Rice, wheat prices drop globally, rise in Bangladesh

The prices of rice and wheat have started to fall in the world market, but the scenario in the local market is in stark contrast.

If the wheat price rises in a week here, the rice price follows the suit in the next week.

The falling trend of grains' price in the global market failed to impact the local market as the country is now receiving the consignments that were bought in September at the higher price.

The government has slashed the duty on imports by the private sector in an effort to promote the import of rice. But the initiative seems to have worked a little. Rather, the flour price crossed that of rice at the groceries for the first time.

Generally, consumption of flour rises among the low and middle-income people whenever the price of rice jumps. And when the prices of wheat and flour rise, people increase their dependence on rice.

The people, this time, are in a dire strait as both the food items witnessed a sharp price hike at a time.

Meanwhile, the Food and Agriculture Organization (FAO) said in its monthly report on the global food prices in the current month that the prices of rice and wheat have started to fall in the world market. The food grains, like rice and wheat, registered a 3 per cent price fall from August to September.

The food ministry, at a press briefing in September, told the media that the food grain prices will soar in the coming days as per the FAO prediction.

Driven by the forecast, the government reached a deal with Russia to procure 500,000 tonnes of wheat at a price of USD 430 per tonne, though the country was then selling the food grain at a price of USD 380 per tonne in the world market. A consignment of the expensive Russian wheat has already reached the Chattogram port.

A report prepared by a food ministry committee described the situation, saying that the price of Russian wheat has been on a steady decline.

It fell by USD 9 per tonne to USD 323 last week. It would cost USD 401, including the shipping cost, if the procurement deal was signed at the current price, the report added.

According to the food ministry sources, parboiled rice is being bought from Vietnam at the rate of USD 521 per tonne and Atap rice at USD 494 per tonne. The government signed the deal in September to procure grain at a price higher by USD 78 from the international market price. Also, agreements were signed to import 100,000 tonnes of rice from India and 200,000 tonnes from Myanmar.

The food ministry report on grain situation said the Vietnamese rice will now cost USD 485 per tonne, including shipping cost while the Indian variety will cost USD 420 and Thailand’s one USD 468 per tonne.

It seems the authorities could have saved USD 29 to 36 per tonne had the grains been bought recently.

Former agriculture secretary AMM Shaukat Ali told Prothom Alo that when the price fluctuates in the world market, import agreements should be made gradually, instead of making an agreement to buy a huge quantity of rice and wheat at once. It is so that the government can exploit the situation if the price falls.

“The government should review its agreements with Russia and Vietnam. It will not be rational to spend an additional amount of greenback during this trying period of dollar and reserve crisis,” he said.

Food secretary Ismail Hossain said they are observing the situation. “The cabinet committee on purchase had approved the deal to procure rice and wheat from Russia, Ukraine, India and Myanmar. We will bring up the issue of price fall before them.”

Even though the price is decreasing in the world market, it is rising in the domestic market. According to the Trading Corporation of Bangladesh (TCB), the price of coarse rice went up by more than 1 per cent in the past month and is now selling at Tk 48 to Tk 52 per kg. The flour price soared by 4 to 11 per cent to stand at Tk 55 to Tk 62 per kg.

The food ministry sources said the consignments of rice from India and Myanmar also reached the Chattogram port. Another ship carrying rice from Vietnam anchored at the port while consignments of wheat from Bulgaria and Ukraine also arrived.

The private sector was given various privileges, including tax waiver, but the import did not gain pace. The government allowed nearly 400 businesses to import 1.34 million tonnes of rice in July, but a total of 180,000 tonnes have been imported so far.

The banks have opened letters of credit (LCs) to import 891,000 tonnes of rice till the date. Of them, credits against 209,000 tonnes have so far been settled. The commerce ministry has allowed them to import rice with the tax cut facility till December.

Chitta Majumdar, the owner of Majumdar Traders, told Prothom Alo, "We are facing trouble to import due to the dollar-crisis and the increase in the rice price in the Indian market. But we are trying our best to bring rice on time.”

The stock of rice and wheat has further improved due to increased imports at the government level. The stock of the two grains stood at nearly 1.6 million tonnes – 1.4 million rice and 0.18 million wheat. The food ministry said the stock to be satisfactory.

Former director general of Bangladesh Institute of Development Studies (BIDS) KAS Murshid said the import of food products from the world market has decreased due to the high value of the dollar and the reserve crisis. Prices are also increasing. The poor’s dependence on rice, wheat, potatoes and other similar foods rises in such a situation.

Therefore, the government should make these foods easily accessible in the market and increase cash assistance programmes for the poor, in addition to the food programmes. Otherwise, the country's hunger and nutrition situation will further deteriorate, he added.