions
A total of 438 poor people from 24 low-income professional groups from 19 districts of Bangladesh were randomly interviewed by using the Survey Monkey tool to collect primary data for this study. The secondary data were analyzed and a good number of literatures were reviewed for understanding the trend, root causes, and solution to the problem of price hikes.
The survey data shows that the monthly family income of 24% of the respondents was below BDT 3,000 which was 4% before the COVID-19 pandemic while only 1% of the respondents had an income higher than BDT 10,000 which was 27% before the pandemic that indicates their level of income much below of the national per capita average income (BDT 15,988; HIES, 2016). The family income of the rest of the respondents (69%) ranged between BDT3,000-10,000.
The respondents of the study noticed that the prices of almost all of the major food items went beyond their purchasing power since the middle of the year 2020 when the economic shock of COVID-19 also caused a drastic reduction in their income. During the previous three months of the survey, the staple and most essential foodstuffs such as Rice, Onion, Potato, and vegetables went beyond their purchasing power as opined by 86%, 94%, 91%, and 81% of the respondents respectively. On the other hand, 62% of the respondents had an opinion that the prices of Dal viz. Lentil, Mung bean, etc., and 55% of the respondents opined that the other food items such as fish, meat, egg, and milk, which are the major sources of protein for the poor people, were also too high to afford them. In such a situation only 5% of the respondents could manage to purchase the same amount of food that they could purchase before the price hike while the rest 95% of the respondents had to purchase a little less (32%) and much less (63%) amount compared to the normal price situation.
About 99% of the respondent opined that they had to cut expenditures for other basic needs either often (65%) or sometimes (34%) due to the price hike. Most of the households had to adjust their increased food cost by cutting costs of other basic needs such as clothing (77%), treatment costs (56%), education costs (40%), and another cost (73%).
In order to meet the extra expenditures for food due to price hikes, the households have often to take loans from microcredit NGOs or local money lenders with high rates of interest. It was found from the survey that 52% of the households had to take loans during the last month may be due to price hikes. The average amount of loan was BDT22,076 which ranged between BDT3,500-50,000. Thus the food price hike throws the poor people under a huge burden of debt.
About 93% of the respondents said that they could take three meals a day before the price hike which is reduced to 60% due to the price hike. On the contrary, before the price hike, only 5% of the respondents used to take two meals a day which was increased to 40% due to the price hike. About 35% of the respondents had to spend a day without any food sometimes while 20% of the respondents said that often they had to spend a day with an empty stomach which indicates their worse situation of accessibility to food.
Open Market Sale (OMS) run by the TCB seems to be a major instrument for the government in managing food accessibility for the poor people as well as controlling the price hike. But from the survey, it was frustratingly found that 78% of the respondents didn’t buy any food from OMS within the previous month of the study despite running the OMS at that time which indicates the lower effectiveness of the OMS service in ensuring the benefit of the program for the poor people.
In response to the query about the reasons for not buying food from OMS the highest 25% of the respondents said that they didn’t know the place where the OMS sales take place while the second-highest 21% of the respondents said that the supply in the OMS was not adequate compared to the demand, so food was not available to them.
As per the analysis in this study, the major causes for the unprecedented price hike in Bangladesh are unpredictable production loss due to the natural disasters; creation of artificial supply scarcity by the traders; the failure of market regulatory bodies due to lack of enough capacity & policy instruments, corruption or other vested interest; lack of authentic demand and supply data to prepare appropriate production and import plan; panic purchase by the consumers etc.
Formation of price commission, strengthening the capacity of TCB, Efficient supply management by managing domestic production and import, and strengthening coordination mechanism among the relevant government institutions are necessary for keeping the prices stable while rationing of essential foodstuff for the poor could be a good option to increase access to food for the poor not only for the price hike period but also ensuring the realization of their RTFN sustainably.
But, it is interesting to note that though too small but still 2% of the respondents opined that there is no responsibility of the government in combating food scarcity and price hikes while 19% of the respondents do not know whether the government has any role to play through the government is constitutionally responsible for ensuring the food for all as a basic need of every citizen. Therefore, the government seems to handle such a crucial issue of price hike in a very relaxed mode as there is no legal obligation in absence of a right to food law in Bangladesh to respect, protect and fulfill such important basic human rights of the people in general and poor & hungry people in particular.
[1] Low-income group: The people having a monthly HH income lower than the national average HH income of BDT15,988 according to HIES, 2016 have been considered a low-income group for the study. The people who are mainly living from hand to mouth, marginal farmers, low-paid labor, daily wage earners, floating people who earn from doing small business on the street, maidservants,s, etc. especially living in the urban slums being migrated from the rural areas are considered as a low-income group for the study.