Rice prices fall below last year's level

An ample supply due to higher domestic production and soaring imports have driven the prices of rice below last year's level and put many millers and farmers into losses.

Fine rice yesterday traded at Tk 39-56 per kilogram at the capital's markets, down 2.11 percent year-on-year, according to data from the state-run Trading Corporation of Bangladesh.

The prices of medium quality rice also declined. Coarse rice traded at Tk 32-37 each kilogram, down 1.43 percent from a year ago.

In line with the decline in rice prices, paddy prices have also fallen, raising fears of losses among farmers during the boro harvest, which has already begun in the haor areas in the northeast.

Freshly-harvested boro paddy is trading at Tk 500 each maund (40kg) in the northeast, Bappi Saha, a rice miller in Netrokona district, said yesterday.

Abdul Jalil, a rice trader at Ashuganj, said the prices of fresh boro paddy stood at Tk 520 a maund, which is lower than the prices at the beginning of harvest last year.

“There is no supply shortfall due to rising imports and stockpiling.” If the current market prices of paddy continue, farmers will incur losses, he added.

His warning comes after the government estimated that the farmers' production costs to produce one kilogram of paddy would be Tk 20 during the current boro season, meaning growers would break even if they get Tk 800 on average for each maund of paddy.

However, the prospects of getting such a price look dim in the backdrop of increasing supply, said traders.

Private imports of rice have so far exceeded last year's total imports, as traders find the foreign produce cheaper.

Between July 1 last year and April 7 this year, rice imports stood at 12.76 lakh tonnes against 3.74 lakh tonnes in the same period last fiscal year, according to food ministry data.

Traders and millers blamed it on the zero-duty benefits for rice import and higher production of medium-quality rice in India.

Apart from import, domestic production also rose this fiscal year. Farmers bagged 1.319 crore tonnes of aman rice in the immediate harvest, up 1.28 percent year-on-year.

Aus output also edged up slightly after record boro production last year, according to Bangladesh Bureau of Statistics.

As a result of increasing supply, paddy prices have fallen by up to Tk 200 each maund since the aman harvest, said Saha, adding that millers are reluctant to buy paddy fearing further losses.

The prices of paddy are likely to fall further because of increased supply, Md Layek Ali, general secretary of Bangladesh Auto, Major and Husking Mills Association, said.

“Many farmers including some of my relatives are yet to clear their aman paddy. There are stocks also at millers' end, as increasing imports from India have made things worse.”

Md Abdur Rashid, president of the association, said the millers have been calling for measures to discourage imports for the last several months.

“We have submitted memoranda to nearly two dozen deputy commissioners, appealed to food and commerce ministries for steps to impose duty on imports to protect millers and farmers from losses. But the government is yet to pay heed to our pleas.”

Ali said the farmers' costs of production increased compared to last year. “One should consider what the farmers will be left with if they are to sell their produce below production cost.”

Economist Mahabub Hossain, who closely follows agriculture and rural economy, said the price decline will hurt poor farmers more than the relatively large ones.

The government should buy higher quantity of rice from the domestic market to support farmers, he said, adding that it should also consider imposition of duty on rice imports to provide a cushion to farmers.

Hossain, also a former director general of Bangladesh Institute of Development Studies, said the imposition of import duty might lead to a spiral in the prices of rice in the local market.

Duty should be imposed in a way that farmers get fair prices for their produce and consumers do not find rice beyond their purchasing capacity, he said.

Asked, Commerce Secretary Hedayetullah Al Mamoon said his ministry is assessing the whole situation.

“The issue of rice is under discussion at the higher level -- we will take appropriate measures after reviewing the pros and cons.”