The country's spice market, which has a sizeable import dependence, will not stabilise with only local products until imports of ginger, garlic, turmeric and dry chillies are normalised, according to the Directorate of National Consumer Rights Protection (DNCRP).
Prices of ginger and garlic were expected to rise by 25% due to the strong US dollar, but these products are being sold at much higher prices, said AHM Safiquzzaman, director general of the DNCRP, at a view-exchange meeting with traders at the directorate on Monday.
"There is instability in this market. Last year, the price of the local variety of ginger was Tk80-120 per kg, which is now selling at Tk150-200. Imported ginger is selling at Tk120-300. Local garlic, which used to cost Tk40-70, is now selling at Tk100-150 per kg," he said, adding that the prices will be higher than expected without regular imports.
According to businessmen, imports of spices have declined mainly due to two reasons – a strong dollar and a 100% LC margin. But there will be no shortage of products in Ramadan if LC openings can be normalised now.
Prices of some spice products have already doubled in the market. The price of cumin has increased from Tk300-400 per kg to Tk600 and Turkish cumin nearly went out of stock, with whatever remains costing Tk700-750 a kg.
Addressing the meeting, Haji Majed, an importer of agricultural products and vice president of Shyambazar Krishi Panya Arat Banik Samity in Old Dhaka, said prices of spice products have been on the rise for the last 15 days due to a lack of imports. A month ago, no letter of credit (LC) was opened with India and China.
"After the opening of LCs, it takes at least one and a half months for the goods to arrive from China. In addition, traders have to open LCs with a 100% margin. It would have been a big relief if importers could get a 20-30% concession here. Imports would increase," he said.
Mahmudul Hasan, deputy head of the Bangladesh Trade and Tariff Commission, said the import duty on ginger and garlic is low and may not affect the price much. However, duty on dry chillies is high in order to protect local producers.
"Although there is no possibility of an increase in the prices of ginger and garlic in the international market, prices may increase by around 30% this year due to the increase in the rate of the dollar," he said.
Besides, around 20% of ginger and garlic are imported while the remaining 80% come from local production, Mahmudul Hasan added.
At the meeting, DNCRP DG AHM Safiquzzaman said that middlemen in the spice market should refrain from making extra profit, which will bring some relief to consumers.
Besides, concerted oversight in the commodity market is needed to reduce volatility during Ramadan, he said, adding that the issues discussed at the meeting will be presented in the form of a recommendation to the Ministry of Commerce.
Amin Helali said, vice president of the FBCCI, the country's apex trade organisation, said there is a problem with the supply system of products in the international market and a dollar shortage in the country. "The supply of essential products to the market has to be ensured by reducing the LC margin for traders," he said.