A harder squeeze on poor as coarse rice going beyond reach
The retail price of coarse rice rose Tk 15 per kilogram within the last one year as a result of higher prices in the international market, squeezed supply and the coronavirus pandemic, official data showed.
The sharp rise in the food-grain has dealt a significant blow to the poor and low-income groups who have been struggling to create ends meet amid massive job losses and a sharp fall in incomes due to the pandemic.
Coarse rice was selling at Tk 28.59 per kg in November this past year and it rose to Tk 43.64 in the first week of October, up 52.64 % during the period, provisional data from the Department of Agriculture Marketing showed.
The rice variety mostly consumed by the indegent and low-income groups was selling at Tk 31.46 per kg in March and since then it has risen by 38.71 %.
The option of the coarse rice has been squeezed owing to the farmers' indifference to create the variety, the coronavirus pandemic and stockpiling by persons due to the coronavirus-induced uncertainty, said Food Secretary Mosammat Nazmanara Khanum yesterday.
A whole lot of coarse rice was imported in 2017 and this contributed to the decline in the purchase price in 2018 and 2019. "This discouraged farmers from growing more coarse variety," said Chitta Majumder, managing director of Mazumder Group of Industries.
"Exactly what is a little puzzling is that the purchase price has increased despite a good boro harvest and reasonably sufficient public stocks. Floods may have been one contributing factor. A shift popular towards coarse rice as a result of the decreased incomes of the middle class could also have contributed," said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.
However, the economist said, the existence of large players with market power in the rice supply chain might have been the most important element in the price increase.
A report on the food-grain situation of the united states was presented at a gathering of the Food Planning and Monitoring Committee (FPMC) chaired by Food Minister Sadhan Chandra Majumder on Wednesday.
The meeting didn't take any step to cut the price of rice as such a move would lower the cost of the staple to below the production cost of Tk 40 per kg and dishearten farmers to grow the cereal, said officials of the meals and agriculture ministries.
The government wouldn't normally also cut the duties imposed on rice imports either. Rather, it would raise the sales of coarse rice through the open market sale (OMS) and distribution of the item through other social back-up schemes.
Total import of food-grain was 6.44 million tonnes in FY2019-20, out of which rice was only 4,000 tonnes.
The federal government has set 0.6 million tonnes of food-grain import target for the ongoing fiscal year. Rice would take into account 0.1 million tonnes, according to a document of the meals ministry.
On Wednesday, Agriculture Minister Muhammad Abdur Razzaque, however, said the federal government might need to import 5-6 lakh tonnes of rice and the decision would be taken after the Aman harvest.
"Initially, an initiative has been taken up to import 2 lakh tonnes of rice."
Higher prices in international markets and higher duties have prevented importers from attracting the staple item.
In Thailand, the cost of coarse rice rose to $457 per tonne in October this season from $387 in November this past year. It was $341 per tonne in Vietnam this past year which went up to $462 in October.
The cost of coarse rice was more stable in India: it was $363 per tonne in November and edged up to $369 in October, data published by the meals ministry showed.
Private importers have not brought in any rice within the last one year. There is 62 % duty on rice imports, said Majumder.
Predicated on the estimates, there is approximately 70 % chance that the price of coarse rice would vary between Tk 38.39 and Tk 41.59 per kg from October to December, the FPMU said.
Following the completion of the upcoming Aman rice harvest, the purchase price would become stable as seen through the same period a year earlier, the report said.
Food Secretary Khanum said the federal government would not decrease the duty on rice imports as the cut would boost imports.
"If the price tag on rice falls below the production cost, the farmers wouldn't normally be interested to keep generating the coarse rice," she said.
The FPMC on Wednesday instructed the federal government to activate various social safety net programmes to support the indegent and the vulnerable.
"We are widening the footprint of the OMS of rice," the meals secretary said.
The federal government has distributed 20,000 tonnes of rice as of October 15 of the current fiscal year beneath the OMS programme, up from 1,000 tonnes during the same period this past year.
Khanum said the distribution of rice through the Vulnerable Group Development (VGD) and Vulnerable Group Feeding (VGF) programmes hasn't grown proportionately as cash can be provided within the initiatives.
The federal government distributed 100,000 tonnes and 101,000 tonnes of rice under the VGF and the VGD programmes as of October 15, that was 151,000 tonnes and 98,000 tonnes respectively through the same period a year ago.
In total, 600,000 tonnes of rice were distributed from July 1 to October 15, down from 666,000 tonnes year-on-year, data from the meals ministry showed.
Zahid Hussain said the upsurge in the price tag on coarse rice is a double whammy for the indegent and low-income families at the same time when incomes are either stagnant or declining largely as a result of pandemic.
Whether collusion between your large players has led to the price increase, that is something the authorities have to look into meticulously, he said.
The government should think about reducing as well as removing the high duty on the import of rice and so that it is easier for new players to enter the marketplace, Hussain said.
"This will boost the contestability of the market and make it risky for the prevailing large players to activate in profiteering by hoarding."
Management of the food-based back-up programmes also needs to improve, he said.
"This will help the indegent and the vulnerable and in addition help keep the marketplace price of rice stable. Assistance to farmers may also be vital that you incentivise increased supply."
