The Financial Express

Time to pay attention to the rice market

Time to pay attention to the rice market

The money spent on rice does have a small share in the daily food bill of a middle-class or an affluent family. This is because they consume a small quantity of rice along with many other food items.

However, the story is not the same in the case of poor and low-income families. The number of items on the daily food basket of these families is always very limited. Their dependence on rice is relatively high. Some families do have a habit of consuming rice three times a day.

So, when rice becomes pricier the latter become concerned. But their worries are not as intense as it was before because of the fact that their earnings have also gone up over time. The pandemic, however, has worsened the situation which they are trying to overcome now. 

Yet any abnormal hike in price does create a sort of uneasiness at the levels of both consumers and the policymakers. The reason for the latter becoming concerned is that the rice price has always been a politically sensitive issue. At least a couple of major famines had struck this part of the world. The price and availability of rice had a role in those. That is why any sudden or abnormal rise in prices of rice does, in most cases, hit newspaper headlines.

But the fact remains that the country now produces enough rice to feed its entire population. Improved farm technology that includes hybrid rice varieties has made it possible. What is more important is that introduction of the technology in full would help the nation raise the production of food further despite a slow but steady decline of its arable land. 

However, a plentiful supply of the main staple notwithstanding, the country often encounters a problem with its prices.  The reasons, on occasions, are found to be natural ones. But due to the lack of timely and appropriate decisions, the rice market on many occasions become volatile. Mismatch of data available with the relevant government agencies on acreage and output of major crops also gives rise to confusion.

The current rice market is a case in point. The market has been volatile for some months with prices of rice showing an uptrend continuously. Even during the peak Aman rice harvest season, the prices are showing no sign of abetting. Rice traders are worried that the prices might soar further in the coming days. The prices of all varieties of rice are abnormally high. Even the coarse varieties of the cereal are now selling between Tk 47 and Tk 50 a kg.

The Aman rice cultivation has suffered several setbacks this year. So, there are justified reasons for the market to demonstrate some volatility. But a few appropriate damage control measures could have helped the government avoid the situation.

The directorate of agricultural extension (DSE) had projected the Aman acreage at 5.9 million hectares this year. But the area under this rice crop that makes available 36 per cent of the country's total annual rice output was less than the projected one due to the consecutive floods. Farmers in many areas of at least 37 flood-hit districts could not transplant Aman seedlings within the usual deadline of 15th August. They had an option to transplant seedlings of late variety, but, in most cases, they did not go for it. Had they done it, they would have to skip the Rabi crops this year.

On August 20 last, Agriculture Minister Dr Muhammad Abdur Razzaque had disclosed that the floods had damaged crops worth Tk 13 billion covering an area of 0.158 million hectares in 37 districts. The DAE in the middle of September downplayed the extent of damage caused to Aman crop by the four consecutive floods. It claimed that the area under Aman this year had been nearly 0.2m hectares more than that of the previous year. The claim makes one believe that the Aman production this year would be more than that of the previous season.

But the supply of the newly harvested Aman rice and the price level do not substantiate such a rosy picture. The Directorate of Food itself has become a victim of the situation. Harvesting of Aman rice is now almost complete. The directorate has not been able to hit even one-third of the procurement target. The millers are found reluctant to sell rice to the government as the price offered by the government is lower than that of the current market price of processed rice.

Meanwhile, the government's food stock has dwindled to less than 0.55 million tonnes, which is far too low to handle an emergency effectively. The government has reportedly struck a deal with an Indian supplier to procure 0.1m tonnes of rice and has floated tender to purchase another 0.1m tonnes. Getting rice at competitive prices, it seems, has become difficult in the international market as most rice exporting countries have hiked prices because of the latest increase in freight rates. The food ministry should have acted in time as far as food import is concerned. The floods and the dwindling government food stock were enough to justify the import of food.

It seems that the government is not willing to allow the private sector to import rice now. It is opposed to the private import out of the notion that farmers are getting 'good and fair' price for Aman this year---the lowest price of paddy is now Tk1200 a maund (37.33kg), more than twice the price of last season. The price is high, but not too many farmers are seen selling paddy these days in the rural bazaars and at other outlets.

What seems more important now is the stabilisation of the rice market. The government has already decided to make a limited intervention into the market. As part of that decision, it would sell rice at a subsidised price in three more city corporations, in addition to Dhaka. However, the move is unlikely to cool off the rice market. Under the circumstances, the government might consider reducing duty on rice for private imports.

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