The rising prices of essential goods in Bangladesh reflect deeper issues in market regulation and supply chain management. While recent government actions, such as reducing import duties and forming task forces, are steps in the right direction, they need to be reinforced by stronger anti-syndicate measures and supply chain reforms, writes Mostafizur Rahman
BANGLADESH’S food price inflation has become a crippling burden on millions of low-income households. Food inflation is largely driven by unchecked syndicates that exploit supply chains. The prices of staples such as rice, eggs, and chicken have surged dramatically, with rice increasing by Tk 6–8 per kilogram in the last two months and broiler chicken prices jumping by Tk 30–40 per kilogram. Eggs, once an affordable protein source, have spiked to Tk 58–60 for four pieces, well above the government-set prices.
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Price control and supply chain monitoring
TO UNDERSTAND the current price hike, we can apply game theory to model how business syndicates behave like oligopolies, limiting supply to maximise profits while manipulating prices. These syndicates control production and distribution, reduce market competition, and increase prices. According to Porter’s Five Forces Model, which assesses the dynamics of industry competition, the syndicates face low threats from new entrants, making them powerful enough to influence price levels. Bangladesh’s lack of effective enforcement allows this concentrated market power to go unchecked, allowing syndicates to create artificial shortages, especially in high-demand sectors like food commodities.
Moreover, the syndicates’ control aligns with the price discrimination model, where they price the same commodity differently across regions and customer types. For instance, rice prices are deliberately set higher in urban centres compared to rural areas, reflecting regional monopolistic practices. Wholesalers and millers often cite rising paddy prices to justify the rice price hike, even when supply data does not support such increases. This mirrors what economists call cost-push inflation, where supply-side factors like input prices are manipulated to drive up overall costs.
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Regulatory success in edible oil market
ONE example of effective intervention in Bangladesh came from the government’s successful regulation of the edible oil market in 2021. Amid rising global oil prices, the government imposed strict price caps and monitored wholesalers for hoarding, an action grounded in price ceiling theory. In addition, import duties were reduced, which helped to stabilise prices within weeks. Such a multi-faceted approach, combining market regulation with targeted imports, can also work for essential food commodities like rice and eggs.
Supply chain monitoring, a key tool in supply chain management theory, can also aid in controlling prices. By improving transparency and reducing bottlenecks in the production and distribution channels, the government can ensure a more efficient flow of goods to the market. Digital platforms for tracking the flow of agricultural goods, as successfully implemented in countries like India and Vietnam, could be modelled in Bangladesh to reduce the reliance on a few powerful players.
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Syndicate control
IN THE egg and poultry sectors, syndicates have even more power. The Bangladesh Poultry Association recently blamed corporate giants and wholesale traders for manipulating egg prices by creating artificial supply shortages. This reflects monopolistic market structures, where fewer competitors have greater price-setting power. According to the Trading Corporation of Bangladesh, egg prices increased by 15 per cent in just one month and 20.41 per cent over the past year. Syndicates operate using tactics similar to collusion models in microeconomics, where businesses collectively restrict output or fix prices, harming consumers.
In countries where syndicate control has been broken, such as the Philippines, active government intervention, combined with antitrust laws to break monopolistic practices, has resulted in long-term price stabilization. Bangladesh’s government must adopt similar tactics by forming anti-cartel task forces to break up market monopolies. Strengthening competition policy, which enforces fair competition among producers and retailers, could alleviate these artificial price hikes.
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Strategies to curb crisis
TO ADDRESS this crisis, the government must adopt multi-layered approaches, such as:
Price ceilings and price floors: By setting price limits for essential commodities, the government can prevent excessive markups.
Supply chain reforms: Digital monitoring tools can improve transparency, reduce inefficiencies and prevent hoarding at various stages of the supply chain.
Import liberalisation: Temporary reduction of import duties on essential goods like rice and poultry can increase supply and lower prices in the short term, providing immediate relief.
Consumer protection policies: Introducing stricter regulations against hoarding, backed by enforcement, can prevent syndicates from creating artificial shortages.
The rising prices of essential goods in Bangladesh reflect deeper issues in market regulation and supply chain management. While recent government actions, such as reducing import duties and forming task forces, are steps in the right direction, they need to be reinforced by stronger anti-syndicate measures and supply chain reforms. Implementing proven economic models, such as price controls and competition policy, can help bring down prices, stabilise the market, and protect consumers, especially the vulnerable low-income population. Effective monitoring of supply chains, breaking up monopolistic structures and ensuring fair competition can provide long-term relief, restoring balance in the market.
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Mostafizur Rahman is a research officer the economics department in the North South University.