Food Grains: Govt paid no heed as stock plunged

It was obvious that the price of rice would increase amid the pandemic. No special expertise was required to see it coming.

But the government did not take any effective measure to stock up on food grains or regulate the price of rice.

Experts suggested keeping at least 12.5 lakh tonnes of grains in stock. But the stock has now fallen to around four lakh tonnes.

This unusually low level is the least since the stock of 2.8 lakh tonnes in 2008, the year following super cyclone Sidr.

Last season, the country's total demand of food grains was 3.58 crore tonne.

In other words, the national demand is around 30 lakh tonnes of food grains per month. But our current public food grains storage capacity is only 19 lakh tonnes. The government is building five more warehouses and, once complete, the storage capacity of public food grains will reach 24 lakh tonnes.

If the government wanted to feed all of the country from its public storage, the stocks would not last even for three weeks.

The government does not store food grains to meet the demands of the entire nation.

The public food storage serves two main purposes -- to support the government's safety net programmes like Vulnerable Group Feeding (VGF) and Food for Work, providing for people in the wake of natural disasters and to intervene in the local market to control food prices when necessary.

If the hoarders create artificial scarcity and raise the price of rice, the government may start Open Market Sale (OMS) at reduced prices.

Every year Bangladesh faces various kinds of natural disasters like floods, flash floods, cyclones, heavy rainfall or tornadoes, each of which carries the threat of damage to crops. If flash floods washes away paddy in the haor in one season, cyclones like Amphan ruins crops in another. This year, it was lack of rainfall and an unprecedented heat wave that damaged paddy.

Experts say the government should have a food grains stock of 24 to 25 lakh tonnes to tackle situations like those.

They say the minimum should be a stock of above 15 lakh tonnes and the price of rice would start rising in the market if the public stock fell down to lower than 12.5 lakh tonnes.

That is exactly what happened this year.

In the beginning of the current fiscal year, the public food grain stock was less than 12 lakh tonnes. And now the public stock of rice has come down to three lakh tonnes. Along with the stock of wheat, the total food grain stock is around 4.5 lakh tonnes.

As the government stock has reduced, the hoarders started to control the market, inflating the price of rice. The price of coarse rice has increased by Tk 13 to Tk 14 per kg in the last year and the price of rice has reached around Tk 45 per kg.

But the truth is there was no shortage of food till the last Boro season -- Bangladesh's total demand of food grains was 3.58 crore tonnes and its production was 3.6 crore tonnes, according to various studies. 

Bangladesh became the third largest rice producers, overtaking Indonesia. So, the country was self-sufficient last season.

During the last Aman season, a portion of paddy was damaged due to Cyclone Amphan. The government should have taken desperate measures to purchase rice and paddy and increase its stocks, and they set a target to purchase 8.5 lakh tonnes of Aman rice and paddy.

But the government's initiative failed because, like the last boro season, it fixed the purchase price of paddy and rice lower than their production costs.

The government fixed the purchase price of paddy at Tk 26 a kg and rice at Tk 36 a kg, one taka less than the production cost. Farmers and millers were getting better price in the market and so the government could only procure 83,000 tonnes of rice in the last Aman season.

Later, this January, the food ministry took the initiative to import 20 lakh tonnes of rice. The government signed several government-to-government deals to import of rice from India, Russia, Ukraine, and Vietnam. It also gave import approvals to private importers.

But the process was delayed due to what they said was "international volatile situation". It took four months for the government to import 2.62 lakh tonnes of rice while private importers brought around 6.5 lakh tonnes.

Although many importers got approval, they are now not willing to import the rest because, with the domestic Boro harvest having already begun, they will not profit if they import rice at a 25 percent duty.

The food ministry had realised much earlier that they would fail to increase food grain stocks because, for the last few months, they were giving out cash instead of food grains under the popular Food for Work programme.

And now that rice hoarders and traders know that the government does not have the stocks to intervene in the rice market, they have increased the price. The food ministry should have realised that it would come to this juncture much earlier, but they could not tackle the situation.

This price hike has put an extra burden on people who do not have a stable income and are struggling to pay house rent or meet treatment costs amid a worsening pandemic.

The glimmer of hope now lies with the Boro harvest that has already begun.

Also, the government has primarily decided to purchase 10 lakh tonnes of parboiled rice, 1.5 lakh tonnes of sunburnt rice and 6.5 lakh tonnes of paddy.

This time it may work as the government shows interest to pay more than the production cost. The purchase of paddy is likely to start from April 28 and rice from May 7.

But agro economists who are following the situation suggests purchasing more paddy from farmers -- it will help the government secure its stock and the marginal farmers will get a good price.

It is a better strategy than importing rice at the last moment. Certainly, it is better to pay our local farmers than farmers from other countries.