DCCI for smooth supply chain to contain food inflation

To control inflation, the government should invest in better transportation networks to ensure timely delivery of food items, develop storage facilities to reduce food spoilage and wastage and streamlining the supply chain ecosystem, according to a study of the Dhaka Chamber of Commerce and Industry (DCCI).

Due to increased production cost, low supply, inefficient market mechanism, high transportation cost and market dominance by wholesalers, limited bargaining power are major reasons behind commodity price hike in Bangladesh, the study said.

The study conducted by Dhaka Chamber of Commerce & Industry (DCCI) unveiled on Thursday stated more reasons are also behind price fluctuation like artificial crisis, LC opening problem, seasonal price variation, depreciation of taka and supply chain inefficiency, inadequate storage facilities, limited market access by the producers.

Food inflation averaged 9.50% in FY 2022-23 and reached double digit in FY 2023-24, peaking at 14.10% in July 2024, driven by global commodity market instability.

High transportation cost was reported by 60% in imported products, the survey also mentioned.

DCCI recently conducted the study to understand the dynamics of the price changes of essential commodities across their supply chain and devise a mechanism for monitoring and controlling the volatile commodity market.

The study reflects information from 600 respondents from 49 Districts of 8 divisions on 21 essential commodities out of which 12 products are locally produced and 5 are imported and 4 are both imported and locally produced.

According to the keynote paper presented by AKM Asaduzzaman Patwary, executive secretary, research and development department of the chamber at a seminar titled “Food Inflation: An Analysis on Price Dynamics of Essential Commodities” on Thursday at DCCI Auditorium in the capital.

Major reasons for current food inflation found are lack of coordination among demand, production and imports of essential products. Also, inefficient market system and information asymmetry, decrease of local production and high transportation cost, high cost of fertilisers, seeds, oils and medicines including pesticides and high input cost, the survey also highlighted.

DCCI President Ashraf Ahmed said despite the high price difference between producers and consumers, producers are not getting the reasonable price. Sometimes, indirect costs are involved in increasing prices.