Govt to import 4.5m tonnes of food from India

The government is seeking to import 4.5 million tonnes of rice and wheat from India through the quota system. Official discussions have commenced to secure food grains from India, driven by concerns over domestic price hikes and the global supply crisis.

It’s worth noting that India has halted the export of rice (atap) and wheat to stabilise supply and prices within its own markets. Nevertheless, they continue to provide essential commodities to certain countries under the quota system.

According to sources from the Ministry of Food and the Ministry of Commerce, Bangladesh is seeking the opportunity to import 1.8 million tonnes of rice under the quota system. Out of this, the government aims to bring in 800,000 tonnes, while 1 million tonnes are earmarked for the private sector. Additionally, requests have been made for the import of 2.7 million tonnes of wheat, with the government aiming for 700,000 tonnes and the private sector targeting 2 million tonnes.

It’s worth noting that in December 2022, quotas were already sought from India for the import of six essential commodities, including rice and wheat. However, the recent emphasis on this matter suggests a renewed focus. Sources indicate that discussions at the highest levels of both countries took place after the 7 January election.

Commerce Secretary Tapan Kanti Ghosh informed Prothom Alo on Tuesday, stating, “Last year, we initiated discussions regarding the import of certain products, including rice and wheat, through quota from India. A draft Memorandum of Understanding (MoU) on this matter has been sent to India. Following the recent election, discussions have resumed, and I am optimistic about swift progress between the two countries.”

This renewed discussion on the import of rice and wheat comes at a critical time when the prices of these essential grains are on the rise in the country. At the outset of the year, the wholesale price of rice has witnessed an increase of Tk 4-5 per kg. Simultaneously, the price of packaged flour has also seen a rise of Tk 5 per kg.

According to the government agency Trading Corporation of Bangladesh (TCB), coarse rice is currently priced at Tk 50 to Tk 52 per kilogram in the Dhaka market, reflecting an increase of Tk 2 per kg. Similarly, medium rice has seen a price hike of Tk 1 to Tk 2 per kg, now ranging from Tk 52 to Tk 56, and fine rice has experienced a rise of Tk 2, reaching a price range of Tk 62 to Tk 75 per kg.

Furthermore, the cost of a one-kilogram packet of flour has surged by Tk 5, now being sold at Tk 60 to Tk 65 in the market.

The Food Ministry convened a meeting with rice mill owners and traders on Wednesday to address the sudden surge in rice prices. During the meeting held in the conference room of the Ministry of Food, concerns were raised about the escalating rice prices despite an ample supply, prompting the ministry to inquire into the reasons behind the increase.

Subsequently, Food Minister Sadhan Chandra Majumder urged the traders to restore the rice prices to their previous levels within four days. He remarked, “It is unwarranted to increase the price by leaps and bounds,” and emphasised, “The way you increased the price in four days, bring it down the same way. Whether you agree or disagree, state your position.”

During this discussion, some businessmen responded affirmatively, saying, “Yes, sir.”

According to the Bangladesh Bureau of Statistics (BBS), the country produced 39.1 million tonnes of rice in the fiscal year 2022-23, significantly surpassing the domestic demand. However, government officials have raised concerns about the accuracy of production and demand calculations. Notably, the government occasionally resorts to rice imports when prices spike. Conversely, the demand for wheat heavily relies on imports, ranging from 5 to 6 million tonnes annually.

India serves as the primary source for rice and wheat imports into Bangladesh. However, India imposed a ban on wheat exports in May 2022 to stabilise its own market. Subsequently, restrictions were placed on the export of atap rice, and a 20 per cent duty was imposed on the export of parboiled rice.

Bangladesh faces challenges if India imposes export bans on essential commodities. Consequently, Bangladesh sought quotas for six daily commodities during the Bangladesh-India commerce minister level meeting in New Delhi in December 2022, with a formal letter subsequently submitted. The six products include rice, wheat, onion, sugar, ginger, and garlic, and India has been known to grant such quotas to some neighbouring countries.

Importing from India proves cost-effective due to lower prices within the country and the ease of transportation. Currently, there are approximately 1.6 million tonnes of rice and wheat in government warehouses. However, the possibility of increased open market sales (OMS) in response to rising prices poses a risk of diminishing rice stocks. Again, there is a continuous need for wheat imports, driving the initiative to import from India.

Food Secretary Ismail Hossain informed Prothom Alo on Tuesday that discussions aimed at reaching an agreement on the emergency import of rice through a quota system are advancing positively.

Additionally, the import of food grains entails a substantial amount of foreign exchange. In July of the previous year, trade between Bangladesh and India was inaugurated in rupees instead of the US dollar. Advancing this form of trade was among the topics discussed during the meeting between Indian Ambassador Pranay Verma and Foreign Minister Hasan Mahmud last Monday.

The government is actively working to curb inflation, a priority highlighted in the Awami League's election manifesto. The Bangladesh Bank has implemented measures in the new monetary policy to address inflation, including adjustments in the prices of 13 products, such as rice and wheat, at the beginning of the year. The increase in rice prices often contributes to inflation.

In response to this, the Food Ministry convened a meeting Wednesday, attended by rice mill owners, wholesale and retail traders, and importers. The meeting, chaired by Sakhawat Hussain, the Director-General of the Food Directorate, also had the participation of Food Secretary Ismail Hossain and Additional Director-General Abdullah Al Mamun. The aim of the meeting was likely to discuss strategies and measures to manage and control rice prices in the context of inflation.

Food Minister Sadhan Chandra Majumder expressed his dissatisfaction with the rise in rice prices, questioning why a Tk 2 increase at the millgate translates into a Tk 6 hike in the wholesale market.

He emphasised that those involved in illegal hoarding or unjustified price increases are not above the law and must be held accountable. The minister issued a warning, stating that individuals stockpiling rice without proper licensing will face consequences.

Directing his message to traders, the food minister emphasised the importance of releasing rice into the market, asserting that there is an abundant supply and no shortage.

Nirod Baran Saha Chandan, President of the Naogaon Paddy and Rice Owners' Association, countered accusations against mill owners, suggesting that corporate companies are responsible for artificially inflating the prices of paddy and rice in the market.

In response, representatives of corporate companies asserted that their influence in the rice market is minimal, and they lack the capacity to control market dynamics.

Abdur Rashid, President of the Bangladesh Auto Major Husking Mill Owners Association, emphasized that mill owners operate within a competitive business environment and don't have the opportunity to form syndicates. He acknowledged that while prices did increase, they have now begun to decrease in the market.

Rice trader Farid Uddin has raised concerns about the accuracy of the information provided by the Department of Agricultural Extension regarding rice production. He suggested that the data should be verified for its accuracy.

According to the Ministry of Agriculture's information, there is a surplus of rice in the country, but Farid Uddin expressed that this surplus is not apparent in reality. He specifically mentioned discrepancies in the data related to paddy production.

Kamruzzaman Kamal, Director (Marketing) of PRAN-RFL Group, added that the lack of precise data on the demand and supply of rice is hindering an accurate reflection of the market. He also commented that the government's plan is not functioning as intended due to these data discrepancies.

* The report, originally published in the print and online editions of Prothom Alo, has been rewritten in English by Farjana Liakat