Food imports look pricey
Imported foods are likely to go pricier through the first quarter of the current year, mainly due to tight global supply as unfavourable climates continue to hurt crops in parts of the world.
Rice now retails at a record high of Tk 35-Tk 50 per kg due to hoarding by farmers and traders. But the prices may ease if the upcoming boro season sees a good harvest when the hoarders will feel a pressure to release stocks on hold, analysts say.
Food and Agriculture Organisation warned of another food price hike in 2011 due to the climate change-induced unpredictable weather conditions. FAO's Food Price Index hit a record high last month, crossing the peak of 2008 when high prices of foods sparked riots in many countries.
“It seems that the market situation won't ease through the next three months at least. The prices of wheat, sugar and cooking oil are likely to remain upmarket globally," said Rajeeb Samdani, managing director of Golden Harvest Commodities Ltd, a local company that settles commodity transaction deals for its clients.
Since mid-last year, the prices of import-based essentials -- flour, cooking oil and sugar -- have been spiralling upward on the domestic market.
Flour has been selling at 43 percent higher prices at Tk 33-Tk 36 each kg for about a year now. Widely consumed unpackaged palm oil surged 50 percent to Tk 90-Tk 93 now compared with the previous year, according to the Trading Corporation of Bangladesh.
"Import-based commodities such as wheat, sugar, edible oil and pulse will follow international prices because of our high dependence on imports," said Mahabub Hossain, executive director of Brac.
FAO predicts the total paddy output will increase by 3.8 percent to 52.3 million tonnes in 2011, allowing the country to trim down its import requirement for the current year.
The farmers and agriculture officials said the harvests of aus, aman and boro were good in the last season. But the prices grew since September 2009 on speculation of crop losses due to floods and fogs in some areas.
The latest rally has resulted from factors such as a spike in government procurement prices in July last year and the tendency among the farmers and traders to hoard in the then aman season.
A rise in wages and land rents as well as the farmers' increased earning through the preceding year also contributed to the recent price hike of paddies and rice.
Fahmida Khatun, head of research of the Centre for Policy Dialogue, said the analysis of the current production, agricultural input distribution and the government's social safety net programmes implies mixed things about the future price of coarse rice in Bangladesh.
"The seed sellers' comment that the seed sales increased sharply in the current season indicates that the boro yields will be sizeable. Therefore, we may be a bit more comfortable with our sufficient rice production."