Distrust leads to price hike of onion, salt

In March 2011, people in China started buying salt as rumour spread that iodised salt could prevent radiation damages. Earthquake and the resultant tsunami destroyed the Fukushima atomic power plant. Chinese people were led to believe that the effect of the radioactive materials of destroyed power plant will reach China. This panic-buying hiked the price of salt there. It was not easy to curb the spread of rumour in the huge country.

We know the source of the rumour that triggered the panic-buying in China but many people in Bangladesh are still in search of answers that led people here to panic-buying of salt on 19 November. The simple answer is, distrust.

It would not be tough for an astute person to find the relationship between the abnormal price hike of onion and this panic-buying of salt. It would be foolish to think that keeping trust on the government people would not react in salt-affairs especially after what happened with the price of onion. As a result people bought more salt than they need in a month. Now compare this man’s condition with the people, who never had the ability to buy onion at Tk 200 per kg, waiting in queue in front of a truck of Trading Corporation of Bangladesh to buy onion at a subsidised rate.

Many people are making fun on social media of people who succumbed to rumour and bought salt then. But these are the very people who trusted the government’s statement that claimed that the price of onion is under control and experienced otherwise. That’s why this is only natural that people won’t trust the market when the rumour about salt spread. In normal times, rumour spread very quickly but in this era of social media it spreads like bonfire.

Rumour is the research topic of American psychologist Robert H Knapp. In his book, A Psychology of Rumour, Knapp said rumour uses people’s emotion. It has a tremendous capability of expressing and pleasing collective emotions. This is why people were not supposed to sit at home controlling their emotions after the onion-saga.

Let’s talk about the onion-saga before the salt-saga. India stopped exporting onion on 29 September. Before that the price of this essential product was between 65-75 taka. Bangladesh imports around 90 per cent of the onion it needs from India. But when the country stopped exporting onion, the government assured people that the price will remain under control and it will be imported from other countries. Despite all the assurances, the price of one kilogramme onion crossed Tk 200.

From the very beginning, the commerce ministry blamed unscrupulous businessmen for the price hike. But they are responsible for their ignorance of India’s onion crisis due to shortage of production. There’s a thing called ‘business intelligence’. Businessmen use this to know the demand of any product, its production and price in a country. It seems only the commerce ministry does not know anything about this.

Besides, there are discrepancies in information about the production of onion in the country, its actual demand and the actual amount of import. We have seen these discrepancies during crises of every product. Why would the people then trust the information provided by the government and the commerce ministry?

Different media outlets ran many news stories about onion in the last one and a half months and about its impending crisis but the authorities did not take effective actions. Instead it issued statements. The businessmen also got a ‘licence’ to increase the price when the commerce minister Tipu Munshi said the onion price is not likely to come down below Tk 100 per kg.

This is clear that the government has failed to tackle the onion-crisis. Not only this, people’s sufferings were also ridiculed. Amid all this, what happened about salt is just a sign of distrust.

Market can never be controlled with the help of police. Instead it runs on trust. The share markets are experiencing a prolonged depression due to this mistrust. Liquidity crisis in banks increased as people did not deposit their money there due to this distrust. The entrepreneurs also do not investment for this distrust. This distrust increases prices of onion over Tk 200 per kg and creates incidents like salt-saga. This is where the government enters with its role of watching over the market and take necessary actions immediately. The commerce ministry and other concerned authorities should do that.

*The report, originally published in Prothom Alo's print edition, has been rewritten in English by Shameem Reza