The market continues to behave erratically despite plentiful rice output in the last Boro season, and high prices of the staple – particularly for coarse varieties – are putting the purchasing capacity of the poor to test.
After failing to contain the high rice prices in the market, the government last week allowed the import of a record 1.2 million tons of rice– mostly from India –by private importers at reduced import duty.
Food Ministry officials told Dhaka Tribune on Friday that cheaper rice from India is expected to make an impact on domestic rice prices that have shown high volatility in recent months.
With a reduced duty of 25%, food officials said Indian rice would be made available at Tk40-42 per kilogram. On Friday, the market price of homegrown course rice in Dhaka was Tk50/kg.
A high import duty (62.5%) had been in place to protect domestic rice growers from cheaper Indian rice, but the government has now reduced the import duty to 25% and asked over 300 private rice importers to import nearly 1.2 million tons of rice by September 25.
Worryingly, the news of the government allowing huge imports throughout the month of September did not have a significant impact in the market as far as course rice is concerned.
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A Food Ministry report on Friday claimed the prices of the fine and medium-fine rice varieties have showed some early signs of reduction, but the coarse rice price remained high.
State-run agency Trading Corporation of Bangladesh (TCB), however, said in its report Friday that prices of fine, medium-fine and coarse
varieties all remained high and static at the preceding week’s price levels.
Officials at the Directorate General of Food and the Ministry of Food told this correspondent on Friday that, as the poorer segment of consumers are the main customers of coarse rice, the government is trying to expedite higher volume of rice delivery to the poor and the vulnerable through open market sale (OMS) and would soon start delivering Tk10/kg rice to 50 million ultra-poor under the Food Friendly Program (FFP).
Why such high imports in a good rice year?
The government’s own statistics as reflected in the United States Department of Agriculture (USDA) showed that Bangladeshi farmers fared well amidst a protracted pandemic in reaping a bumper harvest (over 20 million tons) in the last Boro season.
The government also has a robust food reserve of over 1.7 million tons of rice and wheat in its granaries. As a result, it remains a question why the government is needing wholesale imports under both the public and private sectors.
Officials suspect that hoarding is a key reason the rice prices remain high. The government had made public announcements to discourage artificially increasing prices through hoarding, but the practice is continuing and forcing the government to make huge imports.
Throughout the 2020-21 financial year, private traders imported 0.78 million tons of rice. However, in the just the second month of the current fiscal year (2021-20), the government has approved 1.2 million tons of import by the private traders.
Besides, government under its own arrangement already imported 0.24 million tons of rice in July and August, with more in the import pipeline.