Exclusive: Farmers, marketers, corporate entities - the unholy trinity in cahoots gouging egg prices. Again

A deeper look by bdnews24.com into the bullish egg market identifies several actors responsible for gouging customers with exorbitantly high prices after August

Eggs have long been considered the most affordable source of animal protein in Bangladesh and a daily dietary staple in all households, irrespective of their position on the financial ladder, in many forms - scrambled, poached, boiled and even curry.

Official data supports the narrative.

Farmers in Bangladesh, according to a report produced by the Fisheries and Livestock Ministry, had produced a total of 22.57 billion in the fiscal year of 2020-2021.

That means each Bangladeshi in that year consumed at least 121 pieces of eggs. The number was 104 in the previous year.

So, when the prices of one of nature's most nutritionally dense foods go through the roof for some unknown reasons, understandably it becomes a topic for intense debate in the public sphere as the soaring prices put additional pressure on the low and middle-income groups' already depleted finances at a time when they are grappling with the rising inflation rate.

In August, the price of a dozen eggs rose to Tk 160 in the country, which was later revealed by the Directorate of National Consumer Rights Protection, a government department responsible for addressing consumer complaints over goods and services, as manipulation allegedly by some of the top eggs distributors in the market. The rise in prices and the subsequent revelations created enough brouhaha at the time and is currently being addressed at an ongoing, highly publicised public hearing of the Bangladesh Competition Commission. 

The market of eggs cooled down after the prices remained on the boil for a while in the aftermath of the revelations. And the prices came down to Tk 120per dozen eggs on average.

But the relief only lasted for only a month and a half for workers like Selina Begum, who lives on a minimum wage and has a strict food budget.

Last Sunday, she came to the grocery market at Mirpur No.2 to buy some eggs. The prices she discovered sent a chill down her spine.

Sellers asked Tk 48 for two pairs of pristine-conditioned eggs and for a dozen, the price is Tk 140.

She needed the eggs, so in her desperation, she bought some cracked eggs in not-so-pristine condition, which cost Tk 30 for two pairs.

On the very same day, after a quick visit to two other commodities markets in Dhaka, the ones in Mohakhali and Shah Sriti Market in Mirpur, it was found that a dozen eggs cost around Tk 150, which puts the price of each egg at over Tk 12. Duck eggs, a delicacy many enjoy, were priced Tk 17 per piece.

Chain super-shops and online retailers have been selling a dozen eggs between Tk 175 to Tk 225.

bdnews24.com took a deeper look into the bullish egg market and after interviewing a good number of stakeholders, identified several actors, who are responsible for making customers pay way more than what they should have for eggs.

HOW PRICES OF EGGS SOAR

Eggs end up in the consumer's refrigerator after changing hands at least four times.

Distributors collect eggs from farmers and they sell those to large wholesalers. Traders purchase those eggs from the large outfits and sell them to retailers.

The prices jump at least Tk 2 per piece of eggs during this process.

The stakeholders, who had agreed to be interviewed for this article, in this rather tedious process are blaming each other for these jumps.

Large wholesalers and distributors have been trading blame, each claiming that the other group is to be faulted for artificially raising the prices. Traders, for their part, have been putting the same blame on the larger outfits. Meanwhile, farmers are saying they hardly make any profits from selling eggs to distributors.

It’s completely illogical to charge Tk 13-14 for each piece of egg. My estimation says the production costs should not be more than Tk 6 apiece, and if the farmers and marketers would like to make some profit, the price can go up to Tk 8 per egg. But it can’t go up to Tk 14.

Agriculture Minister Mohammad Abdur Razzaque

FARMERS FAULT STEEP FEED PRICES

Most of the eggs sold in the Dhaka region come from Gazipur and Mymensingh.

Md Rashed, a farmer in Mymensingh’s Bhaluka Upazila, said the production cost for each egg at his farm is Tk 10.40.

“For each piece, I make only Tk 0.05 to Tk 0.10 profit,” he said while being interviewed for this article.

Blaming the mounting production costs, the seasoned farmer said he cannot afford to keep selling eggs for such low profit margins. So, he does not see himself in egg production in the long run.

Agriculture Minister Mohammad Abdur Razzaque does not agree with the estimated production cost figures provided by farmer Rashed.

In August, at a programme in Dhaka, he said in his estimation the production cost should not be above Tk 6.

“It’s completely illogical to charge Tk 13-14 for each piece of egg. My estimation says the production costs should not be more than Tk 6 apiece, and if the farmers and marketers would like to make some profit, the price can go up to Tk 8 per piece. But it can’t go up to Tk 14,” he said. 

Industry leaders dispute the claim made by the minister and side with farmer Rashed.

General Secretary of the Bangladesh Poultry Industries Association Nazrul Islam, in a recent interview with bdnews24.com, said the farmers had been dealing with soaring feed prices and fuel costs, which saw a significant rise in recent days.

Nazrul figured that the production cost rose 25 percent higher than what it used to be in the last couple of months, which forced many farmers to stop production and it made an already volatile egg more turbulent.

“In our estimation, the current production cost should be between Tk 9 and Tk 9.80,” he said.  

COMMON ENEMY- THE DISTRIBUTORS

bdnews24.com investigations reveal that eggs price jump at least Tk 0.60 by the time the wholesalers in Dhaka’s Tejgaon area receive it from distributors. From there to retailers, the prices rise once again to at least Tk 1.

A Tejgaon-based wholesaler, during a recent visit, was found selling 100 pieces of eggs at Tk 1,060, which puts the wholesale price of each egg at Tk 10.60. The retail price goes up more when traders sell it to retailers and the retailers sell these to consumers.

