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November 20, 2019

Some urge government intervention to fix ceiling prices for commodities

Workers carry sacks of onion for local market sale.  Photo : Supplied
Workers carry sacks of onion for local market sale.  Photo : Supplied

Government intervention is needed to fix ceiling prices for certain agricultural products because they are sold at exorbitant prices, regardless of whether agricultural production costs are high or not, according to consumers.
However, traders and merchants are opposed to this, saying that this is a time when a market economy is being pursued, and it is the market that adjusts prices, depending upon the principle of supply and demand. They argue that according to economists, the market automatically adjusts prices and government intervention is not needed.
Nevertheless, when there arises market failures, it is usual that governments intervene, argue those who advocate for the protection of consumers. What is happening now is that some staple foods are being sold at exorbitant prices, irrespective of production costs. The worst scenario can be seen in the rice and onion markets.
On the other hand, farmers and growers are also making demands on authorities to fix a floor price at which traders must buy their produce. In this regard, the Myanmar Rice Federation (MRF) has responded to this demand by issuing an announcement that the floor price of paddy is to be fixed at K 500,000 per 100 baskets (one basket weighs 46 lb) for the 2019 paddy harvesting period. This is the first time the MRF has intervened to protect farmers. As a consequence, the prices of rice and the broken rice declined in the local market in 2019.
It is true that the MRF will also fix the floor price for 2019. However, it could not fix the floor price for rice until 28 March, 2019. Therefore, rice-related NGOs have urged rice merchants to purchase rice at the 2018 floor price.
Meanwhile, onion merchants have requested authorities to fix the floor price of onions, because the price onion traders pay is now at a record low of K 350 per viss in the region. When new onions enter the market, the price of onions decline in Yangon and border areas. Some 120,000 viss of onion are arriving at Yangon markets every day. As there is an abundant supply, the price of onions is some K 350 per viss. March 25 witnessed 390,000 viss of onions entering Yangon market, while 1 million viss per week are arriving via the Muse border gates.
Some merchants are purchasing onions at a record low price during the onion growing season. Then, they store the onions to sell at record high prices in the market.
Therefore, the MRF has been requested to fix the floor price for onions to protect growers against losses, as well as to not allow selling the products at exorbitant prices.—Maung Say Aung  (Translated by Hay Mar)

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