Food crisis to go, spike in price to last

The good news is the country at present has no shortage of food grains due to a bumper Boro harvest in progress and a huge import in the recent months.
But the bad news is food grains will continue to be high-priced in the months to come.
Latest estimates of the food ministry put the demand for rice and wheat in the current fiscal year at 2.60 crore tonnes while net production of the crops at 2.59 crore, meaning a deficit of only one lakh tonne.
This apart, organisations in private and public sectors have imported 34.73 lakh tonnes of grains including 21 lakh tonnes of rice from July 1 to April 24. This is 91 percent up on the corresponding period last fiscal year.
During the same period, importers have opened letters of credit (L/C) for import of 50.56 lakh more tonnes of food grains including 33 lakh tonnes of rice.
According to calculations taking into account the food imports, Bangladesh now should have a grain surplus of over 33 lakh tonnes.
Back-to-back floods and Cyclone Sidr last year damaged at least 18 lakh tonnes of standing crops, posing a serious threat to the country's food security.
In this context, both the government and private sector concentrated their efforts on importing food grains to recover the deficit.
However, things began to change for the better at the start of Boro harvest last month.
Explaining how the demand for food grains and deficit were calculated, a food ministry source said the country's population this year was estimated to be 14.56 crore. Then there was an approximate calculation that each individual requires 489 grammes of food a day. And this all put the annual demand at 2.60 crore tonnes.
On the supply side, production of Aus and Aman was 1.05 crore tonnes in FY 08 while it was 1.23 crore in the previous year.
Boro has already made good much of the shortfall resulting from floods and the cyclone. It is estimated that the yield this season will be around 1.75 crore tonnes while wheat 8 lakh tonnes.
The net food production in that case will stand at 2.59 crore tonnes--just one lakh tonne shy of the total demand.
Despite the positive developments, prices of food grains are not going to come down anytime soon, food ministry officials and economists alike predict.
According to Trading Corporation Bangladesh (TCB) report, the price of coarse rice ranged between Tk 33 and Tk 35 a kg a week ago. It did the same yesterday showing that Boro harvest and import did not yet have an effect on the price situation.
The trend will continue, said a food ministry official. "It's because the production cost has shot up by 54 percent in one year," he added.
On the other hand, import price too has increased sharply due to a global food crisis. The price of rice on the international market is increasing on a daily basis with many countries resorting to restrictions on export of their rice.
Meanwhile, five major rice exporting countries including Thailand, Vietnam, Cambodia, Laos and Myanmar have agreed in principle to launch a platform styled OREC (Organisation of Rice Exporting Countries) to control rice prices on global market.
Thailand, the biggest rice exporter, has already said it wants to form an Opec-style cartel comprising Mekong nations to gain more control over international prices.
Talking to The Daily Star last night, Uttam Kumar Deb, head of research division at the Centre for Policy Dialogue (CPD), said if they really go on to create a cartel the price of rice will increase and at the same time availability of the staple will decrease.
“So, Bangladesh should try to increase the production to meet the deficit,” he observed adding that a hard time is ahead as supply even in the international market will be limited.
He also said though the farmers are having a bumper Boro crop, the price would not mark any significant decrease as both production cost and scarcity of food grains in the world market have increased.
Uttam said how much the price of rice would decrease depends on whether the farmers would be able to gather the crop safely in the next few days.
About the food ministry estimates, he said there should be measures to have actual data regarding production and demand for food grains.
He said the demand should be calculated on the basis of an updated population census.