Traders believe the high price of rice is set to continue after recent flash floods in the northeastern wetlands destroyed more than 200,000 hectares of mature Boro paddy.
The Trading Corporation of Bangladesh says coarse rice has been selling for Tk37 to Tk40 and fine rice for between Tk46 and Tk56 in Dhaka’s markets for the last couple of weeks.
Although rice prices usually go up at this time of the year just ahead of the Boro harvest, both are about Tk10 higher than at the same time last year.
“We were hoping that the prices would go down soon, when the early Boro harvest starts in the Haor region within the next week. But the sudden flash floods have destroyed that chance,” said Nirod Boron Saha, president of Noagaon Rice Whole Seller Association.
According to the Ministry of Agriculture, Boro is the largest part of the country’s rice production. In the 2015-16 fiscal, Boro made up around 19 million tonnes of the total 35 million tonnes of rice produced in Bangladesh.
Zahidul Haq, deputy director of the Department of Agricultural Extension (DAE) office in Sunamganj district, said the recent downpours have taken their toll on the harvest.
“At least a 100,000 hectares of Boro has gone under water in the flash flood in the last few days,” he said. A similar situation prevails in Netrokona.
Although they have not yet estimated the damage, DAE officials in Dhaka fear that the total Boro paddy loss might have passed 200,000 hectares.
If Agriculture Ministry’s calculation of an average of 4 tonnes of Boro produced per hectare is applied, the country may lose around 800,000 tonnes of Boro this season.
“This shortage will definitely create problems in current rice price hike,” Nirod Baon Saha said.
Why the price hike?
For the first time in several years, farmers got a comparatively good price in the last Aman season, selling one maund (37.24 kgs) of paddy for Tk800 to Tk850.
Due to the good price of paddy, most farmers sold out their harvest quickly, bringing the rice to the hands of traders and millers.
“As the millers now have control of the rice supply, they might be playing a role in pushing the prices up,” Nirod Baron Saha said. Another reason is that rice import by the private sector ground to a halt in the past year after the government imposed a 25% import duty.
Rice reserve is half
According to the Food Ministry, the government’s grain reserve is now is almost half of what it was this time last year. As of April 3, the government’s rice reserve was 496,000 tonnes; in April 2016, it was 883,000 tonnes.
This shortage is the result of a failure to meet procurement targets for both Boro and Aman paddy last year. The government has procured 585,000 tonnes of Boro rice against a target of 1 million tonnes and 440,000 tonnes of Aman against a target of 600,000 tonnes.
“The prices would have eased soon, but the sudden flash floods have made the situation worse,” said Agriculture economist Dr Quazi Shahhabuddin, who is also the former director general of Bangladesh Institute of Development Studies.
“The government should not have brought the food reserve to this state. If the reserve was good, it could introduce large volumes of Open Market Sale or other mechanisms to reduce the price.”