Costlier import gets nod

The government yesterday sanctioned 2.5 lakh tonnes of rice import from Vietnam at prices much higher than that of another one lakh tonnes it approved for import two weeks ago.

The cabinet purchase committee gave nod to the new import under a government-to-government (G2G) deal with Vietnam considering that rice price is on the rise in the international market.

And with an all-time low rice stock in hand, Bangladesh requires the supply in quick time to subdue a 42 percent unusual hike in domestic coarse rice price.

The food ministry yesterday convinced the cabinet body that though it would be pricey, Vietnam has promised to ship the first consignment in 15 days and complete shipping all 2 lakh tonnes of white rice (Atap) and 50,000 tonnes of parboiled (Shiddo) within 60 days.

For each tonne of parboiled rice, the government would have to bear $470 and for white rice $430. The prices are $23 to $42 (for per tonne) higher than the rate that the government had sanctioned two weeks ago to international suppliers for importing two consignments of white and parboiled rice each weighing 50,000 tonnes.

Floating international tenders in May, the government awarded two companies based in Dubai and Singapore two import shipments at $406.48 and $427.85 a tonne of white and parboiled rice respectively.

But in yesterday's meeting, the government sealed the deal with Vietnam at $430 and $470 a tonne for two lakh tonnes of white and 50,000 tonnes of parboiled rice.

The government would spend Tk 908.85 crore to buy the Vietnamese rice, spending Tk 56.53 crore more compared to the prices in the international market.

 In May, the government had sanctioned Tk 346.24 crore to buy one lakh tonnes of rice through Dubai-based Shukhbir Agro and Singapore-based Agro Crop.

Food ministry sources told The Daily Star apart from Bangladesh, at least six other countries sought to import rice from Vietnam in recent weeks, putting a demand pressure thereby hiking the price. These countries are the Philippines, Sri Lanka, Malaysia, Indonesia, Cuba and China.

Besides, the sources said, though Shukhbir's and Agro Crop's price offers are competitive, that one lakh tonne consignment was highly unlikely to reach Bangladesh ports in two months. On the other hand, on Bangladesh's insistence, Vietnam agreed to dispatch the first rice consignment in just 15 days.   

Bangladesh's such desperate move comes at a time when rice stock in public granaries touched a nadir at 1.98 lakh tonnes this week from over five lakh tonnes in June last year.  

As millers at home declined to sell rice to the government during the current Boro procurement season saying its price offer was not lucrative enough and price of coarse rice hit an all-time high of Tk 48, the authorities are mulling reducing a 25 percent duty now in place on rice import. 

For the situation, experts blamed an imprudent food stock policy that the government pursued this year thereby allowing market manipulators to pick up the prices of coarse rice up to 42 percent comparing to last year's price.

 According to Badrul Hasan, director general of the food directorate, they could buy only 15,000 tonnes of rice in first month of a four-month (May-August) domestic rice procurement season, as against a target of purchasing 15 lakh tonnes.

With millers declining to sell rice to the government at low price offer of Tk 34 a kg, the government was threatening that those millers would be blacklisted for future trade.

Agricultural economist Jahangir Alam told The Daily Star that although some rice was lost in the haor flashfloods, the price should not have jumped so high. He questioned why the government allowed its rice stock to deplete in the first place.

"Why they [food ministry and food directorate] have failed to keep the minimum security stock of rice in the granaries?” asked Ilahi Dad Khan, a former director of the food directorate who witnessed and had crucial crisis management role during 2007-08 global economic meltdown and 2011 rice shortage.

“They should have noticed well in advance that how fast the food godowns were drying out due to continuous operations of open market sale since January and exhausting of stock through distributions under Tk 10 a kg rice dole programme.”

He said during his time in the food directorate an effort was always there to keep one million tonnes of food (rice and wheat) stock reserve in the godowns. But this time around, Khan noted, the government failed to keep a crises stock and market is now at the mercy of rice millers and traders.

Food ministry and directorate sources said that on top of already existing various food dole programmes like test relief (TR), vulnerable group development (VGD), open market sale (OMS), the government introduced a Tk 10 a kg programme for 5 million ultra poor people in late last year putting a huge pressure on the rice stock.

They said they thought a dried up stock would be soon replenished through domestic procurement during the current Boro season, which never happened.

Contacted, Bangladesh Rice Mills Association President Abdur Rashid said, "We've told the minister many a times that it's not possible to supply rice to government at Tk 34 a kg when we were getting Tk 39 a kg in the open market. Who would bear the Tk 1 lakh loss in each truckload of rice [20 tonnes]".

Abdur Rashid, managing director of Rashid Agro-Food Products, who represents over 1,500 rice millers in the country, did not acknowledge any hoarding taking place but said rice price may come down with government and private importers bringing in shipments from international markets.