Big Wholesale-Retail Price Gap Hits Consumers' Wallets

Dhaka's wholesale markets are selling goods at one price, but consumers are paying much more in neighborhood retail markets. Rice, potatoes, onions, garlic and ginger — as well as fish, chicken and beef and goat meat — are all selling for considerably more at retail than at wholesale.

On some items the gap reaches 15 to 20 taka or more per kilogram, and in fish and meat markets the difference is even wider.

The picture emerged from a price comparison on Wednesday (21 October) between Kawran Bazar's wholesale market and local markets in the Mugda, Maniknagar, Khilgaon, Bashabo and Kamalapur areas.

Comparing rice and daily essentials with fish, chicken and meat, the wholesale-retail gap was clear across the board.

Both wholesalers and retailers say rising fuel prices have pushed up transport costs, keeping prices elevated.

But retailers point to higher electricity bills, rising staff wages and increased shop rents as the reasons local market prices exceed wholesale prices.

Mokhlesuddin Molla, owner of Bhai-Bhai General Store in Mugda Bazar, said his shop has three employees whose wages keep rising year after year. Monthly electricity bills that used to be 3,500 to 4,000 taka now exceed 6,000.

With shop rent and other costs also up, he claims the profit margin between wholesale and retail should be widened further.

Echoing this view, North South University accounting and finance professor and School of Business and Economics Dean AKM Waresul Karim blames 'overhead costs' for the abnormal price difference between wholesale and retail.

He points to shop rent, extortion from shops, fuel and electricity costs — all part of overhead. Consumers pay residential electricity rates at home, he notes, but shops pay commercial rates, and employing staff costs a great deal. Raising product prices is the only way to recover those overhead costs.

Yet Karim believes the gap should be reduced — though not by force. The government must help reduce shops' overhead costs, he says.

For rice: at Kawran Bazar, a 25kg sack of coarse Guti Sharna rice sells for 1,150 to 1,200 taka — 46 to 48 taka per kg. The same rice sells for 52 to 55 taka in local markets — a gap of 6 to 9 taka per kg.

Paijam rice's 25kg sack sells for 1,200 taka (48 taka per kg) at wholesale and 52 to 56 taka at retail. Atash rice's sack is 1,350 taka (54 taka per kg), selling for 60 to 62 taka locally.

Miniket shows the same pattern: Raju Miniket's 25kg sack is 1,650 taka (66 taka per kg) wholesale and 70 to 74 taka at retail; Dawat Miniket's sack is 1,850 taka (74 taka per kg) wholesale and 75 to 80 taka locally.

Potatoes and onions differ widely too: white and red potatoes sell at 20 taka per kg at Kawran Bazar and 30 taka locally. Large sorted onions sell at 42 to 44 taka wholesale and 55 to 60 taka at retail — a gap of 11 to 18 taka per kg.

Imported garlic sells at 165 to 170 taka wholesale and 200 to 210 taka at retail; imported ginger at 170 to 180 taka wholesale and 200 to 220 taka locally.

The fish market gap is even bigger: two-kilo Rui and Katla sell at 300 to 320 taka per kg wholesale and 350 to 360 taka locally; Pangas sells at 180 to 200 taka wholesale and 220 to 250 taka at retail (a gap of up to 80 taka per kg by size).

Chicken prices differ clearly as well: poultry chicken at 170 to 180 taka per kg wholesale and 190 to 200 taka retail; Sonali chicken at 310 to 320 taka wholesale and 340 to 350 taka locally.

Beef sells at 780 to 800 taka per kg wholesale and 820 to 850 taka at retail; mutton at 1,300 taka wholesale and 1,400 taka locally; goat meat at 1,150 taka wholesale and 1,200 taka at retail.

To narrow the gap, monitoring is needed through the relevant government departments, the consumer protection directorate, local administration and mobile courts, says AHM Shafiquzzaman, president of the Consumers Association of Bangladesh (CAB).

He says: 'For essential commodities, the government can fix prices. The government sets prices annually — usually for edible oil and sugar. But traders are conducting business in a way that suggests a hidden syndicate controlling these prices.'

In his words: 'The Consumer Rights Protection Act requires reasonable selling prices and purchase-sale records. But these are not being followed. As a result, consumers' pockets are being picked through excess profit, which goes against their interests.'