Prices in retail markets still high
Pulack Ghatack: Farmers’ smile seen after the bumper harvest of paddy is feared to fade away due to its low price at the producers’ level, while consumers are still paying high for purchasing every kg of rice at the peak harvest season, thanks to a manipulated market largely controlled by a syndicate of suppliers and millers.
Middle men especially millers, in waiting for a further slump in rice paddy prices, are not procuring paddy from the farmers and also have lessened production and supply of rice to the markets to maintain the price level that soared after bad cropping last year.
Inquiring into the country’s second largest rice production and distribution centre in Khazanagar of Kushtia, it was found that at best 20 trucks of rice are being sold daily while selling of at least 200 trucks of rice is a regular feature in this spot.
About one-third of the country’s total rice supplies come from the area which have a total of 31 auto and 280 husking mills. The millers and rice suppliers, however, have been blaming import of low cost rice behind their decision to decrease production and supply.
“We have a huge stock with us, but we cannot sell. The market is flooded with low-cost rice imported from India. If we continue to sell in this situation we will have to count losses,” Jainal Abedin, General Secretary of Kushtia Rice Millers Association, told the Daily Observer explaining the reason behind decreasing the sale.
Some truth was found behind his claim, but that was a half truth. The millers and suppliers of the area had hoarded around 15,000 MT of rice worth about Tk 100 crore to cut extra profit amidst shortfall of the staple food in a bad crop last year.
But zero-tariff import of the staple food is still continuing to show a sharp contrast to an already good stock in the warehouses, which is expected to be inflated further with a huge harvest this year.
Letters of credits to import 32 lakh tonnes of rice were opened until December 23 last year according to data found in the Food Ministry. The import spree continues at a time when farmers have harvested most of the aman crop.
“Imports will continue as prices are higher in Bangladesh compared to India,” said Chitta Majumder, Managing Director of Majumder Group of Industries.
The soaring imports and the harvest of aman crop have increased the availability of rice. However, prices of the staple still remain high.
The coarse and medium quality rice, which is consumed by the majority, were selling at Tk 44 to Tk 56 a kg in Dhaka markets on Monday, the state-run Trading Corporation of Bangladesh (TCB) said in its report. The government data proves that the prices are soaring over 6 per cent and 4 per cent up from a month ago despite a slight decline by two to three taka a kg this week.
This market phenomenon is so far contradictory to the assessment of local and international agencies, who forecast a bounce back after a bad crop year with prospects of a good rice output this year and reduction of dependency on import.
Rice import is expected to drastically reduce by a fourth from a record import of the staple – 3.6 million metric tons (MT) in 2017-18 marketing year (MY) to just eight lakh MT in 2018-19 MY (in May-April), said a report released by the United States Department of Agriculture (USDA) last week.
“Bangladesh’s total rice production would increase to 34.7 million MT in 2018-19 MY (in May-April) from the 32.6 million MT produced in 2017-18 MY,” USDA said.
“Farmers’ expectation of a higher price may be dampened if production is higher as expected and imports continue to follow the pace of the last few months, USDA noted.
“As highly fluctuating husked rice price is mostly controlled by millers, past experience indicates that millers manage to keep the paddy purchase price lower through imports of more rice [husked] before the harvest season.”
The millers have already started the mechanism by stopping procurement of paddy and production of rice to create crises in both the ends – to result in piling up of paddy with the farmers to force them sell their products against nominal prices at the first end and also causing supply shortfall in the market forcing the consumers to pay more at the last end.
Prices of Miniket and Najirshail rice, which are consumed by the middle class, are still high in the retail, said Abul Hossain, 42, a shopper at Malibag Market in the city on Monday.
Miniket is being sold at Tk 64 to Tk 68 while Najishail is being sold at Tk 62 to Tk 65, said Mobarak Hosain, a retailer at the market.
Contrarily the farmers are selling their rice paddy only at Tk 550 to Tk 650 which were expected to be around Tk 900 to Tk 1000 per maund (40 kg), market sources in the haor belt said.
“I have to sale early as I have made loan for planting paddy. But the market price is far from expectation. We could make profit, had we sale prices at the price set by the government,” said Basir Mia of Itna Upazila, who went to sale paddy rice in Bhairab.
Meanwhile, the government is going to start procurement of paddy from the farmers from the first week of May.
“Procurement of rice and paddy would continue from May 2 to August 31 this year,” Food Minister Md Qamrul Islam said.
“The government will procure Boro rice paddy at Tk 26 per kg and rice at Tk 38 per kg during this year’s Boro season. By this measure Boro farmers will receive Tk 2 per kg more than they did last year, while millers will receive Tk 4 more per kg, the Minister announced at a press conference following a meeting of the Food Planning and Monitoring Unit at the Secretariat on April 8.
The government has set a collection target of 10 lakh metric tons of Boro rice and paddies due to the bumper crop this year. The production cost of Boro rice was Tk 36 per kg this year and so the government would buy it at Tk 38 per kg, the Food Minister said.
Last year the government bought 700,000 tonnes of rice paddy at Tk 24 per kg and 800,000 tonnes of rice at Tk 34 per kg. Due to sufficient food reserves the government has reduced its domestic procurement target this year.
Heavy rains, mountain run-off and three rounds of floods devastated last year’s Boro crop and forced the government to lower tariffs and import a substantial amount of rice to stabilise the market.
According to the Food Ministry, the government has 969,000 metric tons of rice and 362,000 metric tons of wheat in its reserves.