Many traders indiscriminately stockpiled rice, potato, and onion to drive up prices even when there was a supply surplus.
In the meantime, government interventions wholly failed to manage the crisis.
These findings of three study teams from Bangladesh Agricultural Research Council were revealed yesterday at a press conference at the capital's Barc office.
The agriculture ministry initiated the market research on October 20 last year following public outcry over the prices. The ministry formed the three teams to investigate why prices of the three essential food items soared in the market.
In the months following the monsoon in mid-October, onion prices rose as high as Tk 80 per kg at the wholesale market and Tk 90-95 at the retail, while each kg of potato was sold for Tk 50 at the retail front. Even prices of rice went beyond the reach of many. Different varieties of the staple, like Miniket and Nazirshail, was sold at Tk 60 per kg.
The study teams found that 52 percent of farmers sold their Boro paddy within a month of harvesting, and only an insignificant minority (five percent) sold it more than four months after the harvest.
"It means, when the price of rice increased, the staple was not with the farmers," Prof Jahangir Alam, a former director-general of Bangladesh Livestock Research Institute and the coordinator of the study teams, told the press conference yesterday.
"The millers told us that Boro production decreased resulting in the high prices, but the farmers told us that Boro production had actually increased. Sure, Aman production was less than usual, but there was plenty of Boro in stock," he added.
The per person demand for rice per day is 551gm, while the per person availability was 621gm (per day), estimated the teams.
The teams found that the cost of rice processing (by millers) had gone up because of increased transportation costs. Despite this, the millers still made Tk 4.7 in profit for every kg during the Boro season and Tk 5.2 per kg during the Aman season.
"If you take only rice into consideration, the profit would not be noticeable, but millers produce a lot of by-products, and those widened the profit margin," said Md Abdur Rouf Sarkar, senior scientific officer of Agricultural Economics Division at the Bangladesh Rice Research Institute while presenting the findings of one of the teams.
The profit, however, was less than that of other years.
The team also pointed at the government's failure in procuring rice. "The government rice stock had gone down to as little as 5 lakh tonnes," said Rouf.
The team recommended that the government should always maintain a reserve of at least 12.5 lakh tonnes of rice every month to control market prices during August-October.
Agriculture Minister Abdur Razzaque admitted that the government had failed to procure rice from the farmers. "Last year our procurement price was lower than the market price, so farmers refused to sell [their produce] to us. Last year, we could not even procure Tk 1 lakh tonnes of grains," he commented.
"We opened up rice imports to ease the market, but the traders refused to import it saying that the 25 percent import duty would not let them make profit," he added.
"Millers and wholesalers are now controlling the market," he said.
The price of Aman rice was 74 percent more than what it was in 2019, the team found, while the price of Aman paddy almost doubled.
Another team found similar reasons behind the increase in potato prices.
"There was a surplus of 3.41 lakh metric tonnes," said Prof Dr Shaikh Abdus Sabur of the Department of Agribusiness and Marketing at Bangladesh Agricultural University, presenting the findings of the team.
The price of potatoes peaked after September and October, while data shows that between July and November, the cold-storage facilities released on average 16.3 percent of their stored potatoes, while the selling price of potatoes shot up to Tk 1,650 per 40kg. In March, when 65 percent of potatoes were released from the storages, the price had been Tk 470 for 40kg.
"The main cause of this price hike was the artificial crisis created by profit-seeking traders, rather than low production and high consumption of potatoes," concluded the team.
"Market intervention by Trading Corporation of Bangladesh [TCB] was also very much limited. TCB only sold 215.5 metric tonnes of potatoes so far in different districts," found the team.
The national demand was 6,817,000 metric tonnes and TCB's intervention was a drop in the bucket.
Stockpiling was also the primary reason behind the price increase of onions, found another of the study teams.
The net demand for onions was 22.92 lakh metric tonnes, while the supply was 25.77 metric tonnes, said Dr Md Abdur Rashid, chief scientific officer at Bangladesh Agricultural Research Institute.
"When India stopped onion exports, the traders started stockpiling onions," he said.
According to data collected from Faridpur, Pabna and Natore, following the export ban by India, onions were released into the market slowly.
"Due to the Covid-19 pandemic, a lot of migrant workers returned from overseas. They turned to onion business and most of their investment was in hoarding of onions, but they did not dispose of the onion in time, raising the prices," he added.