Mehedi Hasan Sobuj, the proprietor of the wholesaler in Tejgaon, said distributors used to supply at least 80,000 to 100,000 eggs per day, which came down to around 50,000 recently.

“Since the supply chain shortages, the distributors have been asking steeper wholesale price, at least Tk 1,045 per 100 eggs. We are selling those at a marginal profit, at Tk 1,060 per 100 eggs,” he said.

Wholesalers accused some distributors of taking the farmers “hostage” by providing short-term loans, colloquially known as payday loans. The financial bindings, according to wholesalers, are a way of forcing the farmers to sell eggs at a cheaper price.

“The distributors have been making at least Tk 30 profit per 100 eggs,” said one wholesaler, who preferred to remain anonymous.

Nasir Hossain, another wholesaler in Tejgaon, said a good number of distributors in Chattogram, Narayanganj, Munshiganj, Tangail, and Dhaka’s Savar are manipulating the egg market by employing these tactics.   

Wholesalers at the Shah Smriti commodity market in Mirpur echoed the same.

Md Rajib, a wholesaler in the market, said: “Distributors have been holding back eggs to create artificial shortages and charge extra to deliver. That’s why the egg market is volatile right now.”

In August, the Bangladesh Poultry Industries Central Council, or BPICC, the association of poultry farmers, blamed the “machinations of middlemen” and “supply-demand mismatch due to disruptions in the supply chain” for the sudden price spiral of eggs.

DISTRIBUTORS IN DENIAL

bdnews24.com identified at least 69 such distributors, who have allegedly been making hefty profits by fixing the market price, in Dhaka and Chattogram divisions.

One such distributor is Abdul Jabbar in Tangail.

“We are not manipulating the market. Period. The current market volatility was caused by a supply-demand mismatch. Supplies of eggs have gone down significantly. Even recently, I have sold 100 eggs at Tk 1,030. We make marginal profits of a maximum of Tk 10 per 100 pieces of eggs."  

Corroborating his colleague’s testimony, another distributor from Tangail, Md Iliyas said they buy eggs from farmers at a maximum of Tk 1,010 per 100 eggs and sell those to wholesalers at Tk 1,030. 

Five such distributors have confirmed to bdnews24.com that instead of informal dealings with commodity wholesalers, they have joined forces with corporate entities now, and the agro companies play a significant role in deciding the retail prices.

A QUESTIONABLE AUCTION SYSTEM

Traditionally, distributors used to bring the eggs to wholesale markets in different districts and auctions. The retail prices varied based on the biddings in those auctions.

Enter large corporate entities that took over major egg market shares in the last few years and the trends have changed significantly.

Now distributors organise auctions of eggs, especially from large farms, online and companies like Kazi Farms, Paragon, Peoples Group and Diamond started controlling the bidding by flexing their financial muscle.

The so-called bidding process is so bizarre that during a hearing at Bangladesh Competition Commission last month, the commission’s chairperson Md Mofizul Islam termed the process “weird”.

Generally, in an auction, sellers have the control of setting a base price. But in online egg auctions in Bangladesh, corporate entities inform the distributors of their quotes. The dealers then send back their offer prices, based on the quotes.

This practice, termed unethical by experts, is a straight-up reversal of a generic auction process.

Even wholesalers in the informal market have been following the quotes sent out by the corporate entities to remain competitive and that’s how the companies like Kazi Farms, Paragon, Peoples Group and Diamond are controlling the market, confirmed a wholesaler in Dhaka’s Tejgaon, who refused to be named.

COMPANIES REFUTE ALLEGATIONS

Large companies have massive operations. They have their industrial-grade farms, own depots and distributors at the retail level.

The manager of a depot maintained by Peoples Group, one of the leading corporate players, swatted away the allegations of creating a so-called oligopoly in the market.

“We do not manipulate the market. We sell eggs at the base price farmers fix,” he said without revealing his identity. 

A manager of Kazi Farms, which faced the heaviest heat from the judicial body empanelled by the Bangladesh Competition Commission during its September hearing, said the idea that the company somehow controls the market is “grossly wrong.”

Our thorough monitoring and vigilance somewhat curbed down the spiralling prices in August, and we made some recommendations to the government to take actions against some key players. A major corporate entity is being investigated and prosecuted by the Competition Commission now.

AHM Shafiquzzaman, director general at the Directorate of National Consumer Rights Protection

“Our [Kazi Farms] market share is three percent at most. You can’t expect to manipulate a massive market with such small numbers, can you? Besides, you can’t blame us for the dealers and retailers who collect eggs at a higher rate from us to ensure their share of eggs to sell in the retail market."

The BPICC’s General Secretary Md Mohsin dismissed the allegation that the association is in cahoots with the companies.

“We notify the buyers about the prices the farmers give us. We don’t dance to companies’ tunes."

AUTHORITIES ON THE WATCH

AHM Shafiquzzaman, director general of the Directorate of National Consumer Rights Protection, said they are closely monitoring the situation in the egg market.

“Our thorough monitoring and vigilance somewhat curbed down the spiralling prices in August, and we made some recommendations to the government to take actions against some key players. A major corporate entity is being investigated and prosecuted by the competition commission now,” he said.

“We have learned that the stakeholders are raising the issue of feed and chic prices. The concerned ministries need to sort these details out with the stakeholders to keep the market stable.”

GM Saleh Uddin, a member of the Bangladesh Competition Commission, said the large companies who have been manipulating the egg prices are being watched and the commission has already brought charges against some.

[Writing in English and content produced by Adil Mahmood; editing by Biswadip Das]