[Reader-list] Milk Price Crisis During Eid+Puja

[Madhumita Lahiri]

My sense-- from an NPR story a while back, plus the general economics
news--is that global food prices have in fact shot up. There are no milk
specific prices but check out the commodity futures chart--the trajectory is
quite dramatic:
http://www.bloomberg.com/markets/commodities/cfutures.html

NPR traced this to a shift in global demand (growing middle classes in the
developing world have shifted towards more animal products consumption,
pushing up demand for those products, and consequently pushing up demand and
hence prices for grains etc. since animal husbandry is much more intensive
than eating vegetarian). The supply side factors are the drought which has
hit agricultural production (generally) in the US and parts of Europe, as
well as the global escalation in fuel prices and certain specific things,
like US agricultural policy (the ethanol subsidy has made the corn market
crazy, for instance). And foodgrain, after all, is an essential input even
in non-grain food products --and it makes keeping milk cows more expensive.
The consumer food prices in the US have gone up quite dramatically since the
last year.

Back to the email, however, the fact that this is linked to global food
prices does NOT mean that the govt should not do something about it. Price
stability in essential commodities is a basic goal for most
political-economic situations; most of the developed world does try to
maintain price stability in the basics, in order to keep general inflation
down. If Bangladesh is in fact allowing for a high rate of commodity
fluctuation (whether for internal reasons or because of external 'free
trade' arguments) that's probably socially bad *and* economically bad.
Conspiracy or not, world commodity price induced or not, one can always
reasonably argue that the government should intervene to keep basic
commodities stable and reasonable.

Hope this is useful. Regards, Madhumita



On 10/10/07, Naeem Mohaiemen <naeem.mohaiemen at gmail.com> wrote:
>
> An interesting email doing the rounds in Dhaka.  Price of chilli,
> eggplant, etc at all time high.  Crisis on people's lips. Now milk
> joins the list...
>
> Bangladesh and its Abnormal Price Hike in Milk Prices
>
> Follies abound in Bangladesh and none can tell where the next round of
> absurdity will hit the ground in Bangladesh. This Eid and Puja season
> the center stage has been stolen by grandiose escalation of milk
> prices. The unfolding story of skyrocketed milk prices gives me the
> temptation to become granivorous (feeding on grains only).
>
> Milk prices have gone up 17% over the last 10 days in a bizarre twist
> of turns. I am joining the Consumer Association of Bangladesh for real
> this time and going to seriously work to right-size this uncalled for
> situation and work as a pressure group so that accidental price swings
> do not surprise Bangladesh. Let us all join the consumer movement in
> Bangladesh and work to keep the corporation in line here in
> Bangladesh.
>
> This is simply tasteless where to my mind all the multinationals and
> locals ( NESTLE, NEW ZEALAND, DANO, Daily, Aarong, Milk vita) have
> colluded. It is senseless greed that has gripped them in this Eid and
> Puja season. I am requesting all to put up your voices against this
> onslaught of corporate greed. I am inclined to request all to venture
> into seriously boycotting drinking milk for a week (which may sound
> impossible but no harm in trying).
>
> This is oligopoly has to stop. I also want to see the Government doing
> the right job by penalizing these greedy organizations and levy
> serious sanctions against them. Additionally, I would request the SEC
> to force them to sell their shares in the public or else cease and
> desist. These corporations have had their jolly ride in skimming too
> much profit that they had never ventured to share with the local
> public. In other words, they are seriously deficient in their
> stakeholder management and all of this is going on under the nose of
> the government. I would request the Government wake from slumber and
> start their drives to bring these corporations to open up to the
> markets of Bangladeshi citizens.
>
> Coming back to the issue of outrageous commodity price movements, the
> people of Bangladesh cannot be robbed just because we are dependant on
> Milk or other products for that matter. We shall not drink milk for
> the next few weeks and make you the cheating corporates understand the
> will of the public and humble you to reduce your prices to levels
> lower than before or else force you to pack bags and leave the
> corporate world. We need sensitive, law abiding corporations with
> positive social responsibility. We do not need cheating and conniving
> corporates that eat on people's innocence. Just imagine how many poor
> children's nutrition you are robbing by skimming above normal profits
> and you can yourselves civilized corporate citizens. Shame on you.
>
> Enough damage has been made and we need to fight back otherwise we
> will be devoured in the long run - our existence threatened.
>
> The only practical reason for raising the prices would be if the world
> market prices had indeed shot up. I think that is a distant
> possibility and, therefore, I would also volunteer the ACC to dig into
> this syndicate of milk supply chain. The dealers of these corporations
> may also be involved in this heinous spiraling of milk prices.
>
> If you feel that I have raised valid points then please pass on this
> email to others and request others to do the same. It is our humble
> attempt at showing our discontentment and frustrations at controlling
> the markets for greed at sensitive national festivities ( Eid and
> Puja). The Government should take note that its popularity also
> depends to a great extent on keeping prices within tolerable limits,
> especially on staple products like Milk, Rice, Wheat, Oil, etc. I
> would also request my friends in the press to carry on their
> investigations and bring out into the public the real reasons for this
> violent price surge and, if indeed some vested quarters are involved,
> then let the public and the government take them to task. A small
> punishment cannot be justified in this case; we, as the public, need
> to see exemplary punishment for these wrongdoers so that Bangladesh do
> not experience such a specter in the comings days and years or at
> least send the signal that this price fixing will be dealt with
> severely if found guilty. Finally, please let us all work together to
> come out of the grips of a few for the welfare of all and, in this
> journey, we need every decent citizen's moral commitment.
>
>
> Ziaur Rahman
> Chief Executive Officer
> International Institute of Technology & Management
> 56/2 Lake Circus, West Panthopoth
> Dhaka 1205, Bangladesh
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