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Dhaka Tribune

Farmers suffer in a time of plenty

Update : 22 May 2015, 09:06 PM

A decision to allow rice to be imported this year following a surplus crop last year has hit the Boro paddy market, with farmers seeing the lowest prices for the Boro harvest in recent memory.

Millers, the primary buyers of paddy from farmers, are reluctant to procure more from local markets because they are already well-stocked with rice and paddy from last year’s yield.

Excess stocks of low-price Indian rice imports have deterred millers from procuring paddy from the local market. And depressed market prices for local paddy are now lower than the cost of production.

“We have around 100,000 tonnes of rice and paddy collected last season in our godowns in Naogaon district alone and imported rice is also available in the market causing millers to back away from fresh purchases of new paddy. This is ultimately causing paddy prices to fall this season,” said Nirod Baraon Saha, convener of Noagaon Rice Mill Owners’ Association.

Experts said permitting the private sector to import rice this fiscal year despite surplus local production last year was the reason for this season’s fall in the domestic price of Boro paddy.

Quazi Shahabuddin, an agricultural economist, said the government should not have permitted the importation of such a huge volume of rice while there were available food grains at home.

He said the government had mismanaged the rice procurement situation, ultimately causing farmers to suffer.

The Bangladesh Bureau of Statistics (BBS) and the Directorate General of Food (DgoF) say the country produced 34.465 million tonnes of rice last season, against a demand of 31 million tonnes.

But data from the Ministry of Food shows that private sector traders were permitted to open Letters of Credit (LC) to import 1.524 million tonnes of rice this fiscal year.

Bangladesh Bank data shows that the private sector imported rice worth $416 million between July 2014 and March 2015. By contrast, the corresponding figure in fiscal year 2013-14 was just $71 million.

Ministry of Food data shows that the government’s rice reserve as of yesterday was 776,000 tonnes; the previous year the reserve was 593,000 tonnes.

Paradoxical procurement

Experts noted a paradox in the government’s policies, as the import order came at a time when the government itself declared a food production surplus in the country and took the initiative to export 50,000 tonnes of rice to Sri Lanka last year.

Meanwhile, the government has fixed a Boro procurement target of 1,000,000 tonnes of rice and 100,000 tonnes of Boro paddy from May this year.

Quazi Shahabuddin suggested the government procure large amounts of rice from the fields instead of stopping at the fixed procurement target, otherwise farmers may not survive.

Too little, too late

At the beginning of the month, the National Board of Revenue imposed a 10% import duty on rice imported from India, a measure rice millers have been calling for since the beginning of the fiscal year.

Finance Minister AMA Muhith told the media on May 10 that the government had taken the step to slow rice imports because the country had achieved self-sufficiency in the production of rice.

For the last three years, the government itself has not imported rice although some quantities were imported by the private sector.

Farmers widely believe they are not getting fair prices because of the importation of rice from India at low prices.

Criticising the government’s imposition of a 10% import duty so late in the day, Quazi Shahabuddin, a former director general of the Bangladesh Institute of Development Studies, said the government should have imposed the duty much earlier.

He said a 10% import duty was not enough to fix the situation, adding that the government should impose an import duty nearer 30%, otherwise imported and local rice prices would be unevenly matched, benefiting importers and achieving little gain for farmers.

Producers’ plight

This season, Boro farmers have seen the lowest prices – Tk450-500 per maund (40kgs) – for their product, the lowest levels in the last few years.

Boro is the largest rice harvest in the country with a production of around 18.9 million tonnes out of a total of 34.6 million tonnes of paddy in 2013-14.

At these prices, farmers are at serious risk of losing big. 

Currently, while the market price per maund of Boro paddy is Tk450-500, the production cost is Tk650.

“This means, ultimately, the farmers will be the losers,” Masud Chowdhury, a farmer from Dinajpur, said. 

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