Govt cuts rice import duty to stabilise market

The government has decided to reduce the duty on rice imports to meet the local demand and stabilise the market as a shortage of wheat supply made many consumers dependent on rice.

The Covid-19 pandemic, the Russia-Ukraine war, and India's ban on wheat export have caused the drop in wheat imports, while floods have harmed rice cultivation in the country this year.

In a statutory regulatory order (SRO) issued Thursday, the National Board of Revenue (NBR) reduced the tariff on rice import from 62.5% to 25%, which will be effective from 22 June to 31 October this year.

A meeting of the Food Planning and Monitoring Committee, which decided to reduce the tariff and import rice, was held in the first week of June with Food Minister Sadhan Chandra Majumder in the chair. Later, the committee sought the prime minister's approval for taking these measures, ministry sources said.

In the letter to the prime minister, the food ministry said the Russia-Ukraine war and India's ban on wheat export have pushed up wheat prices sharply. Consequently, the import of wheat at the public and private levels has decreased significantly.

Wheat import on private arrangement in FY20 was 59.98 lakh tonnes, which came down to 48.64 lakh tonnes in FY21, and dropped further to 31.06 lakh tonnes till 2 June in the current fiscal year.

Rising wheat prices and declining imports have pushed up the price of flour in the country and put pressure on rice. In addition, early floods, storms and heavy rains have hampered rice yields in the haor areas, which in turn has led to fears of further volatility in rice prices. 

At the meeting in June, Food Minister Sadhan Chandra Majumder said the demand for rice has increased due to the impediment to wheat imports and increase in human and non-human consumption of rice.

However, the government does not have information on the actual amount of rice produced in the country, so the food ministry is struggling to determine the amount of imports based on the new demand growth and deficit. 

Muhammed Mahbubur Rahman, senior assistant secretary at the food ministry, told TBS, "The volume of imports has not been determined yet. It will be finalised once the SRO on tariff reduction is issued."

"We have to import rice to increase supply in the market. The market will not become stable if we cannot increase supply," he added.

Agricultural economist Jahangir Alam told TBS, "Many people will increase rice consumption due to rising flour prices, which will create new pressure on rice."

"There is a big difference between the data provided by the Bangladesh Bureau of Statistics (BBS) and the agriculture ministry's data on production. In this situation, it would not be possible to accurately project how much import is needed. Therefore, it is very important to disclose the actual information regarding production," he said.

Fall in Boro production feared

According to sources at the agriculture ministry, flush flood, heavy rains and stormy weather will reduce rice production by 80,000 tonnes. Despite that, 2.11 crore tonnes of rice might be produced during this Boro season.

According to the BBS, 1.98 crore tonnes of rice was produced in last year's Boro season, while the agriculture ministry projected a production of 2.08 crore tonnes.

BBS officials said flash floods this year, heavy rains and storms have damaged the paddy cultivation while farmland size has decreased. So, there is no possibility that rice production will exceed 1.98 crore tonnes.

Meanwhile, Agriculture Minister Muhammad Abdur Razzaque has recently claimed on various occasions that the damages in rice cultivation is small, and its production will increase this year too.

Concerns over government procurement targets

According to the food ministry, the government aims to procure 11 lakh tonnes of boiled rice, 50,000 tonnes sun-dried rice and 6.5 lakh tonnes Boro paddy in this Boro season.

So far, the authorities have collected 1.01 lakh tonnes of paddy, 4.51 lakh tonnes of boiled rice and 7,780 tonnes of sun-dried rice.

According to the minutes of a meeting of the food ministry, it is likely that the target set for paddy procurement will not be achieved due to natural calamities.

The government is collecting paddy at Tk1,080 per maund, while it sells at Tk1,200 in the market. They are also collecting coarse rice at Tk40 per kg, while its price in the market is Tk50. Due to these, the procurement target of paddy and rice will not be fulfilled, said sources.