Food minister, however, made it clear that whoever intends to import rice will have to apply to his ministry first by January 10
The government on Sunday decided to allow private traders to import rice in a desperate bid to offset high rice prices in the domestic market.
It announced lowering import duty to only 25% from the existing 62.5% so that private importers can supplement recent government efforts of importing rice by floating international tenders.
At a press conference, Food Minister Sadhan Chandra Majumder, however, made it clear that whoever intends to import rice will have to seek permission from his ministry by January 10.
"We, from the ministry, will decide which importer will import what volume of rice," he clarified, saying it will be a strictly monitored private sector rice import.
Food Secretary Dr Nazmanara Khanum said the government will make sure there is no glut of cheaper rice imported in the market because that will hurt local farmers.
With prolonged floods submerging about 40% of land in Bangladesh this year, farmers faced crop loss, particularly during the monsoon rice Aman season amidst the coronavirus pandemic. Moreover, rice prices continued to rise even during peak harvesting season.
Bangladesh Rice Research Institute (BRRI) recently projected over 10% loss in rice production.
According to data by state-run Trading Corporation of Bangladesh (TCB) on Sunday (December 27), prices of coarse varieties of rice went up by over 47% compared to the previous year. Prices of medium varieties rose by more than 25% and finer varieties by a little over 19%.
Government went to the international market for rice after three years as stock in public granaries dipped to a record low – 542,000 tons as of December 23. This volume is about half a million tons less than Bangladesh’s usual food security threshold level.
Food department’s failure to buy enough paddy from farmers during procurement drives resulted in non-replenishment of rice stock in public food silos. Now, the food minister said the government badly requires replenishing its granaries, otherwise it will risk run dry in the food aid programs like Tk10 rice to the ultra-poor.
“Rice prices are high in the market; we need to increase our stock in hand. Government is trying to import 400,000 tons of rice, but we need more. That’s why we are slashing down the import duty on rice from 62.5 % to 25 %,” said the minister.
Asked why the food department did not buy paddy from growers, the minister said: “Farmers are getting better prices (Tk1200 per maund) in the market than what we [the government] offer them [Tk1040 a maund].”
However, he was prompt to add that the government would rather buy 1.5 to 2 million tons of paddy from the local farmers than depending on rice from millers, who have long been asking for higher prices and not selling rice to the government.
He explained the predicament saying, “We cannot raise procurement prices as it will further inflate rice prices in the market.”
Food Secretary Khanum said her ministry had a prime ministerial approval since July this year on import of rice but they took time so that imports do not have a dampening effect on homegrown rice during peak harvesting season.
“We will strictly monitor the current import trend too once we have slashed the duty and will make sure the market is not glutted with imported rice,” she played caution.
Bangladesh is the world’s third-biggest rice producer after China and India with an annual output of 36 million tons. However, natural disasters like floods, cyclones, and droughts often compel the country to rely on imports to bridge the demand-supply gap.
Floating five tenders seeking to buy 250,000 tons of rice from the international market over the last one month, the government also is bilaterally negotiating with India to buy 150,000 tons more under a G2G (government-to-government) arrangement.
According to a December 17 market report of the United States Department of Agriculture (USDA), India’s rice exported has been projected to hit a new high at 13.7 million tons this year as the government in India well filled its food stock by buying higher volume of paddy under minimum support price (MSP) directly from the farmers.