Hike in rice price: Import duty could be relaxed

A huge number of poor, lower middle class and even middle class people feel the heat of economic pressure if the market of rice, the staple food of Bangladeshis, becomes unstable. This time, it has begun going against all the expectations. This is not the time of price hike as the Aman crop has just been harvested. Generally, this is the time when the rice price comes down, albeit a little. But this year the trend has altered. According to the Trading Corporation of Bangladesh (TCB), a wing of the commerce ministry, the rice price is up by 17-48 per cent compared to the corresponding period of last year. This is abnormal and worrisome especially because the COVID-19 pandemic and because the income of a huge number of people has been severely affected or stopped.

What could be the reason of this price hike during the peak season of Aman crop? Our experience says when the stock of crops in government warehouses decreases, the price increases. This year, the food ministry could not fulfill its procurement target of paddy and rice in the boro season. Its procurement target had been 200,000 tonnes of paddy and 600,000 tonnes of rice in the Aman season but it could procure only 13,000 tonnes of rice. The stock in government warehouses now is only around 550,000 tonnes, which was over 1 million tonnes at this time last year.

The question is why has the food department been failing to fulfill the target? Firstly, the millers and businessmen did not agree to sell paddy and rice to the food department at the price the government fixed. They said the price is too low and they would incur losses at that price. That’s why they demanded that the government increase the price. But the government did not. In liberal economy, the government cannot force any businessman to sell any product at the price the government fixes.

Another way of procuring paddy and rice is to buy from the farmers directly. But the government has made some rules according to which the farmers cannot sell their products directly to the food department. Instead, they incur losses, selling to the millers.

This year, the paddy production in Boro season declined considerably due to the floods. The expectation to mitigate the loss to some extent through the Aman crop was also not fulfilled as the production of Aman crop saw 1.5 million tonnes less than expected. Still, the stock in comparison to the demand has not declined that much that the price could increase up to 48 per cent. Partly, this is due to dwindling stock in government warehouses, which is almost half than the last year. The government should increase the stock both from local and foreign sources. The rice import duty could be relaxed to do that.