Govt mulls re-imposition of rice import duty

The government is mulling over the re-imposition of import duty on rice which was lifted following the 1998 floods to cope with a possible food crisis.

Last year's record all-time high rice production has rendered its import unnecessary. In 1999, when prices of coarse rice shot up to as high as Tk 14 a kg, the government withdrew the duty to facilitate its supply.

But the Food Ministry now suspects that taking advantage of the duty-free import regime, there has been huge import of taxable items in the guise of rice, sources said.

They said that about two million MT importable were recorded to have been imported after the floods. But when this figure was tallied with the export figures from India, it was found that there was a gap of half a million tonnes.

"The figures of the Indian side show at least half a million less imports and unscrupulous businessmen must have imported taxable items declaring them as rice," said an official.

The ministry sources said that despite a stable supply situation inside the country, 7000 MT of rice were still imported in November.

Meanwhile, the government's silos are already running at a full capacity of 1.5 million MT, leaving very little option for fresh procurement. To make additional purchases, the government has already asked some vital ministries to buy rice from the local currency components of different projects and implement the works through food-for-work programmes.

The Water Resources Ministry alone will buy Tk 15 crore rice from the Food Ministry to implement its ADP projects.

Meanwhile, economists feel that the government's plan to procure two lakh tons of rice will be able to give very little price support and it will need go for at least half a million tons to one million tons of procurement for making any real impact on the market.

The government is also planning to expedite rice distribution for its food-for-works programmes and also to advance the timing of the VGD programme. At the same time, the volume of rice for test-relief and rural road management programme will also be increased for swift uptake of grains from the silos.

The government and the economists are now awaiting developments in the next two to three weeks. "If the price falls drastically, we might give extra support by enhancing our procurement target," said one official.

"Because of the successive bumper production, people are already thinking that we have reached a higher production frontier, opening up scopes for agricultural exports," said Dr Kazi Shahabuddin of BIDS. "But we have to sustain this trend and set a price competitiveness tone over the next five years to establish the market link. Countries like Thailand, Vietnam and the USA have already been making good harvests which helped them top the global rice exporters' list."