In order to ensure fair prices for the growers and an increase in paddy prices, the government has decided to export 1 million to 1.5 million tonnes of rice through the private sector. They are even considering a 20 per cent incentive to encourage exporters in this regard.
However, the International Food Policy Research Institute (IFPRI) has said that Bangladesh is still not in a position to export rice. It says that the government should procure rice directly from the farmers to ensure they receive a fair price. They suggest an emulation of India’s West Bengal model in this regard.
On 20 May, IFPRI presented the details of the country’s paddy and rice prices, agricultural management and the state of the international rice market to Bangladesh’s ministry of agriculture. It pointed out that the poor buyers and farmers were the worst hit by the fluctuating paddy prices. The challenge before the government was to protect these two groups.
After the Aman harvest, the price of paddy in December fell to 580 taka per maund. In May it went down to 499 taka. IFPRI apprehends a further fall in paddy prices once the boro harvest is in.
IFPRI’s country director Akhter Ahmed said, Bangladesh paddy and rice production hasn’t reached a stable position. There is high production some years, and less in others.
International market buyers are not keen on purchasing rice from countries with such unstable production. Also, there is no practical account of how much actually exportable rice there is in the country. The rice market is limited and that too is dominated by India. So even if Bangladesh wants, it will not be that easy to export rice.
Speaking at a press briefing on Thursday, the agriculture minister Abdur Razzak said that the main reason for the drop in paddy and rice prices is that the import of rice exceeded demand.
He said that initially initiative would be taken to export 1 million tonnes to 1.5 million tonnes of rice through businesspersons. However, it would be monitored so that that rice would not be exported in excess of the surplus.
Speaking to Prothom Alo yesterday about IFPRI’s observations, the agriculture minister said, “The price of rice is still low in the international market. The rice mills owners have approached the government for the export of rice.
If they can export the surplus rice this year, that will be fine. We will increase our support to them if necessary. But if this creates a shortfall in food grain or if the prices rise, then we will import rice from India, if necessary.”
Win-win for the rice mill owners
Economists say, with the fall in rice prices, the big rice mill owners will stand to gain the most from rice exports. After the crops were destroyed in the 2017 haor floods, prices of rice shot up and the government slashed import duty from 28 per cent to 25 per cent on rice. The rice mill owners and businessmen immediately imported rice.
With the price of paddy falling in the market, the rice mill owners are buying paddy for 10 taka to 12 taka per kg. They are then selling the paddy at 26 taka per kg and rice at 36 taka per kg to the government warehouses, thus making over double in profits.
The larger rice mill owners mostly export fine grained rice, but this time they will have the opportunity to export medium quality too.
Bangladesh Auto Major, Husking and Mill Owners Association general secretary AKM Laik Ali told Prothom Alo, “The process of determining how much each mill owner will be exporting and to which country, has already begun.
There are about 10 million Bangladeshi living overseas and they buy Indian rice. We are targeting them basically for our exports. Our rice also has demand in certain African countries. It will also be possible to export rice to India and Sri Lanka.”
However, the Food and Agriculture Organisation (FAO) gives a different picture in its annual report on global food grain production published this May.
It says that this year 516.8 million tonnes of rice was produced this year and 46.8 million tonnes will enter the international market, that is 4 per cent highest than last year. The main rice importing countries are China, Indonesia, the Philippines and a few countries of the Middle East.
According to IFPRI’s report, only 8 per cent (around 35 million to 37 million tonnes) of the rice will enter the international market. India is the largest seller of rice in the global market, exporting about 34 per cent alone. Next comes Thailand exporting nearly 28 per cent, then Vietnam with 19 per cent, Pakistan 11 per cent and the US almost 9 per cent.
Most of the rice exported in the international market is par-boiled (atap) and sticky rice. But 95 per cent of rice produced in Bangladesh is hard grained with hardly any demand in the international market. However, Bangladesh exports about 50,000 tonnes of fragrant rice to the Middle East, the US and Europe every year. The main consumers of this rice are expatriate Bangladeshis.
Rice procurement in West Bengal
In West Bengal the state government procures paddy directly from the farmers and within 72 hours their money is deposited in their bank accounts. There are ‘self-help groups’ in the villages who collect the grain from the farmers and inform the district food officer. And the state government purchases that for the equivalent of Bangladeshi 20.80 taka per kg. The state government will procure 5.2 million tonnes of paddy this year, entirely from the farmers directly.
The West Bengal government gives higher subsidy and support to its farmers than Bangladesh. The government leases out price warehouses to stock the rice and later process it at the privately owned rice mills. The self-help groups are paid 31.25 rupees per 1000 kg (one quintal). Another 20 rupees per quintal is paid per quintal for transportation costs.
IFPRI recommends that the Bangladesh government fixes the price of paddy at the year beginning and inform the farmers accordingly. The farmers can then determine how much land they will use for paddy cultivation.
The agriculture minister, speaking to Prothom Alo, said, “As soon as we can, from next year, we will announce the procurement price of rice. The procurement will be gradually increased to 5 million tonnes.”
Previous rice export initiatives
In 2012 Bangladesh had taken initiative to export rice. The rice mill owners and business persons claimed there was surplus production and asked for permission to export the grain.
Bangladesh carried out a study of the matter though Bangladesh Institute of Development Studies (BIDS) and determined a surplus of 700,000 tonnes of rice. On average Bangladesh has either a 700,000 tonne shortfall or surplus of rice annually. The surplus rice was not of export quality and so the rice was not exported.
In 2014 Bangladesh signed a deal to export 50,000 tonnes of rice to Sri Lanka . But that year and the year before that, Bangladesh imported between 1.2 million to 1.5 million tonnes of rice. No further initiative was taken to export rice after that.
Former caretaker government food advisor AMM Shawkat Ali told Prothom Alo that it needs to be seen this year too whether Bangladesh actually has export quality rice. The government needs to carry out a survey and then take a decision. The government should encourage the initiatives being taken by the local administration at various places to procure paddy directly. Also, assistance should be provided immediately through social security programmes to those who are being hit hard by the low rice prices.
*The report, published in Prothom Alo print edition, has been rewritten in English by Ayesha Kabir