Govt cuts public food imports to save forex

Bangladesh plans to cut public foodgrain imports in the next fiscal year in an effort to save foreign currencies and avoid putting further pressure on the already strained forex reserves. 

The Directorate General of Food will buy 500,000 tonnes of rice and 600,000 tonnes of wheat from the international market in 2023-24 to build public food stocks and distribute the grains through various social protection schemes, including subsidised sales among low-income people.

The targeted rice purchase is 44 per cent lower than the revised estimated import of the cereal at 900,000 tonnes for the ongoing financial year, according to the budget documents of the finance ministry.

As such, the government has nearly halved its budget for the purchase of grains to Tk 2,592 crore from Tk 4,865 crore in 2022-23. In the case of wheat, the government plans to buy a 14 per cent lower amount from its revised target of 700,000 tonnes for FY23.

"We have decided to reduce the import in order to save foreign currencies," said Md Shakhawat Hossain, director-general of the Directorate General of Food.

"We have had good Aman and Boro harvests in the immediate two crop seasons. So, we want to buy an increased volume of grains from the local market."

The food office aims to buy 13 per cent higher rice at 19.61 lakh tonnes through domestic procurement in FY24. It wants to purchase 1 lakh tonnes of locally grown wheat as well, according to the documents of the proposed national budget.

The government has allocated Tk 8,750 crore in FY24 to buy locally grown rice, which is up 21 per cent from Tk 7,200 crore in FY23.

"Farmers will get better prices because of a higher increased domestic procurement. At the same time, foreign currencies will be saved," Hossain said.

Until June 1 of the current fiscal year, the food office purchased 633,000 tonnes of rice and 679,000 tonnes of wheat from overseas markets, food ministry data showed.

Alongside wheat, Hossain's office will buy 12.5 lakh tonnes of milled rice and 4 lakh tonnes of unhusked grains or paddy from the local market during the current Boro procurement season, which ends on August 31.

Already, it has bought 341,000 tonnes of parboiled milled rice and more than 30,500 tonnes of paddy from the local market to build up stocks, which stood at 17.13 lakh tonnes as of Sunday.

"We are getting a good response," Hossain said.

Despite increased purchases from the domestic market, the government plans to slash its overall procurement of cereals by 5 per cent to 31.61 lakh tonnes for FY24.

Accordingly, it also looks to reduce the public distribution of food, both in monetised sales and non-monetised distribution programmes.

The distribution of rice through cash sales schemes such as Open Market Sales (OMS) is planned at 14.19 lakh tonnes for the next fiscal year, down 4 per cent from 14.83 lakh tonnes in the outgoing financial year.

The distribution target for wheat has also been revised downwards for FY24.

In the case of non-monetised distribution programmes, namely the Food for Work and the Vulnerable Group Feeding, the government has decided to distribute 998,000 tonnes of rice in FY24, down 9 per cent year-on-year.

Similarly, the government plans to distribute a lower volume of wheat under the scheme. 

When asked about the reasons behind the plan aimed at reducing distribution, Hossain said the government will decide based on the situation.

"If the situation demands, the government will respond accordingly," he said.

The volume of rice and wheat that would be sold through open market sales operation has been revised upwards to 550,000 tonnes for FY23 from the 350,000 tonnes initially targeted.