Importers spend Tk120 a kg overall, but prices double, triple at retail level

Fahim, a private firm employee in Dhaka, frequently buys red apples to cover the nutritional needs of his children. He recently bought a kg of the delicious fruit from a Rampura vendor for Tk 280.

Little did he know that importers brought the fruit into the country for around Tk 53.10 per kg, show an analysis of FY23 customs data.

According to the Chattogram Custom House, Bangladesh spent Tk 803 crore on 1,51,216 tonnes of apple imports, and Tk 795 crore on 1,48,519 tonnes of oranges imports. These figures indicate that a kg of these fruits cost Tk 53 on average in the last FY.

Importers and wholesalers claim that the prices of apples and oranges are high in the local market due to higher duties. Meanwhile, retailers say syndicates in the wholesale markets are behind the steep prices of apples and oranges at the consumer level.

The government had imposed a 20 per cent regulatory duty on fruits to discourage imports and rein in the ongoing foreign exchange crunch, against the backdrop of economic headwinds triggered by the Russia-Ukraine war.

As per the Bangladesh Customs Tariff, there are about 114 per cent total taxes now imposed on fruit imports, including customs duty, supplementary duty, regulatory duty, advance income tax, and advance tax.

After clearing all sorts of duties in imports, the import cost of a kg of apples and oranges should be about Tk 115, insiders say. An additional Tk 2 – Tk 3 is also spent per kg on freight charge, other government charges and transportation fees.

However, depending on the variety, apple and orange prices in the capital market are more than double or triple compared to the import costs.

Steep prices in wholesale markets

In a number of visits to Falmondi and other fruit markets in Chattogram, The Business Post found that traders are selling a basket of 19 kg – 20 kg of African apples for Tk 4,500. That means per kg of apple costs around Tk 225 – Tk 234 at the wholesale level.

Wholesalers sell a basket of Chinese apples at Tk 3,400, so per kg price would be around Tk 170 to Tk 179. Each basket of oranges is being sold for nearly the same prices. So, when the import and wholesale levels are compared, prices of these fruits are jumping by Tk 50 – Tk 115 per kg.

Industry insiders say the wastage of imported apples and oranges is minimal.

Commenting on the issue, Chattogram Falmondi Business Association President Mohammad Ali Hossain Sowdagor said, “All the imported fruits are brought in air-conditioned containers. After arrival at port, we keep the fruits in special storages that require power, to keep those fresh.

“After leaving the port, it takes only one to two hours to a reach wholesale market such as Falmondi. As a result, these imported fruits are not wasted. However, letters of credit (LCs) mention that up to 5 per cent of the imports may be lost.”

Hossain is also a member of the Bangladesh Fresh Fruits Importer Association.

It should be noted that in Falmondi, the association and importers fix fruit prices every noon between 2.30pm and 3pm.

The Business Post had reached out to Bangladesh Fresh Fruits Importer Association President Serazul Islam on multiple occasions, but he did not provide any comments on the matter till the filing of this report.

Prices go further up in Dhaka

Though the cost for transporting apples and oranges from Chattogram to Dhaka is around Tk 5 – Tk 10 per kg, consumers at the retail level pay more than Tk 50.

Traders in different markets, including Rampura and Tikatuli, in the capital are selling per kg of green apple for Tk 340, red apple for Tk 270 – Tk 300, and smaller red apple for Tk 220. Besides, shops are selling oranges for Tk 250 – Tk 300 per kg.

When inquired about the price hike, several retailers blamed syndicates at the wholesale level, extortion during transportation, and shop positioning for the increase in retail rates.

Higher duties can’t curb imports

To discourage imports amid steadily depleting foreign exchange reserves, the National Board of Revenue (NBR) in May last year raised regulatory duty on imports of furniture, fruits, flowers and cosmetics from 3 per cent – 5 per cent to 20 per cent.

The regulatory duty on imports of various fruits such as apples, oranges, bananas, plantains, figs, avocados, mangos, papayas, pears and quinces, has been increased to 20 per cent from the previous 3 per cent.

The NBR in a press release had said regulatory duty on the imports of these items has been raised to promote local products and boost competitiveness.

Moreover, the Bangladesh Bank asked all scheduled banks to slap high margins on opening letters of credit for imports, setting the margin at 100 per cent for fruits.

Despite such austerity moves, the country imported 15,62,127 tonnes of apples in FY23, up by 17 per cent compared to FY22.

Apple imports increased even after higher duties were imposed. The NBR collected Tk 992 crore from apple imports in FY23, a decline of 44 per cent when compared year-on-year. An analysis of these figures indicates that importers are now paying even less for apples.

Commenting on the matter, the Consumers Association of Bangladesh (CAB) Vice President SM Nazer Hossain said, “The businessmen in Bangladesh have the tendency to chase excessive profits from every essential commodity.

“The matter of high duty is nothing but a poor excuse. At least 50 per cent profit a kg is just oppression. It is a social illness that businessmen try to profit from every item.”

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