After the duty on rice import was cut by 18% recently to cope with the pressures caused by crop shortfalls, prices were expected to fall in domestic markets.
But the price of different varieties of rice have only changed slightly. Importers say the prices have gone up in India from where they import, leaving them unable to lower prices.
The government on June 20 cut the import duty of rice by 18% from 28% to keep rice prices affordable in the retail markets. Now the importers have to pay 10% duty.
On the other hand, rice prices in India have risen as result of a revival in demand from Asian and African buyers, though markets in Thailand and Vietnam, two other major importers, have remained stable.
According to local rice importers, they were purchasing rice from India at Rs 27,300 per tonne previously, but now they have to buy at Rs 27,950- 28,275. So, after adding other expenses with the purchase price, per kilogramme coarse rice is now between Tk 39-42 when it reaches Dhaka.
Rice prices shot up in the local markets during last couple of months due to recent flash floods in the Haor areas of north-eastern region of the country. The floods damaged over 200,000 hectares of Boro paddy.
Bangladesh Rice Merchants Association Vice President Zakir Hossain Rony said: “The rice price hike in Indian market would have impact on our markets, no matter how much import duty the government cuts.
“We expected the price of coarse rice to come down to Tk35 and Miniket to Tk45. But coarse rice including Miniket and Paizam were sold at Tk54 to Tk56 per kg in Dhaka last week after prices witnessed a fall by Tk2 to 5 per kg for different rice verities.”
Mamun Ur Rashid, member of Bangladesh Rice Exporters Association, said: “As India has increased price, it will definitely have an impact on our markets. But right now we are yet to calculate the volume of the possible impact.”
“I sold coarse rice at between Tk46 to Tk52 per kg which was Tk50 to Tk56 a week ago and fine rice between Tk54 and Tk60 per kg which was Tk58 to Tk65,” said Tawhidul Alom, a retailer at Dhaka’s Kolabagan.
Rezaul Karim, a wholesaler at Kawran Bazar said: “We sell 50-kg sack of coarse rice at Tk2,000 to Tk2,200, Paizam at Tk2,300, Miniket at Tk2,700, Najirshal at Tk2,950 and Chinigura at Tk3,750-4,000.”
After the import duty was cut, prices came down by Tk150 to Tk200 for every 50-kg sack.
“But we have to face pressure as India has increased rice price,” he added.
The private sector imported 1,33,000 tonnes of rice between July 1, 2016 and June 30, 2017 but the government did not import any rice in that time.
According to the state-run Trading Corporation of Bangladesh which tracks the prices of daily necessities, the price of coarse rice was Tk30-34 and fine rice was sold at Tk44-55 last year.
Bangladesh is set to buy 250,000 tonnes of white and parboiled rice from Vietnam to maintain immediate availability of stock in the market, as well as reserves.
According to a Food Ministry proposal, the government will be importing 200,000 tonnes of white rice at $430 per tonne, though the price per tonne was $380 in the last month.
The ministry is also planning on procuring 50,000 tonnes of parboiled rice at a cost of $470 per tonne, while the price had been less than $450 just a week ago.