Bangladesh is one of the nine countries that have been warned by the Food and Agriculture Organization of the United Nations (FAO) about rising food prices. The organisation said in a report released on Wednesday that the price of rice, Bangladesh's staple food, has risen by 35 per cent in the past year. This is the highest rate of increase in rice prices in the country since October 2017. Among the reasons for this are shortage of rice production, limited import and increase in demand for rice due to the COVID-19 pandemic.
We have already published several news reports, editorials, interviews, etc. about the unusual rise in rice prices during the peak season of Aman production. The main problem that has been seriously mentioned in all the articles is the abnormal depletion in the stock of paddy and rice in government warehouses. Long-term experience has shown that as soon as the stock of government warehouses falls below 1 million tonnes, it has a negative impact on the market and therefore, the price of rice starts rising. The lower the stock, the higher the price. That is why we have been urging from the beginning that increasing the stock of rice in government warehouses should be the first priority. But no progress has been seen in this regard. Even after the Aman crop was harvested, the stock in government warehouses did not exceed 550,000 tonnes. But experts have always said that it is better to have 1.5 million tonnes stored in government warehouses and it should never go below 1.2 million tonnes.
The import duty has been reduced from 62 per cent to 25 per cent to encourage rice imports in the hope that prices could come down if supply increases in the rice market, and about 150,000 tonnes of rice has already been imported by government and private organisations. But even after a month, the price of rice in the market has not decreased. Because, it is said that the price of imported rice is also high.
Most of our rice is imported from India. The price went high in Indian market after the traders came to know that government of Bangladesh has reduced the import duty on rice. As a result, the cost for our importers to import rice from India shot up. This is a problem as our rice traders may be discouraged from importing. If that happens, the expected amount of rice will not be imported and the price of rice in our market will not decrease.
However, with the onset of Boro season rice in haor areas in early April and then in other parts of the country, the rice market will definitely return to normalcy. If the production is high, the price of rice may go down and the paddy growers may have to count losses. Meanwhile, it is important to keep in mind that bumper crop growers should not have to sell paddy at unusually low prices.
Until then, however, the government should seriously consider two steps. One is to increase food aid for the poor under the social security programme. Secondly steps to be taken to increase the stock of rice in government warehouses to at least 1.2 million tonnes as a minimum security from the almost exclusive control of mill owners in the rice market.