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Syndicates could cause another hike in rice prices

  • Published at 03:05 pm February 4th, 2018
  • Last updated at 06:12 pm February 4th, 2018
Syndicates could cause another hike in rice prices
With the 11th general election is just around the corner, there are concerns that a number of syndicates that manipulated the rice market in 2017 could become active again. A number of insiders have warned that these culprits are just waiting for another opportunity to destabilize the rice market like last year, with the motive to gain profit from the situation as much as they can. Rice farmers witnessed a severe drop in crop production last year due to flash floods in the central region, and in the wetlands of Bangladesh. The government food grain reserves were also affected by these natural disasters. Around 1,000,000 Rohingya refugees that entered Bangladesh from Myanmar since August 25, 2017, also increased the pressure on the food reserves. There are also predictions that the demand of rice will increase this year due to the approaching general polls. Bangladesh could witness a shortage of food grains if the reserve becomes inadequate to meet the demand. These different factors could lead to the rice price going up once again. Sources from the Ministry of Agriculture confirmed that flash floods have destroyed at least 1,000,000 metric tons of Boro crop last year.
Also Read- Who is behind the rice price hikes?
At the end of March, 2017, Boro crops in the six wetland districts were washed away by landslides and flash floods. There are allegations that a number of businessmen increased the price of rice, using the flash floods in wetlands as an empty excuse. Months have passed since the price increase of rice hit the consumers but the market is yet to become stable again. Following the flash floods and the landslides in 32 districts, prices of coarse rice went up from Tk30-32 to Tk50-52 per kg in 2017. The crisis deepened as the government faced difficulties while trying to buy rice from mill owners, as they refused to sell for the stipulated price. This caused the government reserves to go further down. At that time, coarse rice was being sold in the retail market for Tk56-60 per kg. Ruling party lawmakers and ministers blamed the millers for destabilization of the rice market. Responding to the crisis, the Ministry of Food blacklisted many rice dealers. Later, the government slashed import taxes for rice from 28% to 2%, aiming to boost the supply in domestic markets. These initiatives caused the coarse rice prices to drop but not below Tk50 per kg.

Current food grain reserves

The Boro collection drive began on May 2, 2017 and ended on November 15. During that period, government purchased 334,469 metric tons of Boro rice and 4,702 metric tons of Boro paddy. In the Amon collection drive for the current fiscal year, 392,177 metric tons of parboiled rice has been purchased from December 3, 2017 to January 30, 2018. The total food grain reserve in government warehouses was 1,190,000 metric tons as of January 30. Of the reserve, 837,000 metric tons is rice and the rest is wheat. A total of 96,000 metric tons of rice also is waiting at the docks, to be delivered to the warehouses.

What are the opinions of the ministers?

Earlier in the parliament, Commerce Minister Tofail Ahmed previously said: “A total of 2,200,000 metric tons of rice have been imported by both the government and the non-government entities, as of the first quarter of the current fiscal year.” However, commenting on the matter, Food Minister Qamrul Islam told the correspondent: “The government has a projected target of importing 1,500,000 metric tons of rice this fiscal year.” The minister added: “After flash floods damaged the crops, we suffered a shortage of food grains last year. A group of corrupt businessmen and the coverage from media caused the rice prices to skyrocket. That crisis has been averted.” Responding to a query, Qamrul Islam said: “Bangladesh currently has a reserve of 824,491 metric tons of rice, and the reserve will exceed 1,000,000 metric tons after next month.” Visiting a number of retail markets in Dhaka, the correspondent has found that coarse rice was being sold at Tk50 per kg, and fine rice at Tk65-75 per kg. The commerce minister in Thursday said: “It will be illogical to bring down rice prices below Tk40, as the farmers could suffer financial losses. If they [farmers] lose interest in rice farming, we could be in a lot of trouble.” However, Finance Minister AMA Muhith had opined that rice, if sold at Tk40 per kg, will be bearable for the average consumer. Despite the opinions of these two ministers, there is no variety of rice in the market that is available at the price of Tk40 or less per kg.

What would the farmers do?

Under the circumstances, a committee formed by the Food Ministry had set a price of Tk39 per kg of Amon rice while purchasing from farmers. The food minister is the committee president, while the ministers of finance and commerce are members. There are serious concerns that the farmers will prefer to sell rice at the markets instead of to the government because the open market will pay more. This could disrupt the ongoing Amon collection drive of the government, warned sources concerned. The syndicates that manipulated the rice market in 2017, could take advantage of the above mentioned situation and increase the price of rice again in 2018. Nizam Uddin, general secretary of Badamtali-Babubazar Chaul Aartadar Samiti, told the correspondent: “If supply remains normal in the markets of Northern region, we will face no issues this year. "It is the government’s duty to look after that market.” He also commented that no one should be allowed to spread false rumours regarding rice supply and prices. This article was first published on banglatribune.com