It was likely one particular day in June 2009 when I received a phone call. On the other end was a woman’s voice. She said she had called after reading my article in the newspaper. I was a bit surprised. I don’t write very frequently, and even when I do, it’s unusual for someone to call if they liked my writing, unless we’re acquainted. Typically, strangers respond via social media or, at most, by email.
The article was about the price hike of sugar just before Ramadan or Eid in that particular year. When the price of sugar increased at that time, the Awami League government, as expected, began arresting businessmen in its typical authoritarian manner and sending them to jail. The woman’s husband was one such sugar trader, and he was in hiding to avoid arrest. The main point of my article was that if businessmen could raise prices at will, they wouldn’t necessarily wait for Ramadan to do so. Ramadan is a sensitive period when both the media and government closely monitor prices. So, if price control were entirely in their hands, why would they foolishly choose that time to raise prices?
The real reason for the price increase at that time was that the demand typically rose for food items during religious occasions, while supply remained constant. And by the inevitable rules of the market, prices rise as well. The only way to reduce prices then is to increase supply. Instead of focusing on that, the government launched arrest campaigns against businessmen, making it seem as if doing business itself was a “sin.”
I was surprised to notice that this notion hasn’t changed in the last 15 years. The same old story persists, and whenever the price of any product rises, people shout “syndicate, syndicate.” From common people to the media and even interim government advisors, everyone focuses on syndicates, blaming them for recent price hikes.
Why this tendency to blame “the syndicate” for everything? The reason is that it’s a very straightforward and seemingly logical explanation of price hikes. When I go to the market and buy any essential item, I buy it directly from the seller. And if he sold it for a certain price a week ago, today he sells it for Tk20 more. Then surely, this seller is to blame. And it’s not just him; everyone in the market is selling at a higher price. So, they must be working together with a plan. This is what a syndicate is.
At first glance, this conspiracy theory seems pretty airtight, but it is often entirely incorrect, especially for essential items that have many sellers and buyers, and where products are largely similar. This means that the onions from one shop aren’t fundamentally different from those in another. If they were, there would be a price difference. But for items like onions, potatoes, rice, lentils, or oil -- where there’s little difference from one shop to another -- prices tend to stay roughly the same. This type of market is known as a competitive market.
In such competitive markets, it’s practically impossible for thousands of sellers to coordinate or conspire to raise prices. What might seem like a planned or conspiratorial price hike is actually the market’s “invisible hand,” controlled collectively by both buyers and sellers.
Most of the time, when prices increase, you’ll notice that one or both of two things are happening: There’s either a disruption in supply or an increase in demand. For example, during Ramadan, demand for certain products like sugar, onions, and oil inevitably rises, affecting every level of the supply chain. Similarly, natural disasters can disrupt the supply of certain goods, leading to price increases. The recent vegetable price hikes illustrate this well. Imagine a wholesale market in Narsingdi where vegetables are being sold. Several trucks are lined up to transport these vegetables to Dhaka. What happens here is that the wholesalers participate in an informal auction to secure produce for Dhaka’s Kawran Bazar. Let’s try to understand this process.
This year, there have been two to three instances of flooding, along with unseasonal heavy rains, which have damaged vegetable crops. Naturally, this reduced the vegetable supply in the market. As supply is limited, the wholesaler who bids the highest quickly loads the vegetables onto their truck from the local market.
When these vegetables reach Kawran Bazar in Dhaka, all the retail sellers buy those vegetables at higher prices from the wholesalers, who themselves purchase them at a premium. Naturally, all retail sellers then sell at higher prices. At this point, it might appear that these sellers are conspiring to charge higher prices. This is what we refer to when we use the term syndicate.
A similar situation has occurred in the egg market. This year the intense heat, particularly from May to September, affected poultry significantly. The extreme heat caused chickens to lose weight, and many even died, which reduced overall egg production. As a result, the egg supply in the market naturally decreased. Then, to make matters worse, multiple floods hit, further challenging poultry farmers. This created a crisis in the egg market similar to that in the vegetable market. By natural market rules, the price of eggs increased. There’s no actual syndicate here, nor is one possible, as the egg market is also highly competitive, like other essential goods markets.
Another concept linked to syndicates is the idea that middlemen exploit producers to make excessive profits, driving up the price of any product. While it’s true that, in some cases, producers or other agents within a supply chain don’t equally benefit from price increases, the ability to benefit often depends on the agent’s storage capacity. When news of rising prices hits the market, sellers who have goods on hand might reduce sales, hoping that prices will go up further. This is a very natural market tendency, though some label it as hoarding, branding it as a serious offense. However, doesn’t a seller have the full right to sell his goods when it’s advantageous?
When prices fall, sellers face losses but are still forced to sell. There’s no public outcry about why a seller is selling at a loss. Therefore, deciding when to sell and how much to store is entirely a strategic business decision. It’s also worth remembering that supply chain agents with storage capacity naturally have more control over their profits. They’ve invested in storage, which allows them the flexibility to choose the right time to sell their products, so their profits will naturally be higher.
For some import-dependent goods, like onions and oil, syndicates may indeed form at the import level. Importing is an expensive process, and the scale of business is crucial here. You can’t just import 10kg of onions; you need at least thousands of metric tons. Naturally, only a few businesses are involved, and this may limit competition in the market. However, even then proving the existence of syndicates in such markets requires hard evidence.
While this applies to large-scale businesses, small traders, farmers, or rural producers, who deal in perishable goods like vegetables or fish, often must sell quickly to avoid losses when supply increases, as they lack storage facilities. If we believe poor farmers deserve fair prices, it’s more important to focus on increasing their storage capacities rather than criticizing wholesalers for higher profits. The government should set up cold storage at the local level, providing it to farmers at a highly subsidized rate. Such steps would be far more effective than constantly blaming syndicates.
We must stop using the blanket excuse of syndicates for price hikes. This doesn’t mean that syndicates don’t exist for certain products -- they might. However, there’s no reliable research yet proving that syndicates control specific markets. What we have are populist narratives that foster the harmful perception that every price increase is due to a syndicate. This hides actual issues when syndicates do affect prices.
When everyone is labeled a criminal, it is much easier for the real culprits to remain hidden.
Dr Rushad Faridi is an Assistant Professor, at the Department of Economics, University of Dhaka.
