Prices hinge on demand-supply seesaw
KATHMANDU: Uncontrolled price rise is hitting consumers hard. Experts believe the monopolistic supply chain of essential food commodities and hoarding are the primary causes.
Consumers complain that suppliers are creating an artificial food shortage to jack up their profits. The problem is worsening as importers are also acting as stockists. Said Kamal Bahadur Thapa, monitoring officer at Department of Commerce, “This is the reason why consumers are falling prey to unscrupulous traders.”
Traders are more likely to create artificial shortage when there are periodic bandhs and strikes across the transit route in the Terai and other parts of the country, he said.
Given the unchecked price rise in Nepal compared to low inflation in other parts of the world including India, the government recently intervened in the import of edible oil from India. The move decreased the price of mustard and soybean oil by nine per cent — a saving of Rs 9 in Rs 100 a consumer spends.
Earlier, the government was not involved in price control of essential supplies except of petroleum products and salt. “We weren’t authorised to intervene in import and supply of other items,” Thapa said. “But, the government decided to intervene in the import of other food commodities as well to control prices.”
Thapa also said that the government was all set to import 5,000 metric tonnes of pulses from India through Nepal Food Corporation (NFC) and Salt Trading Corporation (STC) as per a July 27 decision. “Pulse price will go down once it is imported,” he said. The government plans to import food grains, including rice, from India.
Kailash Bajimaya, acting director general at DoC, blamed the open market policy. “The private sector is taking advantage of the policy and hoarding food items.” He said market intervention would continue until consumers get respite from unethical trade practices.
However, Nepal Chambers of Commerce (NCC) president Surendra Bir Malakar challenged the government to prove that the businesspeople were hoarding and creating artificial shortage.
“We will help the government, if anyone breaks the law,” he said adding, “but where does the private sector keep its stock?”
He claimed that the godowns that were raided were regularly distributing commodities. “Anyone breaking he supply chain, should be penalised. Otherwise the government should allow us to operate our godowns.
What is hoarding?
KATHMANDU: According to Kailash Kumar Bajimaya, acting director general at DoC, “hoarding is the storage of large quantities of food commodities in order to create an artificial scarcity. Warehousing of the food commodities by agents, dealers and retailers exceeding one month without any transaction is punishable by existing law.
Who holds the market
The comodities market has around two dozen players, including at least 20 business organisations and traders. The key figures are:
• KL Dugar
• Pawan Bansal
• Chandreshwor Prasad Kalwar
• Pawan Kumar
• Murarka Group