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What is causing the latest rice price hike?

  • Published at 12:38 am January 15th, 2019
web-rice stall
File photo of a rice shop Rajib Dhar/ Dhaka Tribune

Fear of post-election political turmoil has driven the rice market into frenzy, say market insiders

Rice millers and wholesalers across the country are cashing in on the prediction of a serious political instability in the country that many feared would follow the December 30 general election. The crisis never happened, but they have gone ahead and hiked riceprices at consumer level.

Both parties hold each other responsible for the latest upward trend in rice prices as happened before, the Dhaka Tribune learnt after speaking with several mill owners and wholesalers.  

Interestingly enough, all millers, importers and wholesalers admitted that there was adequate production, stock and supply of rice in the country.   

Experts find the Ministry of Commerce responsible for the price hike, saying they failed to ensure regular monitoring of the commodity market.  

In the past two weeks, prices soared by Tk150-250 per 50-kg sack in Kushtia, Naogaon, Rangpur, Dinajpur, Nilphamari, Pabna and Jessore, according to the Bangladesh Auto Major Husking Mill Owners’ Association (BAMHMOA).  

After visiting several wholesale stores in Dhaka city – mainly in Karwan Bazar – on Monday, our correspondents found that each sack containing 50-kg Miniket rice was selling at Tk2,600 – some Tk300 higher than the price two weeks ago.

The price of each 50-kg sack of Nazirshail rice shot up by at least Tk200, to Tk2,800. Meanwhile, BR-28 rice was priced at Tk1,900, up from Tk1,700 at the end of last year.    

Speaking to the Dhaka Tribune, Md Hasan, Kushtia Rice Agency’sproprietor in Dhaka’s Kathalbagan area, said he ordered rice four days before the election, but received the consignment two weeks later, when the prices had already soared significantly.

“The millers deliberately stockpiled rice and delayed the supply to push the prices up,” he claimed, alleging that the mill owners did it to make a quick buck.

He further opined that the millers thought the new government would remain busy with administrative responsibilities, instead of focusing on market monitoring.

Nure Alam, of Barisal Rice Agency in Karwan Bazar, echoed the same sentiment, saying that the market saw the highest hike in the price of aromatic rice – Tk500 per 50-kg sack.

“A sack of aromatic rice is selling at Tk4,500,” he said, adding that they had been spending an additional Tk18,000 on an average for each shipment of rice since the election.   

“What can we do, except hope that the government would do something?” said the frustrated rice trader.

He further added that the wholesalers were making only marginal profits, as the millers are bagging the hefty sum.

Md Nurul Islam, owner of Shahen Shah Rice Agency in Badda, made a similar allegation. 

“We did not receive all the rice that we ordered from the millers,” he said. “They also raised the prices. “So we are now forced to charge our customers a higher price.”

Retailers say they have to sell the rice at prices in line with the wholesale market value. 

“I am selling Miniket rice at Tk63 per kg, which was around Tk58-59 even in the last week of December,” said Zahir Uddin Ahmed Uzzal, a grocer in the Kalabagan area.

“Since I had stockpiled several sacks of Nazirshail, I am still selling those at the earlier price,” he said, frustrated. “What else could I do? I have to maintain good relationship with my customers.”

BAMHMOA President Abdur Rashid refuted the allegation, saying the millers collect coarse rice at government prices, and sell the processed rice to wholesalers at cheaper rates.

“The wholesalers charge higher prices from customers, causing the hike at the retail level,” he claimed, adding that a pre-election buying spree at both wholesale and retail levels contributed to the price hike.

The prices will not increase further, he assured the correspondents.

Bangladesh Rice Merchant Association President Mohammad Nayeem Mia said the mill owners were mostly to blame for the situation. 

“They stopped supplying rice to wholesalers, causing the prices to soar,” he added.

The scenario outside Dhaka

Naogaon, the largest rice producing district with about 1,200 mills has seen the prices rise by Tk2-3 per kg since December. It produces 1,500 tons of rice per day. 

In Kushtia, Sherpur and Kurigram, the prices have increased by Tk2-3 per kg as well.

When asked, Kushtia District Rice Mill Owners Association General Secretary Jainal Abedin refuted the allegations that the millers were stockpiling rice.

“The prices soared after wholesalers, mainly in Dhaka and Chittagong, started buying rice in large quantities after the news of price hike spread,” he told the Dhaka Tribune.

What is the government doing?

Commerce Minister Tipu Munshi and Food Minister Shadan Chandra Majumder sat with rice millers and wholesale traders on January 10.

Urging the millers and wholesalers not to indulge in immoral business practices that could affect consumers, Tipu also warned them to be more careful while running their business.

In the latest development, the minister said the government is not considering rice import to tackle the situation. 

“According to our data, there is sufficient stock and supply of rice in the country. So we are not thinking of imports right now,” he told the Bangla Tribune on Monday. 

Terming the price hike “illogical,” he said: “At this moment, farmers do not have rice in their stock; millers do. I don’t see any reason behind the price hike.”

However, the minister said, the market had been stable over the last few days.

“I will hold a meeting with the food minister to find a solution to this issue,” he said. “We are looking into the possibility of any artificial mechanism behind the hike, or if a vested quarter is behind all this to tarnish the image of the new government.”

Consumers’, retailers’ take

Shirin Begum, a small trader in Karwan Bazar wholesale market, said she was bearing the brunt of the price hike since it was curtailing the profit margin.

Shirin, who sells parboiled rice, said the government must take effective measures to control the price hike.

Saiful Islam, a Kalabagan resident who is unemployed, said the sudden hike was taking a serious toll on his budget.

Speaking to the Dhaka Tribune, Consumers Association of Bangladesh (CAB) President Golam Rahman said: “Analysing the remarks of the stakeholders, it becomes clear that the market is being manipulated.”

He suggested intensifying market monitoring to stop the price hike.

“The government must identify the masterminds behind the hike and punish them. What’s most frustrating is that, in the last two years, despite such price hikes, the government hardly took any effective action,” he added. 

Our correspondents Abdur Rouf Pavel from Naogaon, Al-Mamun Sagor from Kushtia, Abul Hashim from Sherpur, and Ariful Islam from Kurigram contributed to this report