Output data has no impact on rice market
Rice prices are on the rise, although the food grains output is close to autarky by an official estimate. Economists now question the validity of production data.
They say there should be an impact of adequate food grains production on the market. Data shows a rise in rice production to 3.22 crore tonnes in fiscal 2009-10 from 3.13 crore tonnes the previous year.
But without showing any impact of better output, retail prices of rice, depending on variety, shot up between 18 percent and 47 percent in the last one year.
For coarse rice, consumed mainly by low-income people, prices rose by 47 percent to Tk 31-34.
Mustafa K. Mujeri, director general of Bangladesh Institute of Development Studies, said data shows that food availability is higher than requirement.
"Under such circumstances, there should be adequate stocks and thereby its impact should be felt in the market," he said at a discussion on 'Food Grain Market Situation: Prices and Government Response' yesterday.
Food Division of the food and disaster management ministry organised the programme at the Cirdap auditorium to find reasons why rice prices have soared and suggestions to tackle the situation in the coming months.
Food Minister Muhammad Abdur Razzaque, who moderated the discussion, expressed his concerns over the rise in rice prices at a time when estimates show a good harvest of crops in FY 10.
"We know population is a problem. But if we take production and per capita availability into consideration, there is no crisis," said Razzaque.
One of the reasons the food minister pointed was the impact of rise in the prices of rice in the international market.
A rise in purchasing capacity may also be a reason for the price-hike, he observed, seeking interpretations of analysts at the discussion.
"It's a serious concern for the government," he said, ''There is no serious crisis of food in the market. But still, some have to cut their budget."
Expressing doubts about objectivity of domestic production data, discussants blamed lack of stock in government hand, profit-mongering of traders, rise in inflation and wages and surge in prices of food grains in the international market for the rise in rice prices.
Centre for Policy Dialogue Executive Director Mustafizur Rahman said government's low food stock as well as its failure to achieve procurement target has created a fear of inflation in the market.
"Stock management is important," he said.
Rahman also cited production data and said an objective estimation is needed to get clear idea. For Rahman, prices should not have increased so much if demand and supply situation was in order.
Abdus Sattar Mandal, vice chancellor of Bangladesh Agricultural University, linked increase in wages partly to the rise in prices of food.
Participants suggested the government procure rice from farmers by forming cooperatives, create adequate storage capacity and enhance production.
They also stressed the need for continuing providing rice to the extreme poor at subsidised price and increasing efficiency of bureaucrats so that they can take steps and procure food grains in advance before the market goes up.
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