Production loss, govt indecision caused rice price spiral: WB
The recent abnormal price rise of rice is the outcome of production loss, policy indecisiveness and rumours, among several reasons, the World Bank said yesterday.
A tendency to generalise the causes was noticed whereas various factors were active behind the price spiral, said Zahid Hussain, lead economist at the Dhaka office of the Washington-based multilateral lender. Two consecutive floods damaged 20 lakh tonnes of the staple food leading to the fall in production, he said during the release of the latest edition of World Bank's Bangladesh Development Update at the office.
The government's indecisiveness in procuring rice and reducing tariff destabilised the market while it did not have adequate stocks for intervention in the market, said Hussain.
There was indecision at the government level about the mode of procurement, whether it will be government-to-government or through tender -- and from which country to import it from, he said.
As a result, rice did not reach government silos in time, said the economist, adding that the government also suffered from indecision on decreasing taxes, due to which import halted and hundreds of trucks were stranded at land ports.
Hussain said the spread of a rumour that India has banned export of rice spurred a steady rise of the price while the price went up in India, Thailand and Vietnam. He said businessmen might have taken advantage of these uncertainties to go for speculative hoarding, which may have pushed up the price.
“It is difficult to prove the hoarding but it cannot be dismissed,” Hussain said.
Price per kilogramme of coarse rice reached Tk 50 recently while fine rice Tk 70. The former's price is falling but that of fine rice is still hovering around the same level.
Rice prices were Tk 42 and Tk 68 respectively in Dhaka yesterday, according to a report of the Trading Corporation of Bangladesh.
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