Bangladesh’s markets for apples, maltas, oranges, grapes and dates depend almost entirely on imports, which meet 95–99 percent of domestic demand for these fruits. At the import stage, the combined tax and duty rate ranges from 96.10 percent to 121.78 percent. The Bangladesh Trade and Tariff Commission has identified high taxes and duties, assessable value determination, and supply chain constraints as the main reasons for high fruit prices and market instability.
Apples cost BDT 280–380 per kilogramme in Bangladesh, according to the commission, while the price is BDT 150–220 in India, BDT 110–170 in Pakistan and BDT 160–240 in Nepal. Similarly, maltas cost BDT 240–320 per kilogramme in Bangladesh, oranges BDT 250–350 and grapes BDT 300–450. In practice, however, consumers have to pay even more than the prices cited by the commission, while in neighbouring countries, the fruits are available at around half the prices found in Bangladesh.
The Bangladesh Trade and Tariff Commission presented the information at a meeting held in the conference room of the commerce ministry yesterday to discuss ensuring adequate supplies of fruits in the domestic market and keeping prices stable. Commerce Minister Khandakar Abdul Muktadir chaired the meeting.
The commission’s presentation said annual demand for imported fresh fruits in Bangladesh is around 500,000–600,000 tonnes. Apples and maltas account for around 77 percent of demand in the domestic fruit market. Annual demand for dates, meanwhile, is around 100,000–110,000 tonnes, with around 60 percent consumed during Ramadan. These fruits are mainly imported from China, India, South Africa, Egypt, Brazil, Saudi Arabia and the United Arab Emirates.
The commission’s comparative data show that oranges cost BDT 250–350 per kilogramme in Bangladesh, while the price is BDT 90–150 in India, BDT 70–120 in Pakistan and BDT 120–170 in Nepal.
Grapes cost BDT 300–450 per kilogramme in Bangladesh, compared with BDT 130–200 in India and BDT 100–160 in Pakistan. Ordinary dates cost BDT 250–450 per kilogramme in Bangladesh, while they are available for BDT 160–260 in India and BDT 120–200 in Pakistan.
But when comparing market prices, differences in fruit varieties, quality, import sources and retail stages across countries need to be taken into account.
The commission identified three factors behind the high prices of these fruits and market instability in Bangladesh. These are the imposition of high duties by classifying fresh fruits as luxury goods rather than essential nutritional products; the determination of higher assessable values by customs than the actual booking prices in international markets; and disruptions in the supply chain caused by a limited number of importers, transportation and port-related complications, and a shortage of cold-storage facilities. The prices of these import-dependent fruits can consequently rise by as much as 300–360 percent by the time they reach consumers after passing through several intermediaries.
According to the commission’s presentation, under the existing structure, fruit imports are subject to 25 percent customs duty, 20–30 percent supplementary duty, 15 percent VAT, 5 percent advance income tax, 20 percent regulatory duty and up to 7.5 percent advance tax, depending on the type of product. In total, the combined tax and duty burden ranges from 96.10 percent to 121.78 percent.
Traders say high duty rates and rising transportation costs in Bangladesh cause the prices of imported fruits to increase several times by the retail stage. Consumers consequently have to buy them at higher prices. The decline in demand has also discouraged many traders from importing fruits due to fears of losses. If the situation continues, a supply shortage could emerge in the future.
Shahidul Islam Jony, a leader of the Bangladesh Fresh Fruits Importers Association (BFFIA), believes fruits could be sold at prices similar to those in neighbouring countries if these obstacles are addressed.
He told Bonik Barta: “Taxes and duties on imported fruits such as apples, maltas, grapes and dates are much higher in Bangladesh than in other countries. In some cases, the combined tax and duty burden is as high as around 122 percent. Duties are also much higher than in neighbouring countries. Naturally, high duties increase the prices of imported fruits. But the current increase in the price of maltas isn’t solely due to duties. Imports have declined below demand, resulting in a supply shortage.”
The business leader believes the policy of imposing high duties on imported fruits by classifying them as luxury items needs to be reconsidered. He said, “If duties are reduced and brought in line with those in neighbouring countries, it’ll make business easier for importers and allow consumers to buy fruits at relatively affordable prices. It’ll particularly be possible to bring these fruits within the purchasing capacity of middle-class families.”
At the meeting with the commerce minister, traders also said the supply shortage was one of the main reasons behind the current rise in the price of maltas. They claimed that only 12–29 containers of maltas arrived in the country in some weeks. But around 15 containers are needed every day to meet normal demand. Many traders have reduced maltas imports due to high duties, transportation costs, complications involving ships and ports, and losses on previous consignments. They also said that as maltas are perishable, there are significant financial risks during transportation and storage.
The commerce minister urged traders to explore alternative sources for importing maltas. The government would review the possibility of opening letters of credit (LCs) quickly and increasing supplies of the fruit in the market within a few weeks, he also said.
Dates are another major imported fruit in Bangladesh. Traders also have to pay substantial duties on these imports. Ordinary dates are consequently sold for BDT 250–450 per kilogramme in Bangladesh, compared with BDT 160–260 in India, BDT 120–200 in Pakistan and BDT 180–280 in Nepal. Although ordinary dates are relatively cheaper in Bangladesh, better-quality varieties are sold for BDT 1,000–1,800 per kilogramme.
The commerce minister has urged traders to start preparing to import dates now, taking future demand into account. At a meeting with traders, he said, “The government’s decision on duties on dates will be announced this week. Initiatives have also been taken to resolve the longstanding complications over determining the assessment value or customs value. To this end, the Trade and Tariff Commission will hold a meeting with importers within a few days.”
Customs valuation, rather than duties alone, has also become a major problem for importers. Customs authorities are assessing imported fruits at values higher than their actual booking prices in international markets, increasing import costs, according to the Bangladesh Trade and Tariff Commission’s observations. The limited number of importers and shortage of cold-storage facilities are also putting additional pressure on the supply chain.
Experts believe that rising fruit prices could put additional pressure on consumers while also contributing to nutritional deficiencies. They say the high tax burden on essential and nutritious food items such as fruits is directly affecting consumers. For fruits with very limited domestic production, imposing high duties on imports does not provide an opportunity to protect local producers. Higher taxes instead increase importers’ costs, reduce imports and create supply shortages. The impact is ultimately felt in the retail market. So alongside revenue collection, duties on fruit imports need to be reconsidered by taking into account consumers’ purchasing power, nutrition and supply conditions in the market.
Agricultural economist Dr Jahangir Alam Khan told Bonik Barta, “When taxes on fruits are so high, the burden naturally falls on consumers. Fruits are an essential part of people’s diets and are extremely important for nutrition. They are particularly beneficial for children and patients. But when fruit prices rise because of taxes, it becomes difficult for ordinary people to afford them. Demand for fruits is increasing in the country, but prices are also rising due to high taxes, putting them beyond the reach of many consumers. So taxes on fruits should be kept as low as possible and reduced where feasible.”
Nazim Uddin, proprietor of Oishi Fruits Agency, said many traders have stopped importing fruits because of supplementary and regulatory duties. He told Bonik Barta, “The only reason behind the current crisis is the unexpectedly high taxes. We’re fulfilling the LCs we opened earlier, but we aren’t opening new ones. We import to do business, not to incur losses.”