Rice stocks dip at public warehouses
Rice stocks at public warehouses have fallen to 3.59 lakh tonnes, which is the lowest in six years, owing to less than targeted procurement in the last two seasons and increased distribution.
Total food grain stocks stood at 5.46 lakh tonnes, the lowest since fiscal 2009-10, according to food ministry data.
The low level of stocks has created worries that millers and traders may cash in on the situation by increasing prices of the staple.
Rice prices edged up early this month, as large millers and traders banked on the loss of paddy at the haor regions in the country's northwest.
“Food grain stocks send some signals to millers. For them, low stock means that the government cannot intervene in the market quickly to curb the price spiral,” said Towfiqul Islam Khan, a research fellow of the Centre for Policy Dialogue (CPD).
The present cereal stock is almost half of last year's level of 11.15 lakh tonnes. Analysts have suggested keeping the stock at a minimum of 10 lakh tonnes of grains, particularly rice, so that the government can intervene quickly to stabilise the market.
Food officials have, however, brushed aside fears of a further price spiral, saying that boro harvests have begun.
“Farmers have started bagging crops. There will be no scope for millers to raise prices by capitalising on the situation,” said Md Badrul Hasan, director general of the Directorate General of Food.
Crop loss in the hoar regions is estimated to be 4.5 lakh tonnes, which is 2.3 percent of the total boro rice production target of 1.91 crore tonnes this season, he added.
The CPD, in its State of the Bangladesh Economy in 2016-17 report, said the rising rice price in recent months in the backdrop of declining public stocks appears to be the major cause that is pushing food inflation upwards.
The price of coarse rice in Dhaka was 6.49 percent higher at Tk 40-42 a kilogram on Thursday, compared to a month ago.
It was 24 percent lower a year ago, according to data from the Trading Corporation of Bangladesh.
Also, the average rice price in Bangladesh is about 27.9 percent higher than that in India, the CPD said recently.
Analysing rice prices and stocks at the public warehouses, the think tank said there is an inverse relation between the two.
“It will, thus, be advisable that the policymakers take a closer look at the stock situation and calibrate the targets for boro season procurement accordingly,” said the CPD.
The government has targeted to buy seven lakh tonnes of paddy and eight lakh tonnes of rice during the harvest of boro at prices higher than last year's. It also announced to buy one lakh tonnes of domestically grown wheat.
Hasan said his office aims to start buying both paddy and rice from the first week of next month to refill the warehouses. KAS Murshid, director general of Bangladesh Institute of Development Studies, said the current stock would be inadequate if the government needs to intervene in the market suddenly.
“But it is time for harvests; low stocks should not impact market prices. The government should strengthen procurement drives to replenish the stock,” he said.