Rice, wheat and lentils: Food grain imports lowest in 7 years

It is believed that Bangladesh will need to import at least 10 million tonnes of wheat and rice in the current fiscal year to meet the domestic demand. 

But the imports of the three key food grains – rice, wheat and lentils – have been decreasing here, when the United Nations has expressed concern over the global food crisis in the coming years. 

Bangladesh had imported 1 million tonnes of rice in the fiscal year 2020-21. But the import has decreased in the first quarter (July-September) of the current fiscal as the traders reportedly failed to open letters of credit (LCs) in the banks as per their demand.  

Apart from that, many traders are not interested in taking risks amid the volatile dollar market. The import also took a heat from the reduced number of sources in a changed global context, the traders say. 

According to the data of the National Board of Revenue (NBR), a total of 1.5 million tonnes of rice, pulses and wheat have been imported in the four months of the current fiscal year 2022-23 (1 July to 21 October), which is the lowest among the import volumes of the corresponding periods in previous seven years. 

The number of food grain importers has also decreased. A total of 348 companies have so far imported the food grains in the current fiscal, when the number of importers was 493 in the same period a year ago. 

At least 145 companies, mostly small ones,  refrained from importing food grains. It was learnt that the small traders could not import due to the restrictions imposed by India, the easily accessible source, and difficulties in opening LCs amid the dollar crisis. 

In conversation with Prothom Alo, top four consumer product importers said they are counting a huge sum of extra money to pay the import liabilities amid the surge in dollar price. In the last few months, they brought products at the rate of Tk 86 per dollar, but settled the import liability at the rate of Tk 100-112 per dollar. 

Many have deferred the payments of import liabilities. The banks now do not show interest in opening LCs without the guarantee of dollar supply. The big groups somehow manage to open LCs, but the small ones are facing hurdles. 

Bangladesh Bank (BB) spokesperson GM Abul Kalam Azad told Prothom Alo that Bangladesh Bank will take initiatives to increase food production in the country in line with the state policy. He blamed the Russia-Ukraine war for the reduction in food grain imports. 

The department of agriculture in the United States (US) has predicted a decline in rice production in Bangladesh in the current fiscal. According to its report released in October, a total of 35.6 million tonnes of rice are likely to be produced in Bangladesh in the current fiscal, which is down by 0.2 million from the production of the previous fiscal. 

Bangladesh might have to import 1.2 million tonnes of rice to meet the domestic demand, the report said.   

The rice market has already become unrest. The government itself is procuring rice and also giving approval to imports by the private sector at a reduced duty. The cabinet committee on purchase has so far approved the imports of 1.4 million tonnes of rice under the government arrangements. The government has reached an agreement to import 0.5 million tonnes of the amount. 

Besides, the government allowed imports of 1.5 million tonnes by 429 companies at a reduced duty, the private sector importers are facing difficulties in imports. A total of 0.3 million tonnes of rice have been imported in the first four months (until 21 October) of the current fiscal when the government set the import target at 1.1 million tonnes until October. The import volume was 0.5 million tonnes in the corresponding period a year ago. 

Some 90 per cent of local demand for wheat are met through imports. The US department of agriculture predicted the import volume of wheat to be 7 million tonnes in Bangladesh in the current fiscal. An average of 6.4 million tonnes of wheat has been annually imported for the last few years. 

The revenue board data shows that the country has imported 0.9 million tonnes of wheat in the first four months of the current fiscal, down by 36 per cent from 1.5 million tonnes recorded in the previous year’s same period. 

Russia and Ukraine were the main sources of the durum wheat until the war broke out in February 2022. Bangladesh lost another convenient source of wheat on 13 May when the Indian government suspended export of the food grain. 

However, three ships have reached here with wheat from Russia and Ukraine this month. It has been possible under the agreement between the two countries brokered by the United Nations. 

The agreement will expire in November. Russia has already expressed its intention to withdraw from the agreement. If the deal period does not extend, the market will be closed again. 

Imports of another food grain, pulse, has also decreased. Bangladesh normally imports 1.3 to 1.4 million tonnes of pulse due to low domestic production.   Some 246,000 tonnes of pulse have been imported in the first four months of the current fiscal, when the import volume was 369,000 in the same period a year ago.  

TK Group director Shafiul Ather Taslim said there will not be a big crisis yet even if the import decreases. But, the banks will have to come forward for cooperation in opening LCs for the import of consumer goods in the coming days.

The import costs of food grains, consumer goods, spices and oilseeds are increasing every year. According to the revenue board, Bangladesh had spent USD 1.47 billion to import food grains, consumer goods, and oilseeds in the fiscal year 2012-13. The cost rose 178 per cent in a decade to USD 9.67 billion. The figure stands at USD 10 billion with the shipping cost, insurance, and customs clearance cost. It shows that some 11 per cent of the total import costs are spent on consumer goods.  

Distinguished fellow of the Center for Policy Dialogue (CPD) Mustafizur Rahman said the decrease in imports is a concern for food security. Now the government should increase the stock by importing under its own initiative so that any rumors do not create uncertainty of availability and increase the commodity prices. 

Again, it is important to ensure that disincentives are not created in the food grain imports by the private sector. Attention should be paid so that no complexities hinder opening of LCs. Besides, ultimate caution should be adopted so that any deficit cannot hinder the production in the coming boro season, Mustafizur said, adding that there will be no problem if importance is given to these issues.