Buy paddy, not rice

To ensure fair prices for Boro farmers, the government under its procurement programme should only buy paddy from the growers instead of rice from millers, a study suggested.

It showed that last year the market price of Boro paddy could have increased by 45 percent had the government purchased only paddy from farmers for its rice stock.

Analysing last year's data, the research, titled "Boro Rice Procurement in Bangladesh: Implications for Policy" revealed that rice procurement from millers accounted for 81.1 percent of total government procurement.

The remaining 18.9 percent of the procurement was purchased in the form of paddy from farmers. 

In 2019, the government bought four lakh tonnes of paddy from farmers at Tk 26 per kg and 11.5 lakh tonnes of rice from millers at Tk 36 per kg.

Only 1.34 percent of all farmers, who sold Boro last year, could supply their produce to the government depots.

Others sold Boro paddy for an average of Tk 15.4 per kg in the open market.

This prompted the Ministry of Agriculture to commission the International Food Policy Research Institute (IFPRI) to conduct a research on the government's Boro paddy procurement, said Akhter Ahmed, country representative, IFPRI Bangladesh.

Last week, the study, funded by the United States Agency for International Development (USAID), was submitted to the agriculture ministry, said Akhter, the lead researcher and also the chief of party, policy research and strategy support programme (PRSSP).

He explained that the government's current procurement scheme mainly benefits the rice millers. But IFPRI suggested a policy option that will benefit both the farmers and the millers.

THE SUGGESTION?

The Directorate General of Food will only buy paddy from farmers at the local supply depots and get those husked at rice mills.

Since the moisture content of paddies sold by farmers is usually higher than the government's requirement of 14 percent, the procurement price will be adjusted for different moisture content, the study suggested.

"Those, supplying paddy with 14 percent moisture content, could receive the announced procurement price and the farmers, selling paddy with higher moisture content, would receive a relatively lower price from the government," said Akhter.

The government can also set a limit, wherein each farmer can sell a maximum of two tonnes and a minimum of 200 kg of paddy. Small farmers and sharecroppers can then participate in the procurement process.

The government-designated rice millers would transport the paddy from the depots to the mills.

It has to be ensured that paddy with moisture content above 14 percent are taken to the mills within a day to avoid damage. 

For paddy with 14 percent moisture, paddy-to-rice crushing ratio should remain at 0.67 -- for 100 tonnes of paddy received, millers should provide 67 tonnes of rice. The crushing ratios for paddy with higher moisture content should also be determined.

Beside the milling charge, rice millers would receive payment to cover the transportation cost of paddy from the depots to the mills.

IMPACT ON THE MARKET PRICE

Under this policy, the farmers who cannot sell to the government would benefit from the resulting higher market price of paddy during the harvest season, said Akhter Ahmed.

The research showed that if this policy was implemented during the 2019 Boro harvest season, it would have raised the market price of paddy to around Tk 22 per kg.

"Although this would still be below the procurement price of Tk 26 per kg, this would have been a significant improvement from the actual market price [Tk 15 per kg] of paddy in 2019," said Akhter.

If the policy is implemented, there will be higher demand from the government procurement, which will increase the price of paddy.  

Conversely, procurement of large volumes of rice from millers may push up the retail price of rice in the market impacting consumers negatively, particularly the urban poor, the researcher noted. 

When asked about the policy option, Mosammat Nazmanara Khanum, secretary of the food ministry, said they cannot do anything during the current season as Boro procurement has already started.

The procurement prgramme began on April 26 with the target of eight lakh tonnes of paddy and 11.5 lakh tonnes of milled rice (parboiled and sunburnt).

"As per the government rules, we will have to take these decisions in an inter-ministerial meeting. We may accept all of them, if the suggestions are good. We may implement it partially, if we think it is not doable for us," she said.

When asked, KM Layek Ali, general secretary of Bangladesh Auto, Major and Husking Mill Owners Association, said the government should protect farmers' interests with priority as they grow food.

He said millers would husk the rice bought from farmers if the government provides them with the expense. But he warned that millers may not be able to control the quality of rice.

The government should also determine the crushing ratio for paddy with moisture content above 14 percent, he added.

This year, the government decided to purchase eight lakh tonnes of Boro paddy at Tk 26 per kg.

According to traders, the market price of harvested Boro in Sunamganj, Mymensingh and Netrokona is currently between Tk 16.25 and Tk 19.5 per kg for paddies with moisture content above 14 percent.