Rice prices continue to soar amid peak Aman season

The Aman season is in full swing, and new rice is entering the market in abundance. However, instead of decreasing, rice prices have continued to rise.

This is contrary to the interim government's expectations that prices would drop with the start of the Aman season.

The price of coarse rice has seen the highest increase. According to the Trading Corporation of Bangladesh (TCB), the price of coarse rice has risen by three to four taka per kg in the past week alone.

During the same period, the price of medium rice has gone up by two taka per kg. Although the price of fine rice has remained stable over the past week, it has increased by two to four taka per kg over the past month.

Food advisor Ali Imam Majumder expressed hope on 14 November that rice prices would gradually decrease with the arrival of Aman rice in the market. However, Anwar Hossain, owner of Naogaon-based Rira Traders, told Prothom Alo on Monday, "Usually, rice imports are high during the Aman season, leading to a drop in prices. But this time, the opposite is happening. The Aman season is in full swing, yet rice prices are not decreasing. On the contrary, they are increasing."

After the fall of the Awami League government during the July uprising, the interim government assumed office on 8 August. The new government significantly reduced import duties in an attempt to lower rice prices and took steps to increase rice imports. Despite these measures, the prices remain uncontrolled due to limited imports.

According to the Food Ministry, only 117,000 tonnes of rice were imported between 1 July and 2 January, far short of the 1 million tonnes the Food Directorate had recommended for import in October. The private sector has not imported enough rice, and rising US dollar prices have increased the cost of imports.

To address the situation, the government has initiated rice imports from Vietnam, India, Pakistan, and Myanmar. Md. Moniruzzaman, Director of the Food Directorate’s Procurement Division, told Prothom Alo: “We have started purchasing rice from both domestic and international markets to stabilise prices.

Imports from India have already begun, while discussions with Myanmar and Vietnam are in their final stages. Talks with Pakistan have also started. Officially, we aim to procure a total of 900,000 tons of rice.”

Meanwhile, a meeting held yesterday at the Food Ministry focused on rice imports from Pakistan. It was decided to import 50,000 tons of Atap rice from Pakistan at a rate of USD 499 per ton (approximately 61 taka per kg).

The Trading Corporation of Pakistan (TCP) will supply the rice, and the shipment is expected to arrive in Bangladesh within the next 45 days.

The online meeting was attended by Pakistan's High Commissioner to Bangladesh, Syed Ahmed Maruf, and other relevant officials.

Rice prices have remained high for several years and have risen further in recent months. According to the Trading Corporation of Bangladesh (TCB), a kg of coarse rice now costs 54 to 58 taka, compared to 48 to 50 taka a year ago.

Similarly, medium rice is priced at 60 to 65 taka per kg, up from 50 to 55 taka last year. Fine rice currently costs 70 to 84 taka per kg, compared to 60 to 75 taka a year ago.

Looking back to early 2020, the price of coarse rice was only 30 to 35 taka per kg (TCB data). The previous Awami League government struggled to control rice prices and further burdened production costs by raising the prices of fertiliser, fuel oil, and electricity in stages.

Md. Shamsul Haque, an employee of a private firm in Mirpur, Dhaka, told Prothom Alo that the prices of most daily essentials, apart from vegetables, remain high. He expressed concern  over why rice prices are increasing, even during the peak Aman season.

Low-income households typically purchase coarse and medium-quality rice, while fine rice is preferred by the middle class. For families in the lower income bracket, buying rice now costs over 60 taka per kg. Visits to Dhaka's Karwan Bazar, Mohammadpur Agricultural Market, and Shewrapara Bazar revealed that commonly consumed BR-28 and BR-29 rice varieties are being sold at 62 to 65 taka per kg.

Among coarse rice varieties, Guti and Swarna are the most popular, with prices around 55 taka per kg. Finding cheaper rice in major markets is difficult, though some areas frequented by poorer communities offer rice at 50 taka per kg. This rice typically originates from government rations and social safety net programmes but often reaches the market through unofficial channels.

Middle-income buyers tend to favour Miniket rice, which is hard to find below 70 taka per kilogramme. Higher-quality Miniket is sold for 75 taka or more, while Nazirshail rice, considered premium, is priced at 80 to 90 taka per kilogramme.

Despite Nazirshail rice being in season, its price remains high. When asked about this and the overall price stability during the Aman season, Farhad Chakdar, General Secretary of the Naogaon Rice Mill Owners Association, told Prothom Alo that the cost of rice production has increased significantly. He noted that substantial rice imports from abroad could help reduce prices.

Rice is sold in the open market (OMS) as part of the government’s strategy to control market prices. The government also distributes rice through various programs.

According to the Food Ministry, approximately 1.2 million tons of rice were distributed between 1 July and 26 December, a 2 per cent increase compared to the same period last year. However, economists have suggested increasing rice distribution further to address the current situation.

The government’s ability to supply rice remains limited due to low stock levels and modest domestic procurement. As per the Food Ministry, the current government rice stock stands at 800,000 tons.

During the ongoing Aman season, which began in mid-November, the government set a target to procure 650,000 tons of rice and 300,000 tons of paddy. So far, only 250,000 tons have been collected. The procurement process is expected to continue through January and February, but its success remains uncertain.

One key challenge is the gap between market prices and the government’s procurement price, which is set at 47 taka per kilogram. With market prices significantly higher, procurement efforts could face obstacles.

HR Khan Pathan, General Secretary of the Bangladesh Auto Major and Husking Mill Owners Association, told Prothom Alo: “The prices of paddy and rice have risen significantly, which may slow down the supply of rice to government warehouses. However, most rice mill owners are likely to meet the government’s deadlines.”

Despite this optimism, past experiences suggest otherwise. In previous years, when market prices were high, many mill owners refrained from supplying rice to government warehouses.

Rice is considered a politically sensitive commodity in Bangladesh. In the past, rice imports were allowed when prices increased. With a lower dollar value, importing rice was profitable for traders. However, the rising value of the dollar has significantly increased the cost of rice imports. 

The global price of rice typically ranges between USD 400 and USD 500 per ton, with occasional fluctuations. At the beginning of 2022, importing rice at USD 500 per ton, with the exchange rate at 86 taka per dollar, would cost 43 taka per kg (excluding shipping and other costs). Now, even at the same price, the cost exceeds 56 taka per kg due to the dollar’s increase to 123 taka. 

According to the World Bank, the price of 5 per cent broken rice in Vietnam was USD 608 per tonne in the first quarter of 2024. That price has since dropped to USD 496 per tonne. Even at this reduced rate, importing rice would cost around 61 taka per kg (excluding shipping and additional costs). Similarly, rice prices in Thailand have also decreased. Despite this, private imports remain unprofitable. 

Market participants argue that the rising value of the dollar has heavily shielded the domestic rice market from external competition. To stabilise prices, they believe there is no alternative but to increase imports and boost domestic production. 

The rise in rice prices has had a significant impact on inflation. According to the Bangladesh Bureau of Statistics (BBS), the country’s inflation rate in December was close to 11 per cent, slightly lower than in November but still alarmingly high. 

Khandaker Golam Moazzem, research director at the Center for Policy Dialogue (CPD), told Prothom Alo that the production of Aman rice this season has likely fallen short of expectations due to floods and other challenges. Combined with low government stock levels, this has led traders and large farmers to hoard rice, anticipating higher prices. 

Moazzem warned that if the rice market remains unstable, it could further exacerbate inflation in the coming months. He emphasised that the government should take decisive action to increase imports instead of relying on traders for domestic procurement or imports. 

 [Naogaon correspondent provided information to prepare the report]