Rice market unstable as local procurement failure, less import lead to stock shortage

The Aman season has failed to stabilise the rice market due to lower imports and the failure to meet procurement targets from local sources, and now the government is focusing on rice imports to bolster its stock.

Low stock levels in government warehouses are affecting the rice market, even during the Aman season, which typically ensures a stable supply and falling prices. However, the situation is the opposite this year.

This has strained the government's ability to provide affordable food through Open Market Sales (OMS) and the Trading Corporation of Bangladesh (TCB), while rice prices have seen a sharp increase.

The 8 January report from the state-run trade entity shows that the prices of all types of rice have risen over the past month, with coarse varieties like Swarna and China increasing by Tk3-4 per kg in the past week.

On Wednesday, these were sold for Tk54-58 per kg, up from Tk50-55 on 31 December. Medium and fine rice prices have also increased.

The rising prices have prompted the government to focus on rice imports.

Food Adviser Ali Imam Majumder told The Business Standard yesterday that the government has sufficient stock and is rapidly importing rice to boost supply.

According to sources at the food ministry, the government plans to import 1.75 lakh tonnes in January and a total of eight lakh tonnes for the rest of the fiscal year ending in June.

To support this, the ministry has sought an increased allocation of Tk6,270 crore for rice imports in the revised budget, up from the initial allocation of Tk2,898 crore. This includes Tk438 crore to settle import liabilities from the previous fiscal year.

According to sources, the food ministry has finalised a tender for the import of 2.50 lakh tonnes of rice, with the Advisory Council Committee on Public Procurement approving an additional 50,000 tonnes from India under this tender.

Additionally, one lakh tonnes will be imported from Myanmar on a G-to-G basis, and 50,000 tonnes from Pakistan. A meeting with the TCB was held on Monday, and discussions are ongoing regarding rice imports from Vietnam.

A senior official from the food ministry, speaking to TBS on condition of anonymity, said it will not be possible to procure rice from the domestic market as per the target because the government is offering parboiled rice at Tk47 per kg, while it is currently being sold in the market at Tk55-58.

"As a result, traders are not showing interest in supplying rice to the government," he added. "Therefore, to ensure adequate stocks, imports from the international market will be necessary. With rising rice prices and the increasing exchange rate of the dollar, additional allocation has been requested."

According to the Department of Agricultural Extension, a target of 1.75 lakh tonnes of rice production was set for the Aman season this year. However, due to flooding in the country, officials believe that Aman production will not meet the target.

Speaking to TBS, Professor Sayema Haque Bidisha, an economist and pro-vice chancellor of the Dhaka University, said, "To stabilise the rice market, the government will have to review the supply system in the short term and make a decision."

"If there is a shortage in supply due to natural reasons, initiatives must be taken to increase supply. And if someone disrupts the normal supply through artificial means, strict punishment should be enforced."

In the long term, initiatives are needed to increase production capacity. For this, research and cooperation with producers will be required, she added.

According to information on the food ministry's website, as of 7 January, 8.03 lakh tonnes of rice are available in government warehouses. In addition, the government has 4.16 lakh tonnes of wheat in stock.

Currently, the government is collecting boiled rice at Tk47 per kg and coarse rice at Tk46 from Aman season production. This collection, which began on 17 November last year, will continue until 28 February. The food directorate has collected 2.74 lakh tonnes of rice as of 7 January.

From 1 July to 7 January of the current fiscal year, 1.41 lakh tonnes of rice were imported through government and private initiatives. Of this, the government imported 24.72 thousand tonnes, while private sector importers brought in 1.17 lakh tonnes.

However, private sector imports have been low recently due to the increase in the dollar value in December.

Considering the benefits for low-income people, the government has been providing 5kg of rice at a rate of Tk30 per kg for each family card from TCB once a month since July 2023.

However, since the food directorate has not supplied rice to TCB, it will not be possible to provide rice to beneficiary families in January, the state-run entity's information officer Humayun Kabir told TBS on Tuesday.

Meanwhile, at the inauguration ceremony of TCB's edible oil, lentils, and sugar sales programme in Tejgaon, Dhaka, yesterday, Commerce Adviser Sk Bashir Uddin told reporters that the price of rice has increased due to temporary hoarding.

According to the food ministry, instructions have been given to deputy commissioners and UNOs to enforce the anti-hoarding law. Food directorate officials are also taking action in the field levels.

According to the food directorate's report on government food grain distribution, four lakh tonnes have been sold through OMS from 1 July to 31 December of the current fiscal year. In the same time of the previous fiscal year, 3.90 lakh tonnes of rice were distributed.