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Hoarding: A catalyst for the rice crisis

  • Published at 12:34 am February 2nd, 2018
Hoarding: A catalyst for the rice crisis
Farmers in the majority of the northern districts faced crop loss during the recent Aman growing season because of severe flooding and pest attacks. But a Dhaka Tribune investigation has also revealed that a significant portion of the last season’s Boro paddy still remains with the speculators among the traders and millers. There are two types of speculation going on in the rice market. When there is a hint of short supply in the market, comparatively wealthier farmers and traders can wait for about 15 days to one month for the price to rise a bit more. On the other hand, big traders and millers, who have huge storage capacities, can store either paddy or rice for several months and create an artificial shortfall to reap the benefits. Md Ashraful, a small paddy trader at Boda upazila of Panchagarh, told Dhaka Tribune that sometimes he holds back one to two truckloads of paddy for a couple of weeks. “About 200-250 sacks (75kg sack) can be loaded on a truck. I store the paddy to sell it later at a higher price.” Mojibur Rahman, a paddy trader at Mohabbatpur under Dinajpur Sadar upazila, mentioned that the small traders like them cannot afford to hold back huge amounts of paddy or rice for long like the millers. Mojibur also noted that the large-scale millers were able to store a huge quantity of paddy during the Boro season. “They have stored the lot as paddy instead of processing it. It’s a ploy they’re using to get around the laws. When the time will be ripe, they will process the paddy and sell the rice.”

Meet the rice syndicate

Small traders in Dinajpur, Panchagarh and Naogaon were almost equivocal to claim that dishonest wholesalers and millers have formed syndicates to hoard rice. When there is space in the warehouse of a miller, it is utilized by the miller’s cohorts who have surplus stocks of paddy, according to the small traders. This Dhaka Tribune correspondent visited some of the auto rice mills based on the allegations. She had to pose as a researcher because no journalist was welcome to visit the storage facilities. At the warehouse of Sarwar Automatic Rice Mill in Mahmudpur area under Dinajpur Sadar, the stack of paddy sacks were found to be above the declared capacity of the mill, which is 50 metric tons.
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Admitting the fact, the mill’s owner Sarwar Syed Sohel said he did not own any of the stock of paddy stored in the warehouse at that time. He claimed another rice miller kept the paddy in his warehouse to be processed there within one month. During a conversation, the workers of Mousumi Auto Rice Mill at Mataji Road in Mohadebpur upazila, Naogoon claiming to have worked on piles of paddy round the year. “We work here on daily wage basis. But we work here at a stretch, seven days a week. We can’t even afford to take a day off in a month. We only get a vacation the month of Kartik (between October-November) in the year. It is just before the Aman harvest,” said a female worker, preferring not to be named. “This year, the operation at the mill was halted for eight to ten days more in the month of Ashwin (between September-October) because of the floods. The supply of paddy during the rest of the time has been normal. We don’t find a respite from the work,” she added. However, an overseer of the mill workers, who was present during the conversation, mentioned that the stock of paddy existing in their warehouse was actually imported from Panchagarh. The correspondent later visited the rice producing areas of Panchagarh. The traders and millers there brushed aside the claim of that their paddy was being transported to Naogaon. “The price of paddy doesn’t vary much from Panchagarh to Naogaon. It will not be cost-effective for the millers to buy the rice from here. Besides, Panchagarh doesn’t produce much rice to be exported to another district,” said Hafizur Rahman, a wholesaler in Sakhoa Bazar of Boda upazila in Panchagarh.

Outrageous capacity of the rice mills

While some rice millers and their employees were very reluctant to give information about the rice stocks in their mill, some of them, on the other hand, expressed quite candidly that they have to store the paddy for months to keep the mills operational. Anisur Rahmn, owner of Tasiron Automatic Rice Mill at Rambhadrapur in Naogaon town, said the paddy production in Aman season is generally much lower compared to that of the Boro season, and the rice mills have to store paddy from the Boro harvest to keep the mills operational all the year round. Toufiqul Islam, owner of Mofiz Uddin Auto Rice Mills in Raninagar upazila of the district, admitted that he had a stock of Boro paddy collected about six months ago. This correspondent found some stock of Chinigura rice processed at Rajia Semi-Auto Rice Mill of the same area. Chinigura is fragrant non-boiled rice variety that is cultivated only in Aman season. During the visit, the paddy of that variety was yet to be harvested. Workers at the mill said the rice was collected in December of 2016. During the floods of August-September, the rice stock was shifted in a godown elsewhere. But the same rice stock returned to the mill to be processed further so that the rice gives a glow and looks fresh. Naogaon District Controller of Food, Abdus Salam, however, argued that they had not found any undue rice stock in the mills. “The millers can store paddy up to five times of the capacity for 30 days, and rice up to twice the capacity for 15 days.”

Does regulation equal anarchy?

Officials of the Directorate of Food in Dinajpur also informed that they were unable to trace undue stocks of rice during their inspection. They also noted that there is a direction from the high ups of the ministry not to create panic for the millers while the directorate also lacks the manpower to carry out the inspection in all the mills of the district. Dr Asaduzzaman, professorial fellow at state-run think tank Bangladesh Institute of Development Studies (BIDS), observed that the rice milling sector has expanded in Bangladesh without much regulation being put into effect. “The number of large-capacity automatic rice mills established over the last decade is superfluous. About 40% of the capacity of those automatic rice mills remains unutilized. So a bulk of the rice produced throughout the year ends up in the hands of the millers. They do have the ability to influence the rice price,” Asaduzzaman said. There are about 20,000 rice mills across the country that process and market at least 60% of the paddy produced in the country. There were only 200 semi-automatic and automatic rice mills in the country in 2005. But the number has now crossed 800, said AKM Khorshed Alam Khan, president of Bangladesh Auto Rice Mills Owners’ Association. When contacted over phone, Agriculture Minister Matia Chowdhury said: “They (millers) tend to hoard. There are dishonest quarters among them. Some of them cut the coarse rice and turn it into Miniket (fine rice). They stock the rice. We are monitoring it as best as we can. Would you advise me to send police to each and every mill and end up creating anarchy?”  
Additional reporting by Sazzadur Rahman Sazzad, Khondaker Md Abdur Rouf, and Md Faruk Hossain