Controversy Surrounding Consumer Egg Prices in Nepal: Associations' Price Setting Under Scrutiny
Last week, a group of egg producers made headlines by publishing an advertisement in a daily newspaper to set consumer prices for eggs.
The Nepal Layers Poultry Breeders Association in Chabhil decided to establish a consumer price of 20 rupees per egg, effective from the following Friday.
Previously, the pricing of chicken eggs in the Nepali market was overseen by the Nepal Egg Producers Association, headquartered in Chitwan. This association, led by Shivram KC, had announced consumer egg prices on the 2nd day of Bhadra.
According to the new price structure introduced on Bhadra 3, large eggs would be sold at Rs 430 per crate, while medium-sized eggs would be priced at Rs 410 per crate. The association asserted that the average consumer selling price for eggs should be 17 rupees.
The recent price-setting actions of these associations have exposed how consumers might be affected by fluctuating egg prices. Interestingly, the Black Market and Some Other Social Crimes and Punishment Act 032 explicitly prohibits setting prices for goods through such associations. However, another group, known as the Nepal Layers Poultry Association, has emerged within the organization traditionally run by the Nepal Egg Producers Association Chitwan. Despite these activities being in violation of the law, the government has remained largely inactive in addressing the issue.
Market Egg Price Increases
Since Chait 2079, the average price of eggs had been approximately 15 rupees. However, on June 14, the Chitwan association increased the price by 2 rupees to 17 rupees. On Bhadra 2, they reaffirmed the same price as the official consumer price for Nepal.
Currently, retail markets, including the Kathmandu Valley, are selling eggs at Rs 21 each. According to the Nepal Retail Trade Association, the crate price of eggs, which was 480 rupees until recently, surged to 500 rupees after the Kathmandu Association introduced a new price. As a result, the consumer price for each egg now stands at 21 rupees, considerably higher than the previous rate of 17 rupees.
Disputes Among Cartels
Previously, a single union had the authority to set egg prices. Now, two similar organizations are competing to increase prices while accusing each other of illegality.
Despite both associations claiming that the cost price of each egg is around 14 rupees, one association set the selling price with a profit margin of Rs 3, whereas the other priced eggs with double that margin, at Rs 6. According to the law, a profit margin of 20 percent on the cost price is permissible, making a profit of three rupees excessive. A profit of six rupees results in a profit margin of only 43 percent.
The pricing set by the Nepal Layers Poultry Association has raised concerns among consumers and may impact farmers in the future.
Both associations assert that their prices are in the best interest of farmers and consumers nationwide. The newly formed association accuses the old organization of being unproductive and lacking the trust of farmers.
The new price structure accounts for transportation expenses and commissions paid to intermediaries. According to them, this decision was made in the best interest of farmers. However, the lack of clarity in the law regarding such actions leaves room for these practices to continue unchecked.
The Legal Framework
The law explicitly prohibits monopolizing prices and cartelizing them through institutions. The Black Market and Certain Other Social Offenses and Punishment Act 2032 provides authorities, such as the Chief District Officer, with the power to conduct raids, searches, and file cases in instances of hoarding, profiteering, misappropriation of goods, and excessive profits.
Those found guilty of such offenses can face fines and imprisonment, with the extent of the penalties determined by the investigating officer. However, there is a need for legal clarity and enforcement in addressing these practices by traders and associations.
