Rice production to go up, but little hope for price to go down

Bangladesh is expecting robust rice production this Boro season thanks to the absence of any major disasters, but there is a little hope for a significant fall in the price. 

The highest amount of rice is produced in the Boro season. Harvesting of paddy has already begun in the haor areas, while the crops have started to ripen in the northern and southern parts of the country. 

In a report released on 9 April, the United States Department of Agriculture (USDA) anticipated that rice production may go up by 500,000 tonnes to 20.5 million tonnes in the Boro season in Bangladesh. They estimated that the cultivation area in Bangladesh also expanded by 50,000 hectares to 4.9 million hectares. 

Some factors are widely being highlighted for the high price of rice. They are – rising cost of production, high price in the global market, ban on rice exports in India, and crisis as well as high exchange rate of dollars. 

The USDA also mentioned that there is no possibility for the rice price to go down from the current level. 

According to sources at food and agriculture ministries, the government does not want the farmers to lose interest in rice production due to a low price. Therefore, the authorities are in favour of keeping the rice price static at the current level. 

Ismail Hossain, secretary of the food ministry, hoped that the price would decline to some extent as the Boro paddy is set to hit the market.  

“However, it should be ensured that the price does not fall sharply and the farmers get fair prices. We should consider that the production cost increased as well,” he said. 

As per the latest data from the Trading Corporation of Bangladesh (TCB), coarse rice is selling at Tk 50 to Tk 52 per kilogram (kg) in Dhaka, while medium and fine rice varieties are priced between Tk 55 to Tk 58 and Tk 65 to Tk 76 per kg, respectively. The overall price has gone up by 2 to 5 per cent within a month. 

According to the food ministry, there was a rice stock of 877,000 tonnes in the country until 17 April. Farmers grow paddy in three seasons – Boro, Aman, Aush. Usually, around 20 million tonnes of rice are produced in the Boro season, which is more than 50 per cent of total production. 

The USDA forecast total rice production at 37.7 million tonnes for the marketing year 2024-25, which is up by 700,000 tonnes from the previous year.

The demand is also going up with the production. The USDA forecast rice consumption at 38 million tonnes for the marketing year 2024-25, which is up by nearly 1 per cent from the previous year. 

According to the USDA report, feed and industrial use of rice has increased significantly in recent years, mainly in animal feed and starch production. The poultry, cattle, and aqua feed industry is increasingly using broken rice and deoiled rice bran as a filler in various feed formulas at lower prices compared to other imported feed ingredients.

Citing a recent study of the food planning and monitoring unit (FPMU), the report noted that around 3.5 million tonnes of rice is used for household level animal feed annually. 

In Bangladesh, wheat is the second most significant staple food after rice and its annual demand is nearly 7 million tonnes. However, imports of wheat decreased comparatively due to high price in the international market and the high exchange rate of dollars. 

Shahjahan Kabir, director general of Bangladesh Rice Research Institute (BRRI), said hoped that the rice production would surpass the threshold of 40 million tonnes this year, outstripping domestic demand by at least 4 million tonnes. Hence, there is no need to go for imports. 

GIven the rising price in the international market, it will not be feasible to meet the demand through imports. Rather, there should be initiatives to increase local production, he added. 

Last week, the agricultural ministry finalised the production cost of rice and paddy for this boro season estimating paddy production cost at Tk 31.60 a kg and rice production cost at about Tk 45 a kg –a Tk 4 a kg up from the previous year.

According to the Bangladesh Rice Research Institute (BRRI), the cost of rice production from broro paddy increased by Tk 3 kg in the 2023-24 fiscal from the previous fiscal due to the rise in the prices of fuel oil, electricity and fertilisers.

The USDA report mentioned the government of Bangladesh increased fertiliser prices by Tk 5 a kg. Besides, irrigation costs have also risen due to the increased cost of diesel last year. Farmers need to use more irrigation than before due to delayed rains at the start of the aman season and excessive heat in the boro season. Compared to the previous year, the daily labour wage rate was 30 to 40 per cent higher during the boro planting this year. The price of paddy seed also increased. Overall, the cost of rice production rose.

Bangladesh Auto Major and Husking Mill Owners Association general secretary HR Khan Pathan told Prothom Alo prices are yet to fall despite the arrival of new paddy at markets, thus, rice prices do not drop. If the price falls further than the current price everyone including farmers, millers and traders will face loss. They must collect production costs first, he added.

High prices of rice cause problems for people in low-income brackets. A 2022 study by the Bangladesh Institute of Development Studies (BIDS) showed people living in extreme poverty spend 32 per cent of their total expenditure on rice while poor people do it 29 per cent and other people spend one-fifth of their total expenditure on rice.

There are currently various low-price rice sales and food assistance programmes by the government for poor people. The government distributed 2.05 tonnes of rice between June 2023 and 11 April 2024. However, a large number of people cannot enjoy this privilege as more than 30 million people live below the poverty line.

A rise in rice prices affects inflation the most because rice prices have the most importance in estimating inflation. High inflation has persisted in the country since August 2022. Meanwhile, the government plans to fix rice prices based on its variety, as well as mandatorily inscribe names of rice varieties on sacks in a bid to check the rice market manipulation and artificial price hike.

Mohammad Jahangir Alam, professor of agribusiness and marketing at Bangladesh Agriculture University, told Prothom Alo rice and other foods prices cannot be checked by applying pressure and fixing prices. Competition must increase at markets, and it must be ensured that several companies cannot monopoly the supply of rice and other commodities because the inflow of cash, easy access to bank loans and influence become important at rice markets. If it is ensured that various companies can compete in markets rice prices will remain at a rational level, he added.