Rice imports soar despite huge supply

bdnews24.com :
Local traders are on a rice importing spree in recent months, though there is no shortage of the grain in Bangladesh.
Bangladesh Bank data show that rice imports have registered a phenomenal increase, though the government had contemplated rice exports last year because of inadequate storage space.
Bangladesh saw a bumper paddy harvest last year and the export plan was considered a means of ensuring fair price to marginal farmers and dealing with the storage crisis.
The trend of opening Letters of Credit (LCs) to import rice in the first seven months (July to January) of the current fiscal (2013-2014) was up 1000 percent compared to the same period in FY 2012-13.
The settlement of LCs on import of rice during the same period also increased at the same rate.
Ahmed Hossain Khan, Director General of the Directorate General of Food, feels statistics of rice import is ‘incredible’ since there was no shortage of supply.
He told bdnews24.com on Thursday, “The government isn’t importing rice for several months. The private sector might have done so to some extent. But a 1000 percent rise in rice import in the past seven months seems unbelievable.”
The latest Bangladesh Bank data show that in the first seven months of the current 2013-14 financial year, the total LC opened for essential food grains was $174.7 million against $15 million during the same period of the 2012-13 FY. The growth in the LC amount was 1060 percent.
On the other hand, the settlement of LCs was $126.7 million for July to January of the current FY 2013-14 while it was $11.5 million during the same period of the last fiscal. The rate of increase in
the settlement of LCs was 1000 percent. Dr Mahbub Hossain, Executive Director of BRAC, said the rise on rice export was being calculated based on a small volume of rice import since the government did not import rice during the last two years. So, the rate of increase in rice import appeared to be higher.
The central bank statistics show that the country imported rice worth $30 million from overseas markets in the 2012-13 fiscal which is the lowest the past one decade.
The country had imported rice worth $288 million and $830 million in FY 2011-12 and FY 2010-11 respectively. Last year, the production of rice was 33.8 million of tonnes in the country against its annual domestic demand of 27.5 million tonnes.
DG of the Directorate General of Food Ahmed Hossain Khan said that currently there was a stock of 825,000 tonnes of rice in government food storehouses.
Mahbub Hossain, also a former Director General of Bangladesh Institute of Development Studies (BIDS), said that the prices of rice in the domestic market were rising over the last six-seven months.
Taking advantage of the government’s poor food stock and high domestic price, local grain traders stepped up rice imports from India through the Benapole and other land ports, as the prices of rice fell substantially following a slide of the Indian rupee.
Hazi Mohammad Nizamuddin, General Secretary of the country’s two biggest wholesale rice markets, Babubazar and Badamtali, in Dhaka, said traders in the capital were not behind the soaring imports and pointed to traders of the bordering districts.
Mashiur Rahman, an importer of rice at the Benapole land port, said that local businesspeople were importing the Indian rice, Swarna, almost daily because of its competitive price over other verities, giving traders a profit of Tk 1 in per kg.
He said though there was no rice shortfall in the country, traders chose to import, prompted by the difference in prices. “This imported rice isn’t sent to Dhaka or Chittagong but are mostly sold in the markets of Jessore and Khulna region.”
BRAC official Mahbub Hossain told bdnews24.com: “The production of Boro rice has remained constant over the past two years. But the country’s population and demand for rice have increased during this period. The readers are importing by keeping these factors in mind.”
He said that the government’s current food grains stock “was not enough”. It should have been about 1.5 million tonnes under the present circumstances but the current stock of rice and wheat was only 1.05 million tonnes. “The importers keep these things in their mind while importing food grains.”