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Sayma Fariha Tahsin.

10720009

Strategic Marketing

Army Institute of Business Administration, Sylhet

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Q. What is the reason behind the price hiking of green chillies in Bangladesh? What is

the strategy used to reduce it?

Solution

During Eid-Ul-Adha the price of green chillies reached to a peak. It costed around 800-

1000tk per kg which is completely unusual. There is always a shortage of green chilies during

the monsoon and their prices increase for a short period. But, until this year, the price of

green chillies has never gone up as high as Tk 700 per kg. Although dealers' syndicates have

been cited in media accounts as the cause of the price increase, this is not totally accurate.

Farmers claim that this season's yield has not been good. Sometimes, market participants

might manipulate prices for personal gain. This can involve hoarding, creating artificial

shortages, or engaging in price gouging. Traders say that the price is high in Indian market.

Besides, the price is soaring due to the surging dollar exchange rate. On the other hand,

importers claim that local traders are responsible for excessive price hike in the retail market.

The plants perished flowers and fruits as a result of the lack of rain before the monsoon

arrived and the ongoing hot wave. Importers assert that the current season has seen a notable

increase in the price of green chillies in India. Additionally, they are grappling with escalated

expenses related to transportation, workforce, and customs duties when compared to previous

years. Furthermore, the value of the dollar has surged by over 20 percent compared to the

previous year. Despite the fixed exchange rate of the dollar at Tk 109 presently, importers are

compelled to procure the foreign currency at a higher rate. According to farmers, the yield

this season has not been good. The scarcity of rain before monsoon and the lasting heat wave

caused the plants to shed their flowers and fruits.

A few traders started importing from India after receiving approval from the agriculture

ministry, but the import was blocked at the land ports starting on June 27 owing to the Eid
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vacations, traders claimed. According to UNB, green chilli was going for Tk 600 per

kilogramme on Saturday in Dhaka.

In response to the escalating price of this essential kitchen ingredient, the government made

the decision to import green chillies from India, as the cost exceeded Tk 300. During this

period, the closure of the land port due to the Eid holiday further contributed to the price

surge. Diverse government entities-initiated actions across various markets. During this

period, import activities were temporarily suspended by importers for a few days.

Additionally, the Panchayat elections in West Bengal disrupted imports during this time.

Despite these factors, the price of green chillies has not witnessed a decrease yet.

Climate change has caused the occurrence of the El Nino phenomenon, which is a climate

pattern associated with the warming of the ocean's surface in the central and eastern tropical

Pacific Ocean. Though the full effects of El Nino are still unknown, it is usually associated

with natural disasters that affect agriculture in developing countries. Green chillies, like many

other agricultural products, are often subject to seasonal variations in production. If there's a

shortage during a particular season, prices can go up. So due to supply shortage the price

increased vigorously. Customers rarely purchase more than 100g due to the expensive price.

Nowadays, selling 2-3 kg of green chilies takes two days. As a result, a large number of

chilies are being damaged.

To begin with, evaluate the circumstance and pinpoint the root of the problem. Unfavourable

weather, transit issues, and shifts in demand are some of the widely mentioned potential

explanations that could have started the whole thing. It's crucial to consider the interests and

worries of the major players, such as farmers, distributors, consumers, and governmental

agencies. Consider the socioeconomic perspective, the effects on the spending habits of

middle-class households, and the global economy.

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In this situation, there have to be some strategies to reduce and control the price hike

of green chilli as it is a staple in Bengali household. So, temporarily allowing traders to

import chillies from foreign countries will be a good strategy. If the supply and demand is

met the price will reduce gradually. Strategies for Mitigation Both consumers and politicians

are concerned about the recent spike in green chilli prices in Bangladesh. This necessary

ingredient's rising cost has an effect on daily meal costs and household finances. A

comprehensive approach that includes both short-term and long-term actions is needed to

solve this situation. Sustainable farming methods are shown as a key remedy. It is possible to

increase the overall production of green chilies by encouraging farmers to use sustainable

practises. Enhancing yields and quality using integrated pest management, crop rotation, and

organic fertilisers can lower supply-related deficits and stabilise prices.

Government intervention is essential as well. To prevent disproportionate price increases and

ensure affordability for the general public, the government can enact price controls.

Additionally, subsidies for necessary inputs like seeds and fertiliser can lighten the load on

farmers and encourage continued production. Diversifying the market is another approach to

tackling the price increase. In order to replenish green chilli supplies, look into alternative

sources. This can entail working with other nations to import goods when there are shortages

at home, stabilising prices and maintaining a consistent supply. A forward-looking strategy is

essential in addition to the now-existing initiatives. Long-term sustainability is based on

providing adequate farmer support and training. Farmers' productivity and revenue can be

increased by arming them with information on contemporary agricultural techniques, post-

harvest management, and successful marketing tactics. Effective supply chain management

techniques are essential for addressing price swings. Green chillies can be consistently

transported from the field to the market by streamlining the distribution network and

lowering post-harvest losses, which can prevent unexpected price increases. Research and
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development (R&D) funding must be prioritised. The chilli industry may undergo a

revolution if funding were directed at R&D projects that improved crop yields, disease

resistance, and processing techniques. Improved varieties and modern agricultural

technologies can boost output and stabilise prices. A well-structured action plan that includes

monitoring and assessment procedures is essential for a holistic strategy. Regular evaluation

of performance criteria can identify areas that need improvement and help with appropriate

strategy revisions. The effectiveness of the deployed measures and their alignment with the

changing market dynamics are both guaranteed by this iterative approach. And for a longer

plan, the general people can grow three or four chilli plants in our yards, rooftops, or

balconies, we would not have to buy as many green chillies from the market.

In conclusion, a diversified approach is required in light of the increase in green chilli

prices in Bangladesh. Price variations can be reduced by combining sustainable farming

methods, government action, market diversity, and long-term initiatives including farmer

support, effective supply chains, R&D investments, and careful monitoring. Bangladesh can

create a reliable and competitive green chilli market that will benefit both consumers and

producers by adopting a comprehensive strategy.