Food crisis and sorrows of the consumers

It is believed that a syndicate of millers and wholesalers has crafted the “crisis” to sell rice at higher prices

As the prices of rice are spiraling beyond control food crisis is stalking and the blame game between wholesalers and millers continues. Millions of low-income people are worst-hit by the price shock as coarse rice consumed by them is now being sold at a minimum price of Taka 46 per kg.
Last three months were the worst period when people saw steep rise in prices of all varieties of rice. It is alleged by the wholesalers that a syndicate of millers created the crisis. Government data often lower than market prices show a 47 percent rise in the price of coarse rice while a fine variety saw around 20 percent rise in a year. The fine variety is currently on sale at no less than Tk 60 per kg. An agro-economist sees it as an ominous sign of a food crisis ahead, reminiscent of price spirals during the army-backed caretaker government. Prices of coarse and thin grains rose to Tk 40 per kg and Tk 56 per kg respectively in 2007 and 2008 during the caretaker government rule. It was then recorded as the highest price of rice since independence. An expert, a professor and a fellow at the Bangladesh Institute of Development Studies (BIDS), says, "The prices had created panic at that time. I think we will face the same situation again”.  
Boro paddy cultivation in the country was hit hard by unseasonal rains and flash floods earlier this year 2017. On the other hand, rice production slumped in China, Vietnam and India. A 28 percent duty levied on imports is also blamed for the hike. However, the market was significantly stable during Awami League's 2009-2013 tenure when coarse rice was sold at Tk 30-35 and thin rice at Tk 40-42 per kg.

Bangladesh is considered a food self-sufficient country. An expert said that a syndicate of millers and wholesalers has crafted the “crisis” to sell rice at higher prices. The government seems reluctant in this regard. Experts guess mill owners and wholesalers have an ample stock of rice. It is unfortunate that the government does not even have that data. The government is neither monitoring them nor compelling them to release the stock. When contacted, Food Minister declined to comment on rice prices and advised media to consult the Directorate General of Food.

According to the Food Planning and Monitoring Unit (FPMU) the government had some 193,190 tonnes of rice in stock on June 12, 2017 compared to 593,020 tonnes on the same date last year 2016. Quoting the Department of Agricultural Marketing, an FPMU report says the wholesale price and retail price of coarse rice in the capital is Tk 45-46.5 and Tk 46-48 per kg respectively. The Director General of Food, said the price soared as production turned out to be low this year due to flash floods in “haors” and adverse weather. He hoped the rates would return to normal if the 28 percent duties charged on import are withdrawn.

Between May 2 and June 11, 2017 the government procured a total of 19,532 tonnes of Boro rice from farmers. Wholesalers claim the hike is nothing but the result of an artificial crisis created by a syndicate of millers. Unlike in previous Boro procurement seasons, rice price has soared this year despite the presence of new rice in markets, said Md Selim, proprietor of Shubho Rice Agency in Babubazar. He said that Mill owners are using crop losses caused by flash floods as an excuse to increase the rates. Auto rice mills are now the main source of rice supply. These mills are concentrated in some districts: Kushtia, Sherpur, Chapainawabganj, Rajshahi, Bogra, and Naogaon. Abdul Jabbar, manager of Chowdhury Rice Agency in Babubazar said that some industrialists are controlling the rice market countrywide with these auto mills. And the government is failing to keep the rates normal. He identified three areas of concern leading to the current crisis: paddy shortage, corrupt practices by millers and hoarding by unscrupulous businessmen.

Mirpur-based trader Wahiduzzaman said sales of rice jumped up to three times last month (May 2017) when people stocked up with grains fearing a hike in June 2017. Wahid, owner of New Billal Rice Agency said that one customer who usually buys one sack of rice bought three. Mill owners took advantage of the situation. Now sales of rice have dropped in Dhaka. Mill owners, however, put the blame squarely on the shortage of paddy production caused by flash floods and inclement weather. Tarek Anam, marketing executive of Rashid Automill, said they were selling a 50 kg bag of Miniket rice at Tk 2,600 – the highest on record. He said that rice prices should be higher if you consider paddy prices.

