The Financial Express

Cooling off rice market    

| Updated: January 11, 2021 22:42:37

Cooling off rice market      

The government late last week reduced the taxes on rice imports by a big margin--- from 62.5 per cent to 10 per cent--- amidst the prices of the item soaring to a record level. The decision is designed to cool off an otherwise overheated rice market. The effect of the move, however, remains to be seen. There was no visible impact of the government's latest action on the rice market until Saturday last. Many tend to believe that the government should have taken the decision earlier to offer price-relief to the poor and low-income consumers.

The price of the coarse variety of rice, which is consumed widely by the poor and low-income families, is between Tk.48 and Tk.50 a kilogramme (kg) at the retail level. The price is considered high, particularly during this pandemic-hit time.  Though most economic activities have picked up the pace lately, finding jobs and regular wages by the poorer section of the population continues to be difficult.  

The hike in rice prices has not been without any reason. The local and international agencies had forecast that there would be a sizeable shortfall in Aman rice production this year because of consecutive floods. The prediction has come true as the production of the second largest rice crop this year is lower than the official projection.  Besides, the government's rice stock also has depleted to a notable extent because of lower than usual replenishment.

The government's rice procurement programme during the immediate past Boro season was a big failure.  The prospect of the same during the ongoing Aman harvesting season also appears to be not bright. The mismatch between the prevailing market price and the price offered by the government is said to be the primary reason behind the failure of the procurement drive.

The quantity of rice imported in recent months has been small. The private import of rice was almost nil because of higher import duty and taxes---62.5 per cent in total--- on the item.  A sufficient food stock at the state level acts as a deterrent to any move to hike prices of rice artificially.

 The private millers in recent years have emerged as a powerful force in the rice market.  They can easily manipulate the price of the item to their advantage. There are instances where they did not even honour deals to supply rice to the government under different pretexts.  The food ministry, however, overlooked such an act of defiance for reasons best known to it. 

The government last week approved the import of about 0.4 million tonnes of rice by the private sector. The government does also have a plan to import a sizeable quantity of rice. The government must not allow the millers to import rice. Since the government has slashed taxes on rice by a big margin, there should be no reason for the prices of the item coming down to a reasonable level. Only foul play by some quarters can foil such a development.

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