Imkong Walling
Dimapur | June 17
In the current circumstances, unwarranted taxation is said to be the main cause behind uncontrolled spiralling of price in the market in Dimapur. Behind the hullabaloo however another factor, and no less disturbing a practice, is comfortably milking the consumers dry. Though it has been in existence for many years now, the authorities as well as the public has failed to grasp the effect of a shadowy force called ‘middlemen’ and the way this force has entrenched itself in the market.
People, in the know of the market dynamics of Dimapur, point to an oft alleged yet sidelined illicit affair between bulk distributors and middlemen, as one of the factors which is aiding artificial rise in prices of commodities. These so called middlemen do not hold any legal permit to conduct trade yet hold the key to how any commodity is distributed in the market. They act as brokers between wholesalers and retailers, taking a cut out of every deal.
In theory, there should be direct dealing between the wholesalers and the retailers – the wholesalers selling to the retailers at a price lower than the printed MRP and the retailers in turn selling it to consumers at the prescribed MRP. But in reality, this hypothesis is moved aside, making way for the middlemen eventually giving rise to what is known as ‘syndicate system’ or ‘dealership system’. The urge among wholesalers/distributors to make a few extra rupees on each item has also aided the rise of the middlemen.
Wonder how and why ‘Gold Flake’ (cigarette brand) is being sold at Rs. 70 per packet in stark contrast to the printed MRP of Rs. 55? This is how it works. The main distributing agency hands away in bulk a certain quantity to a middleman at a price slightly higher than the actual wholesale rate. There is said to be only one licenced bulk distributor of packaged tobacco products in Nagaland. The middleman then unofficially becomes the wholesaler from whom retailers are but compelled to buy at a price much higher than the prescribed rate.
The retailers, in order to make up for the deficit sell at a rate far exceeding the printed MRP. This way, the main distributor makes additional profit aside from the commission already guaranteed in the contract with the manufacturing company, while the middleman takes his undue cut, ultimately leaving it to the consumer to bear the extra cost.
This practice was also, in part, a result of the distributors trying to do away with the trouble of attending to several small orders from different retailers, which often results in a long list of pending orders. The same practice is applied in the supply or distribution of almost all commodities, sources suggest. According to the norm, only wholesale permit holders can deal in bulk sale but not in the case as mentioned above.
Same is the case in poultry, fish, ‘paan’ leaves etc. which are distributed in the market. To cite another example, taking bricks as a case in point, brokers also known as ‘middlemen’ book way in advance a certain quantity by paying a lumpsum to the manufacturers, thereby virtually blocking direct dealing between the manufacturer and the actual buyer. It usually happens during the time when manufacturing costs are at its lowest. When the ‘lean season’ approaches or when stocks run dry at the manufacturing sites, the blocks of bricks booked months ahead are released for sale at high rates; simply put, hoarding leads to control over the economy and eventual price rise.
