Rice price shoots up as govt lags behind in collection

People who are facing an economic crisis due to the novel coronavirus outbreak and the flood-affected people are suffering due to the hike in rice prices.

Certain Rabia Khatun of Kazipara in the capital earns her living as a part-time domestic worker. She said she used to earn Tk 6,000 a month working in four houses.

She lost job in one of the houses due to coronavirus. In one hand her income has decreased while on the other hand, the price hikes of various products including rice, pulses, vegetables, eggs and potatoes added to woes amid the crisis.

Shortly after the harvest of Boro paddy, the government announced a target of collecting rice for the new season in late April. It was informed to purchase parboiled rice at Tk 36 per kg and atap rice at Tk 35 per kg. The total collection target for rice was around 1.6 million tonnes. Only 722,000 tonnes of rice have been collected till last Monday. Only three working days are left to complete buying the rest amount.

Speaking to Prothom Alo on Tuesday, Sarwar Mahmood, director general of the food department said, “The rice mill owners did not deliver the rice as per the agreement. This has created doubts about reaching the target. However, if we cannot collect enough, we will import. We’ve already taken approval from the government.”

He said a decision on import would be taken next month after the expiration of deadline for supply of rice to the government warehouses and considering the overall collection situation.

Currently, the government has a stock of one million tonnes of rice. Due to the coronavirus situation and floods, rice is being allocated to new sectors outside the government's regular social security programmes. Notably, when the government does not have sufficient stocks, there is a general tendency to increase prices in the market.

M Asaduzzaman, former research director and economist at the Bangladesh Institute of Development Studies (BIDS), told Prothom Alo, “We know from our past experience that traders raise prices when the government's rice stocks dwindle. However, besides boosting the government stocks, it is necessary to ensure that there is no crisis in the supply of rice in the market.”

There should not be any crisis as there was ample production of rice this year, he added.

Recently, the government has deployed the national consumer rights protection directorate to control the market of rice. In the last few days, they have carried out 92 raids in three big markets in the capital and rice shops in different parts of the country and fined the traders around Tk 600,000.

Masum Arefin, deputy director of the directorate, who is in charge of the campaign, told Prothom Alo, “We are also looking into whether rice is being sold at inflated prices in the mills.”

The wholesale market situation is not favourable. Prothom Alo correspondents said that the price of rice is increasing every week in Naogaon and Kushtia, the country’s big rice trading centres. Price of paddy is also rising. Coarse paddy is being sold at Tk 1,050 per maund, semi-coarse paddy at Tk 1,100 and fine paddy at Tk 1,200. The price has been termed as good.

Abdur Rashid, president of Bangladesh Auto, Major Husking Mill Owners Association, an association of rice mill owners, told Prothom Alo, "Paddy prices have been rising for the past two months. The price at which we are buying paddy, we are losing money after selling rice. So, it is not correct to blame us for the rise in rice prices.”

Now the question is, will the government reduce tariffs to increase rice imports? If the private sector is given the opportunity to import by reducing the tariff, the price will decrease. Following a plenty of imports, the price may come down but discourage the farmers from planting paddy in the Aman season. The total tariff on rice imports is now 62.5 per cent. To protect the farmers, the import duty was increased in May 2019.

In the current situation of production in the country, there should not be any shortage of rice. According to a report by the US Department of Agriculture (USDA) this week, rice production in Bangladesh this year will be higher than any previous year.

According to the agriculture ministry, about 20 million tonnes of rice was produced in the last Boro season. The total production in the year could stand at over 36 million tonnes.

The Bangladesh Rice Research Institute (BRRI) estimates that the country will have a surplus of 5.5 million tonnes of rice by the time of harvesting of Aman this year.

BRRI director general Shahjahan Kabir told Prothom Alo that there is no rice crisis in the country. Rather there is surplus.

The government should look into whether the rice is being stored somewhere or why the price is going up, he added.

* The report, originally published in the print edition of Prothom Alo, has been rewritten in English by Farjana Liakat