Rice prices high despite good production

Aman paddy has already been harvested. The production has also increased this year. Meanwhile, the Boro season has begun. Usually, rice prices keep lowering during the harvesting season. But, there’s no sign of rice prices going down right now.

The price of coarse rice has remained consistent at Tk 52 a kg (since the second week of December), which is 4 to 5 per cent higher compared to this time last year. On the other hand, prices of flour, the second staple food of the country, have increased as well.

This information was revealed in the fortnightly report on market price of food items in Bangladesh, published by the United States Department of Agriculture (USDA).

According to agriculture ministry records, the production cost of a kilogram of coarse rice is Tk 40 to 42. As per records of the other government agency Trading Corporation of Bangladesh (TCB), that’s selling for Tk 46 to 52 in the market.

Agricultural economists say that usually there’s a difference of Tk 3 to 5 between the production cost and consumer-level price. The bigger chunk of the extra profit is being pocketed by the rice mill owners and traders.

Economists are considering this profit unusually high. They say that because of the rice mill owners and traders profiting too much, prices aren’t coming down even during the peak season.

Mohammad Jahangir Alam, professor at Bangladesh Agricultural University’s agribusiness and marketing department told Prothom Alo, despite the production cost going up, farmers are profiting a bit from selling rice. But, the rice mill owners and traders are making an unusually high or super normal profit. That’s why rice prices cannot be decreased. This in consequence, is raising the living cost for a huge number of poor people in the country. An issue of malnutrition is being created as well. The reason is they have reduced purchasing nutritional food for rice prices being high.

According to government agency Bangladesh Rice Research Institute (BRRI) records, natural disasters resulted in a slight reduction of yield during the last Boro and Aush seasons. So, the government set a target of producing 16.1 million (1.61 crore) tonnes of rice this Aman season.

But due to favorable weather conditions, 200,000 (2 lakh) tonnes or 16.3 million (1.63 crore) tonnes of rice have been produced in addition to the targeted amount this Aman season. The amount of rice there is in the country, there will be no shortage till next June, instead there will be a surplus of 4.5 million (45 lakh) tonnes of rice.

According to BRRI, production cost of aman increased by 10 per cent this year while the production cost, according to Bangladesh Agriculture University, increased to 10-15 per cent, thus, production cost of paddy and rice stands Tk 25 and Tk 40-42 a kg.

Speaking to Prothom Alo, BRRI director general Md Shahajan Kabir said there is no crisis of paddy in the country and the aman yield is also adequate.

Though production costs rose slightly, existing price of rice should have been much lower, he said blaming the rice mill owners and traders for not dropping the price.

According to the US Department of Agriculture (USDA) report, rise in price of urea fertiliser and farming equipment triggered production cost and that is responsible for increased rice price.

The government lowered tariff on rice import. Another 450,000 tonnes of rice were also imported through government-to-government channel. Yet, rise in domestic production cost and import cost import could not affect the rice market.

Meanwhile, price of coarse rice, according to TCB, varies from Tk 46-42 a kg, price of medium quality rice Tk 55-58 a kg and price of fine rice Tk 58-75 a kg over a week.

According the USDA report, the government has a stock of 366,000 tonnes of wheat and 1,520,000 tonnes of rice. Stock of rice increased following the import of 4000,000 more tonnes of rice.

The government, according to the food ministry, set a target to collect 500,000 tonnes of rice, 300,000 tonnes of paddy during this aman season. As of 18 January, 250,000 tonnes of rice, 3,000 tonnes of paddy has been collected so far.

The report said the government set a target to cultivate around 4.97 million (49 lakhs 70 thousands) hectares in order to produce about 21 million (2 crores 10 lakhs) tonnes of rice. The Boro season rice plantation has started throughout the country beginning in January 2023 and is expected to be harvested between April and May.

Bangladesh’s import of wheat dropped due to India’s wheat export ban, causing a rise in wheat price. According to the TCB, the price of unpacked coarse wheat flour (aata) remained at Tk 62 a kg and the unpacked fine quality wheat flour (maida) price increased slightly to Tk 72 a kg, about 3 per cent higher than last week.

Speaking to Prothom Alo, Bangladesh Agriculture University emeritus professor Sattar Mandal said high price of rich hit hard on about 30 million low-income people living in big cities inducing Dhaka and the government should increase food supply for them under social safety programme.

However, it is necessary to further scrutinise whoever is pocketing additional profit from high price of rice and whether that is justified or not, he added.

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