Govt mulls alternative sources as long-term wheat supply crunch looms

Concerns are growing over wheat's future supply in the country as a sudden ban on the export of the major cereal by India, a key sourcing destination for Bangladesh, has already pushed the prices of the commodity to a new record high on the international market.

The price jumped to 435 euros ($453) per tonne as the European market opened on Monday.

Sensing the looming supply crunch of the second staple food grain in the country, the government also is planning on sourcing the commodity from alternative markets in order to secure the grain stock.

Commerce Minister Tipu Munshi on Monday said the government plans to source wheat from five other countries, including Canada. "We have already engaged in talks with Canada, besides other countries that we are trying to reach out to for imports," he said at a programme in the Secretariat.

However, the alternatives might be costlier, further pushing up prices of widely consumed food items such as paratha and bread, and bakery items such as biscuits, pasta and noodles, fear concerned stakeholders.

"Wheat prices went up by Tk150 per maund [around 37kg] in the local wholesale market as soon as India banned export," said Chattogram's Khatunganj-based wheat importer Abdur Razzak.

On Monday, Indian wheat was at Tk1,550 per maund – up from Tk1,400 last week.

On the other hand, Canadian wheat was selling at Tk2,100 per maund at Khatunganj wholesale market on Monday – up from Tk1,950 on Thursday last week. This category of grain was at Tk1,500 per maund before the war.

According to the revenue board, some 55.46 lakh tonnes of wheat arrived in the country until 30 April of the current fiscal year. In FY20, Bangladesh imported 63% of its wheat from Russia and Ukraine, 18% from Canada and the rest from eight countries, among them the USA, Argentina and Australia.

Wheat prices had been spiralling gradually following Russia's invasion of Ukraine in February this year. With the two key exporters of the grain battling each other, Bangladesh had been increasing imports of the cereal from India – the world's second-biggest producer of wheat. 

The war had already raised wheat prices by 30%-50% in the last two and a half months in the local market, with India's ban pushing up international prices to a record high on Monday. 

Despite India's ban, shipments of the cereal under letters of credit that have already been issued will be allowed to proceed.

Bangladesh consumes about 75 lakh tonnes of wheat per year. About 11 lakh tonnes of wheat are produced locally, while the rest is imported.

'Immediate severe crisis unlikely'

Meanwhile, importers and traders have said Bangladesh is unlikely to face a severe wheat crisis in the coming months.

Traders said they already have around 5 lakh tonnes of wheat purchase deal with India – which does not fall within Delhi's embargo – plus at least half a dozen wheat alternatives.

"Our traders have already ordered around 5 lakh tonnes of wheat from India. The government has to take the initiative to bring that," Abul Bashar Chowdhury, chairman of the leading food importer BSM Group, told The Business Standard.

"If the supply is confirmed, there will be no supply shortage for the next two to four months even if international prices spiral."

Abul Bashar Chowdhury said locally grown wheat has now started to arrive in the market, while yields from Western European countries, Canada and the United States will be in the market in the next three to four months.

"In addition, although there is no scope for import from Ukraine, we still can bring in the item from Russia via a third country," he said.