Rice price: Govt faces double whammy

Dhaka,  Sat,  19 August 2017
Published : 11 Jun 2017, 19:19:20
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Rice price: Govt faces double whammy

It appears rather surprising that the government did not make any move to import rice in time when its own stock had gone below 0.5 million tonnes. The government is supposed to always maintain a buffer food stock, at least, above 1.0 million tonnes, writes Shamsul Huq Zahid
The price of the main staple, rice, has reached all-time high. The coarse variety of rice is now being sold at Tk 50 a kg and the finer variety at well above Tk 60 a kg. 

The uptrend in rice price has been persisting for many months. The expectation was that the price would reasonably come down after the harvest of Boro rice that is grown extensively in a risk-free weather conditions. 

But the hope was dashed because of the severe damage caused to Boro rice in haor areas by flash floods this year. The natural calamity struck with full venom when the farmers were making preparations for harvesting. Nearly one-third of Boro rice yield of the country comes from haor areas.  

There were other reasons behind the unabated rise in the price of rice in recent months. The private-level import of rice was one of the lowest in the outgoing financial year because of the imposition of 25 per cent duty on rice import. The government also did not import rice despite the fact that its own stock of the main staple was dwindling fast. 

The quantity of rice in the government stock is now at the record lowest level, less than 200,000 metric tonnes. With this kind of stock position, the government has lost the capacity to intervene in the market. That the government is now incapacitated by insufficient stock of rice is very much evident from the conspicuous absence of open-market sale (OMS) of rice at reduced price for the poor people. 

With low private sector import and dwindling government stock, it is more or less obvious that the rice price would further go up. 

Amidst such a price situation, the government is now making a belated move to beef up its rice stock. On the home front, it has largely remained unsuccessful in its bid. The rice millers are reluctant to supply rice to the government since the price offered by the government is well below the price now prevailing in the market. 

Until now the government, reportedly, has been able to procure a paltry quantity of 11,000 tonnes as against the target of procuring 0.9 million tonnes of Boro this year. During the last Boro season the government procured more than 1.0 million tonnes.  It is unlikely that the government would be able to procure even one-fifth of its target amount this time. 

So, replenishment of the government food stock is as important as the availability of rice with the rice millers and private rice traders. The government's food stock is very much known as the directorate of food on the daily basis uploads relevant data on its website. But nothing is known about the availability of rice with the millers and rice importers in particular. There is no way of knowing it.

Though belated the government is now trying frantically to import rice as early as possible. The food minister last month went to Vietnam and signed a memorandum of understanding (MoU) on the import of a substantial quantity of rice from that country. A Vietnamese delegation is reportedly due to visit Dhaka this month to finalise the quantity and price. 

But the belated move on the part of the ministry of food is going to cost the public exchequer an additional amount. The rice price that has been fairly low in recent years has started rising following the shortfall in production of the food item in Bangladesh, Sri Lanka and the Philippines. India, Thailand and Vietnam have already raised the export price of rice. Rice production in China has also suffered setback this year. If China starts procuring rice from the international market, the price may go up even further. 

It appears rather surprising that the government did not make any move to import rice in time when its own stock had gone below 0.5 million tonnes. The government is supposed to always maintain a buffer food stock, at least, above 1.0 million tonnes. 

The availability of rice in sufficient volume in the market is also important. Higher import by the government to build its own stock would any way help beef up the supply of the item in the market. The availability of rice with the millers and traders is very important. So, it would be prudent on the part of the government to waive or substantially reduce the duty on rice import and help the rice market cool down. 

There is no denying that high rice price has helped farmers this season. But the high rice price is hurting many marginal farmers, poor and low income people. If the rice price goes up further, the poor would suffer more. Rice price is a politically sensitive issue. The government is expected to handle it with both care and caution. 

zahidmar10@gmail.com



 
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