A BIDS expert has suggested lowering tax on rice import to normalise the rice market. If duties on rice import are cut down to 15 percent from 25 percent, costs will go down, so will the prices. The DG of Directorate General of Food, said that the ministry was served with recommendations in May 2017 to lift the import tariff. The government may take steps in that direction. Bangladesh spends US $440 to import one tonne of rice from India, and another Tk 9 is added as tariff per kg. He said that "We believe removal of the tariff will lower the cost and rice prices will come down once enough rice is imported from India".

Now the bizzare behaviour of the food market for the last few months has been indicating that food crisis is impending. Expert opinion is that food crisis was lurking as the rice prices were spiralling beyond control. The fact that the government has recently sanctioned the import of 250,000 tonnes of rice from Vietnam at a higher cost lends credence to our all-time low rice stock. This is certainly enough to create panic among the fixed and low-income people as they are the worst hit by the price shock. Their fear for further rise in rice price is justified as the price of coarse rice mainly consumed by them shows no sign of decrease.

Experts say that they fail to understand what the government was doing during the last three months of volatile rice market when there was steep rise in rice prices. The authorities did not take precautionary measures to avert the present critical situation when they knew that our public granaries had only 198,000 tonnes of rice left, as reported, compared to the normal five to 600,000 tonnes. The government should have surmised that the shortage would lead to an abnormal price hike which forced the ordinary citizens to bear the excessive burden beyond their purse. Experts and agronomists see this rice price hike as an ominous sign of a food crisis. We recollect the past period when price spirals created panic about the food crisis. We are highly afraid we may face similar situation again.

Though we have not seen any notable change, the pre-Ramadan promise by the ministry concerned was to check the price hike. Making promises is one thing, but what is imperative is to have a strategy beforehand to ameliorate the sufferings of the people. The signs were there for months that we were heading towards such a vulnerable situation. Even then the authorities could not replenish the crisis stock. Mismanagement of the food ministry, expecting that traders would sell rice to the government at low prices utterly failed.

A section of traders are raking in money by windfall profit. But we do not see any action taken against them. Is there any inquiry launched to see if the situation is artificially created? Reports have it that only 15,000 tonnes of rice could be procured against the target of 1500,000 tonnes. The traders are taking advantage of the shortage and the wholesalers and millers are trading blames while the government remains inactive in this regard to the sorrows of customers.

The writer is a retired Professor of Economics, BCS General

Education Cadre

 

 

Food crisis and sorrows of the consumers

It is believed that a syndicate of millers and wholesalers has crafted the “crisis” to sell rice at higher prices

