Rice, flour, corn prices reach record high in Bangladesh

Price of rice, flour and maize reached a record high in Bangladesh, according to the US Department of Agriculture (USDA).

The USDA revealed the data in its 'Bangladesh: Grain and Feed Update' released on Monday.

Rice and flour are staple foods for people in Bangladesh while corn is the main ingredient of animal and poultry feeds. Corn is also used for human food to some extent.

According to the USDA report, four factors contributed to an increase in price of these grains. These are high price in the international market, increased freight costs, dollar price hike and high inflation in the country.

Production of main crops remains unchanged with rice, wheat and corn production reach target this year. Rice and wheat are being imported by the government and private sectors, with wheat import likely to drop.

Speaking to Porthom Alo, food minister Sadhan Chandra Majumder said it is right that rice price has increased, but Aman production is better this year and once this rice arrives in the market, price will start dropping. Even if rice and wheat crisis continues, demand will be met by importing the grains, he said adding there will be no food crisis in the country.

There is no crisis of food supply in the local market. Yet 68 per cent of people are struggling to buy food in Bangladesh due to higher price, according to a World Food Programme report released in October.

The USDA prepared the report using the data from the various government agencies of Bangladesh including Department of Agricultural Marketing, Trading Corporation of Bangladesh (TCB), and Directorate General of Food.

According to the report, price of coarse rice fell to Tk 50 a kg in September from Tk 53 a kg in August. Coarse rice price was around Tk 32 a kg in January 2020. Price of fine rice increased by 12 per cent in a year to Tk 73 a kg in September.

The USDA report used a diagram on rice price, showing that previously, rice price peaked at Tk 50 a kg in 2017.

Meanwhile, price of coarse and medium quality rice, according to TCB, increased by Tk 2 a kg over the last week. Price of coarse rice varies from Tk 48-54 a kg and price of fine rice Tk 52-58 a kg.

People concerned said this year rice price reached a record high in Bangladesh market. Rice price fluctuated in the past, but people had an alternative to rice – flour (ata). This year, low income people face crisis due to higher price of flour, with flour price reaching Tk 65 a kg.

As a domestic factor, rise in production cost is responsible for increased rice price.

The USDA report also said price of urea fertiliser rose by Tk 6 per kg. Irrigation and transportation cost increased due to significant rise in fuel price. Lower domestic fertiliser production will aggravate the existing fertilizer shortage and will likely to affect rice production in the upcoming season.

On wheat market and supply situation, the USDA report said domestic production meets only 15 per cent of total demand and 1.2 million tonnes of wheat will be produced this year. A total of 7.5 million tonnes of wheat were imported last year. This year, wheat import will drop to 6.5 million tonnes. Bangladesh imported 25 per cent of wheat only in the first three months of 2022-23 marketing year.

Regarding price of flour, the USDA report said price continues to rise since March this year because of Russia-Ukraine war. Since Bangladesh meets its majority of wheat demand through import, appreciation of the US dollar increases import cost. Overall, price of loose flour increased by 70 per cent in a year to Tk 55 a kg in October.

According to TCB, price of coarse flour increased by 5 per cent to Tk 55-58 a kg over the last month.

There is an annual demand of 7.5 million tonnes of corn in Bangladesh, with domestic production accounting for about 4.8 million tonnes. The rest of corn is imported, mostly from India, Brazil and Argentina, to meet the demand for poultry and animal feed.

The USDA said price of corn increased by 33 per cent year-on-year to Tk 34 a kg in October.

Soaring price of corn also increased the price of poultry and animal feeds. Farmers said this has increased production cost of egg, dairy and meat. Price of egg is Tk 140 a dozen and price of poultry is Tk 180 a kg in local market.

‘Such a price hike was not noticed at a time'

According to the USDA report, overall inflation reached 11-year high to 9.5 per cent in August this year. However, government holds more food stocks than before.

Speaking to Prothom Alo, former director general of Bangladesh Institute of Development Studies (BIDS), Kazi Shahabuddin said, “According to our past experience, the government shows more production of rice and less demand. The government don't take rice into account that is consumed in hotel and restaurant.”

The problem remains and an universally accepted assessment of the country’s food demand and supply has to be prepared, he said adding when price of either rice or flour increases, people tend to consume the cheap items.

Bangladesh never saw such a rise in price of rice and flour at a time in the past and it is very difficult for lower income people to cope with this situation, Kazi Shahabuddin said.

*This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna