The volatile food market

THE rice market has become volatile, as government stock has hit all time low at 1.9 lakh tons that never happened over the past several years. Local production has sharply dwindled for loss of Boro crop from recent flood while import by the private sector has dropped to a four-year low. It appears that the government has totally failed to maintain the minimum buffer stock leaving the nation unprotected. High corruption by Government Minister in import of food grains and indiscipline and mismanagement within the Food Ministry has created the mess causing the stock shortfall and the phenomenal rise in rice prices.

Traders imported only 1.2 lakh tons of rice till mid-June in the current fiscal year against 2.56 lakh tons in the previous fiscal year. The import has not dipped so low since 2012 when 29,000 tons of rice were imported. Importers blame the existing 28 percent tariff on rice import for the decline. As the domestic rice market has become volatile, the government is now trying to replenish the stock through quick import.

It has already reduced import duty to 10 percent to encourage private import, but it is too late given the supply shortfall and higher rice price in the market. The present stock at government gown below two lakh tons just shows how indifferent the government was over keeping the food market stable. For any category of rice price has shot up from Tk 5 to Tk 10 per kg over the past few weeks.

Last week, the government decided to import rice from Vietnam at high cost. The state-run Trading Corporation of Bangladesh recorded 47 percent hike in the price of subsidized coarse rice this month. The government didn’t have to import rice since fiscal 2011-12 due to successive good harvest. Then it stopped cheaper import from India raising the import duty that forced private importers to stop rice import.

But the supply crunch started as the government-started open market sale of rice at low cost to the poor. It was mainly a politically motivated programme to give rice to the poor at affordable cost at Tk 10 per kg for certain amount in a month. But as the stock dwindled, government procurement from local market also failed. Traders demanded higher price to supply rice to the government.

We must say the price of rice can go down quickly if the supply of rice can be increased in a parallel effort by both the government and private sector imports. In the meantime it can force domestic rice stockist like millers who are ruling party leaders in most cases not to hoard stock and keep the supply stable in the market. Bangladesh Bank has also advised banks to open L/Cs with zero margins for rice import.

We are appalled by the indifference of the government and hope that it is not a trap by dishonest people to rob people and make illegal fortune.