As the prices of rice are spiraling beyond control food crisis is stalking and the blame game between wholesalers and millers continues. Millions of low-income people are worst-hit by the price shock as coarse rice consumed by them is now being sold at a minimum price of Taka 46 per kg. Last three months were the worst period when people saw steep rise in prices of all varieties of rice. It is alleged by the wholesalers that a syndicate of millers created the crisis. Government data often lower than market prices show a 47 percent rise in the price of coarse rice while a fine variety saw around 20 percent rise in a year. The fine variety is currently on sale at no less than Tk 60 per kg. An agro-economist sees it as an ominous sign of a food crisis ahead, reminiscent of price spirals during the army-backed caretaker government. Prices of coarse and thin grains rose to Tk 40 per kg and Tk 56 per kg respectively in 2007 and 2008 during the caretaker government rule. It was then recorded as the highest price of rice since independence. An expert, a professor and a fellow at the Bangladesh Institute of Development Studies (BIDS), says, The prices had created panic at that time. I think we will face the same situation again. Boro paddy cultivation in the country was hit hard by unseasonal rains and flash floods earlier this year 2017. On the other hand, rice production slumped in China, Vietnam and India. A 28 percent duty levied on imports is also blamed for the hike. However, the market was significantly stable during Awami Leagues 2009-2013 tenure when coarse rice was sold at Tk 30-35 and thin rice at Tk 40-42 per kg. Bangladesh is considered a food self-sufficient country. An expert said that a syndicate of millers and wholesalers has crafted the crisis to sell rice at higher prices. The government seems reluctant in this regard. Experts guess mill owners and wholesalers have an ample stock of rice. It is unfortunate that the government does not even have that data. The government is neither monitoring them nor compelling them to release the stock. When contacted, Food Minister declined to comment on rice prices and advised media to consult the Directorate General of Food. According to the Food Planning and Monitoring Unit (FPMU) the government had some 193,190 tonnes of rice in stock on June 12, 2017 compared to 593,020 tonnes on the same date last year 2016. Quoting the Department of Agricultural Marketing, an FPMU report says the wholesale price and retail price of coarse rice in the capital is Tk 45-46.5 and Tk 46-48 per kg respectively. The Director General of Food, said the price soared as production turned out to be low this year due to flash floods in haors and adverse weather. He hoped the rates would return to normal if the 28 percent duties charged on import are withdrawn. Between May 2 and June 11, 2017 the government procured a total of 19,532 tonnes of Boro rice from farmers. Wholesalers claim the hike is nothing but the result of an artificial crisis created by a syndicate of millers. Unlike in previous Boro procurement seasons, rice price has soared this year despite the presence of new rice in markets, said Md Selim, proprietor of Shubho Rice Agency in Babubazar. He said that Mill owners are using crop losses caused by flash floods as an excuse to increase the rates. Auto rice mills are now the main source of rice supply. These mills are concentrated in some districts: Kushtia, Sherpur, Chapainawabganj, Rajshahi, Bogra, and Naogaon. Abdul Jabbar, manager of Chowdhury Rice Agency in Babubazar said that some industrialists are controlling the rice market countrywide with these auto mills. And the government is failing to keep the rates normal. He identified three areas of concern leading to the current crisis: paddy shortage, corrupt practices by millers and hoarding by unscrupulous businessmen. Mirpur-based trader Wahiduzzaman said sales of rice jumped up to three times last month (May 2017) when people stocked up with grains fearing a hike in June 2017. Wahid, owner of New Billal Rice Agency said that one customer who usually buys one sack of rice bought three. Mill owners took advantage of the situation. Now sales of rice have dropped in Dhaka. Mill owners, however, put the blame squarely on the shortage of paddy production caused by flash floods and inclement weather. Tarek Anam, marketing executive of Rashid Automill, said they were selling a 50 kg bag of Miniket rice at Tk 2,600 the highest on record. He said that rice prices should be higher if you consider paddy prices. A BIDS expert has suggested lowering tax on rice import to normalise the rice market. If duties on rice import are cut down to 15 percent from 25 percent, costs will go down, so will the prices. The DG of Directorate General of Food, said that the ministry was served with recommendations in May 2017 to lift the import tariff. The government may take steps in that direction. Bangladesh spends US $440 to import one tonne of rice from India, and another Tk 9 is added as tariff per kg. He said that We believe removal of the tariff will lower the cost and rice prices will come down once enough rice is imported from India. Now the bizzare behaviour of the food market for the last few months has been indicating that food crisis is impending. Expert opinion is that food crisis was lurking as the rice prices were spiralling beyond control. The fact that the government has recently sanctioned the import of 250,000 tonnes of rice from Vietnam at a higher cost lends credence to our all-time low rice stock. This is certainly enough to create panic among the fixed and low-income people as they are the worst hit by the price shock. Their fear for further rise in rice price is justified as the price of coarse rice mainly consumed by them shows no sign of decrease. Experts say that they fail to understand what the government was doing during the last three months of volatile rice market when there was steep rise in rice prices. The authorities did not take precautionary measures to avert the present critical situation when they knew that our public granaries had only 198,000 tonnes of rice left, as reported, compared to the normal five to 600,000 tonnes. The government should have surmised that the shortage would lead to an abnormal price hike which forced the ordinary citizens to bear the excessive burden beyond their purse. Experts and agronomists see this rice price hike as an ominous sign of a food crisis. We recollect the past period when price spirals created panic about the food crisis. We are highly afraid we may face similar situation again. Though we have not seen any notable change, the pre-Ramadan promise by the ministry concerned was to check the price hike. Making promises is one thing, but what is imperative is to have a strategy beforehand to ameliorate the sufferings of the people. The signs were there for months that we were heading towards such a vulnerable situation. Even then the authorities could not replenish the crisis stock. Mismanagement of the food ministry, expecting that traders would sell rice to the government at low prices utterly failed. A section of traders are raking in money by windfall profit. But we do not see any action taken against them. Is there any inquiry launched to see if the situation is artificially created? Reports have it that only 15,000 tonnes of rice could be procured against the target of 1500,000 tonnes. The traders are taking advantage of the shortage and the wholesalers and millers are trading blames while the government remains inactive in this regard to the sorrows of customers. The writer is a retired Professor of Economics, BCS General Education Cadre