Food prices shoot up as imports decline

In the five months from last July to November, the import of food products in the country has experienced a significant decline of 62 per cent. This reduction in imports has led to a depletion of the government's food reserves.

Experts attribute this decline to the Ukraine-Russia war and the recent conflict in Gaza, which have caused instability in the global food market.

Additionally, the country's ongoing dollar crisis has further exacerbated the situation. The decrease in imports has, in turn, contributed to a rise in the prices of food products within the country.

As per a report by the United Nations World Food Program (WFP), 85 per cent of Bangladesh's total demand for wheat, the second staple food, relies on imports.

Wheat imports specifically witnessed a 51 per cent decrease from October to November. The prices of daily commodities such as rice, wheat, and edible oil have started to surge. This has resulted in 36 per cent of low-income people experiencing food insecurity.

The 'Bangladesh Market Monitoring-November-2023' report by the World Food Programme (WFP) was released on 27 December. Over the past two years, the agency has consistently published reports surveying the country's food situation, food prices, and their impact on the impoverished population.

Concerns have been raised that the reduced import of wheat has led to increased dependence on rice among the poor, thereby intensifying the pressure on rice supplies.

However, despite the surge in demand, the last Aman and Boro seasons yielded an ample rice harvest. There was no need to import rice, the country's staple food, between July and November.

As a result, comparative prices have not seen a significant increase, contributing to a slight decline in overall food inflation in November.

According to the report, food price inflation in the country reached its lowest point in November, marking a 9.49 per cent increase compared to the previous year. This represents a notable decrease of 14 per cent from the previous month. Additionally, inflation for non-food items decreased by 2 per cent during the same period.

The report attributes food inflation to the impact of global geopolitical conflicts, alongside extreme weather events such as heatwaves, cyclones, and floods, which have disrupted agricultural production. The ongoing dollar crisis and the appreciation of the dollar against the taka have further complicated the situation.

In November, an average of Tk 2,833 was spent on food for one person, reflecting a 6 per cent increase compared to the same period last year. The rising costs of purchasing food are posing challenges for a significant portion of the population.

According to the report, the price of a 12 kg LPG bottle in the country has risen by Tk 18, reaching Tk 1,381 within five months, primarily attributed to the ongoing dollar and energy crisis.

Food Secretary Ismail Hossain commented on the matter, stating to Prothom Alo, “We have augmented the food supply for poor people through the social safety net programme and plan to further increase it. There is no shortage of food for the poor in the country.”

According to the report, there is a correlation between the surge in the prices of food products, such as wheat, and the escalating costs of fuel oil. Following the recent Gaza conflict, fuel prices have once again experienced an upswing.

Additionally, the country's recent political instability has rendered the economy more vulnerable, with small traders being particularly affected.

The report identifies global instability, the fragile state of the country's banking system, and a weak monetary policy as contributing factors that have further complicated the situation.

Moreover, it underscores the weakness of the internal good governance as a significant obstacle to overcoming the crisis in Bangladesh.

According to the report, the price of rice experienced a slight decrease in October but rebounded in November, registering a 3.7 per cent increase in that month. The average price of rice stood at Tk 46 per kg during November, reflecting a 4 per cent rise compared to the same period the previous year.

Notably, there were variations in the price of rice across different categories, with Barishal, Khulna, and Chattogram recording higher prices compared to other divisions.

Despite a slight increase, the price of rice remains significantly elevated compared to the national average. It is attributed to the escalating costs of fertiliser and fuel oil, coupled with the decision not to import rice.

Following the onset of the Ukraine-Russia war, the price of wheat experienced a substantial doubling in one leap. Although wheat prices globally had been steadily decreasing since January of the previous year, the price of wheat in the country began to rise again in November. During that month, a kilogramme of flour cost Tk 54.3, marking a 4.3 per cent increase from the previous month.

Soybean oil prices exhibited a steady decline from June to October. However, in November, there was a 1 per cent increase, bringing the price to Tk 159.03 per litre, which is still 8 per cent less than the corresponding period of the previous year.

A similar pattern was observed with palm oil, where prices decreased from June to October but rose by 1.5 per cent in November, reaching Tk 129 per litre.

In contrast, the price of lentils experienced a 1 per cent rise to Tk 112 per kg, primarily attributed to an increase in import prices. Compared to the same period the previous year, lentil prices have escalated by 11 per cent. Notably, 80 per cent of the country's demand for lentils is met through imports.

The report sheds light on the government's food stock situation, revealing that the country's food reserves stood at 1.4 million tonnes in October. This included 1.2 million tonnes of rice and 200,000 tonnes of wheat.

However, by November, the stocks had decreased by 15 per cent compared to October and were 23 per cent less than the same period the previous year. The reduction in stocks is attributed to factors such as the global crisis, dwindling foreign exchange reserves, and disruptions in global food supply systems.

Overall, food imports experienced a significant decline of 62 per cent in the year spanning from November 2022 to November 2023.

Former Agriculture Secretary AMM Shoukat Ali expressed concerns, emphasising that the decrease in food imports does not necessarily indicate an improvement in the country's food security situation. A substantial portion of the country's food needs relies on imports, and as imports decrease and commodity prices rise, the poor are compelled to consume less. This, in the long run, may lead to malnutrition.

He emphasised the need for the government to prioritise the import of essential food items to address these concerns.

*The report, originally appeared in Prothom Alo print and online edition in Bangla, has been rewritten by Farjana Liakat