Rice import by private sector remains low
Rice imports by the private sector in Bangladesh remain low despite five months having passed since the government started allowing local businesses to import the staple grain in a bid to rein in its spiralling prices in the domestic market.
Until December 8, private importers brought 360,000 tonnes of rice while being permitted to import nearly 15 lakh tonnes of the grain since June this year, according to data from the food ministry.
Importers linked the sluggish imports to the banks' apathy in opening letters of credit (LCs) to facilitate shipments of the grain, and risk of losses for lower prices in the domestic market amid the ongoing Aman rice harvesting season.
Traders say increased imports would reduce prices of the grain, which are higher now than what they were during the same period a year ago, and ease the pressure on low and fixed-income households against the backdrop of high inflation.
In November this year, the price of coarse rice was 6 per cent higher year-on-year at Tk 48.09 per kilogramme, data from the Food and Agriculture Organisation showed.
"The biggest problem is that banks are shying away from opening LCs for rice imports due to the US dollar shortage," said a top importer and rice miller, seeking to remain unnamed.
He said entrepreneurs that have export earnings could open LCs for importing rice by using their export proceeds.
In the wake of the spiral in prices for rice, the National Board of Revenue (NBR) in June cut the import tariff for the grain from 62.5 per cent in order to increase supply in local markets.
It eventually slashed the import tariff further to 15.25 per cent as importers were still reluctant, citing that they would not be able to make profit while paying more than 25 per cent as import duty.
Since then, the food ministry has granted permission to private importers to bring in nearly 15 lakh tonnes of rice, a ministry official said.
And in the face of sluggish shipments, the NBR last week extended the deadline for the reduced import duty benefit by another three months to March 31, 2023.
"Apart from problems in opening LCs for import, a section of importers is not interested to import now in fear of losses for the prices fall as there is enough rice in the domestic market," the official said.
"Importers also have to pay in full for opening LCs and many lack the means to do so," he added.
Because of the US dollar shortage, Bablur Rahman, owner of Satata Baniyyalaya in the northern district of Dinajpur, could not open an LC from the local branch of a private bank even though he submitted the required documents two months ago.
Rahman got permission from the food ministry to import 4,000 tonnes of rice when permits were first being issued.
Harun Ur Rashid, president of the Hili Land Port Importer-Exporter Group, said plentiful production of paddy during the ongoing Aman season is another reason for the sluggish response from importers.
"Banks are not providing support to all importers to open LCs. Whoever is getting the scope, they have to provide 100 per cent margin, which is difficult for many," he said.
"For this reason, importers feel discouraged to import and besides, exporters in India are not showing interest to sell the grain to anyone here because of their concerns regarding timely payment," he added.
Md Mezbaul Haque, executive director and spokesperson of Bangladesh Bank, said imports of essential food items are excluded from LC margins.
"So, banks should open LCs in line with that," he added.
Nirod Boron Saha, president of the Rice and Paddy Stockists and Wholesalers Association in Noagaon, one of the main rice hubs in the country's northwest, said prices of paddy are higher by about Tk 120 per maund now compared to the same period a year ago as farmers are slowly supplying the staple grain.
Coarse Aman paddy prices were between Tk 1,104 and Tk 1,139 per maund yesterday, up by roughly 18 per cent from Tk 937 to Tk 967 per maund a year ago, showed data from Department of Agricultural Marketing.
"Prices of rice would have declined had imports rose," Saha added.
Govt rice imports growing
Despite sluggish imports by the private sector, the food ministry has so far brought nearly 350,000 tonnes of rice under state-to-state contracts from Myanmar, Vietnam and India out of its agreements for 530,000 tonnes to build stock and distribute through various social safety net schemes, said the food ministry official.
He then said the ministry plans to import another 420,000 tonnes of rice through international tenders.
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