Rice prices soar in global market, Bangladesh relieved for now

The bumper rice production this Boro season and ample stocks have protected the local market from the recent rise in international rice prices triggered by the El Nino-style weather condition including in India.

Officials say with sufficient supply in the domestic market, retail rice prices are currently stable and the government is not considering importing rice at this time.

The ministry of food has said there are currently 16.19 lakh tonnes of rice in stock in the country. The government is also continuing the programme of buying Boro paddy and rice.

According to a Reuters report, the world's biggest rice exporter India is considering a ban on most rice exports. The move will affect about 80% of India's exports and could raise global prices further.

Citing Indian officials, the report said the Indian government is discussing a plan to ban exports of all non-Basmati rice because of rising domestic prices and authorities want to avoid the risk of more inflation.

Some Indian media outlets have reported that the country has increased the minimum government support to farmers by 7%, raising the export price of rice by 9%.

India caters to 40% of the rice demand in the international market. In the previous year, India exported a staggering 5.60 crore tonnes of rice.

The Reuters report said top rice producing countries, such as Indonesia, China and the Philippines, have been aggressively stockpiling rice this year.

According to the Food Planning and Monitoring Unit of the Ministry of Food, the export price of rice (5% broken) in India in the last week of May was $375 per tonne, and in Thailand it was $486 per tonne. On July 12, the price stood at $414 per tonne in India and $538 per tonne in Thailand.

The retail price of parboiled rice imported from India at the end of May was Tk47 per kg, which will now stand at Tk52 per kg. Similarly, the price of rice from Thailand will increase from Tk61 to Tk67 per kg, the monitoring unit reports.

According to food ministry officials, the government has no plans to import rice at the moment, but it has permission to import 5 lakh tonnes in case of an emergency. Last year, the government allowed private enterprises to import 1.5 lakh tonnes of rice to tide over the volatility in the market.

Muhammad Mahbubur Rahman, senior assistant secretary (external procurement) at the Ministry of Food, told The Business Standard that both rice production and government stocks are in a good position. As a result, even if the price of rice increases in the international market, it will not have any direct impact on Bangladesh.

Meanwhile, the Reuters report has warned that the production of rice may decrease this year due to El Niño weather conditions. This, along with the export price hike in India, has raised the rice price hike to the highest level in the last 11 years.

Traders say that rice prices may increase by five times in the near future if production is drastically reduced due to El Niño.

Shahidur Rahman Patwari, a rice importer and vice-president of the Bangladesh Auto Major and Husking Mill Owners Association, said, "Since we no longer need to rely on imports, the rising international market prices are not impacting the local market significantly."

He further said that the government now possesses numerous tools to prevent market manipulation.

"The government has various measures in place. Even though Open Market Sales (OMS) are operating in a limited capacity, the government is providing 5 kg of rice to one crore families every month. Additionally, in programmes such as Test Relief and Kabikha, the government has decided to offer rice instead of wheat, thereby increasing the overall supply," he said.

According to the Ministry of Agriculture, Bangladesh is expecting a bumper Aman rice harvest this year. The second-largest rice-growing season in the country, Aman accounts for about 1.5 crore tonnes of production. However, rainfall is crucial for the Aman crop, and while it has been abnormally low in recent months, the country has received regular rains in the past 20 days. This is expected to help boost Aman production. 

According to the United States Department of Agriculture (USDA), due to El Nino-style weather, erratic monsoon rains, global warming and drought, rice production declined significantly last year, affecting the international market as well.

The USDA's forecast suggests that global rice stocks at the end of FY24 could fall to a six-year low to 17.2 crore tonnes.

Rice is a staple for about half of the world's population, with Asia consuming about 90% of global supply.