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When will rice prices return to reasonable level

When will rice prices return to reasonable level?

October 11, 2017

 

The prices of rice could increase yet again at the end of this month and may not return to normal levels until June next year, experts and traders have warned. Retail prices of the staple have dropped slightly from the highs paid during Eid-ul-Azha due to several government initiatives, but they have yet to come down to a tolerable level.

 

During the Muslim festival, the price of fine rice went up from Tk54 to Tk70, while the price of coarse rice spiked from Tk38 to Tk54, following market manipulation and rumours that India would stop exporting the staple. According to a report by the Directorate of Agricultural Marketing (DAM), per kg retail price of fine rice at markets of Dhaka was Tk60 to Tk68 on Monday, while coarse rice was sold at between Tk45 and Tk47.

 

However, traders in Dhaka have warned that the prices of rice could rise by at least Tk1-2 per kg at the end of this month. Market insiders have claimed the prices might decrease in around 90 days, during the harvesting season of Aman crops. The prices could further drop to a reasonable level in June next year, if the farmers witness a bumper harvest of Boro crops.

 

Government action

 

The government implemented several measures to bring the market prices under control, such as importing rice, taking action against illegal stockpiling and launching subsidised sales. Government officials conducted drives at different rice mills and warehouses across the country, seizing thousands of sacks of rice which were being hoarded illegally.

 

Additionally on September 19, Commerce Minister Tofail Ahmed, Agriculture Minister Matia Chowdhury, Food Minister Qamrul Islam and former Food Minister Dr Abdur Razzaque held a meeting with rice mill owners, importers, hoarders, wholesalers and retailers at the secretariat.

Following the meeting, the mill owners announced a reduction in the prices of all varieties of rice by up to Tk3 per kg.

 

In a further effort to bring down rice prices, the government took a series of steps to ease the import process by slashing the import duty and allowing private traders to import rice without any deposit against letters of credit or LC margin. According to the Ministry of Food, Bangladesh has so far imported 1,027,000 tons of rice this fiscal year, of which 273,000 tons was imported by the government and the rest by private traders.

 

Reserves hit

 

According to the Directorate General of Food, as of October 3 Bangladesh’s stock of food grains stood at 461,000 tons, of which 354,000 tons is rice and the rest is wheat. Another 71,000 tons of food grains are in port and will be added to the stocks soon. Significant pressure has been placed on these reserves by the ongoing relief activities under the Social Safety Net in the 32 flood-affected districts. The flash floods in haor basins in the country’s north-eastern region damaged around 2 million tons of Boro crops in April this year.

 

This was followed by an above average monsoon flooding in August, which washed away around 600,000 hectares of Aman crops, causing a projected loss of 1.5 million tons of rice this season.

The reserves took another hit from providing humanitarian assistance to the estimated 519,000 Rohingya refugees who have fled to Bangladesh for safety since August 25, when a brutal military crackdown began in Rakhine state of Myanmar.

 

Price drop stalled

 

Government initiatives have helped to slash the price of rice, but it is yet to drop to a tolerable level. According to the Trading Corporation Bangladesh (TCB), the prices of coarse rice have remained between Tk45 to Tk50, while the prices of fine rice followed the same pattern.

 

A number of traders claimed that the rice mill owners had cut the prices while under pressure from the government to do so. However, the price drop stalled as soon as the pressure on traders weakened in recent weeks. Meanwhile, several market experts said the price of rice would have dropped further, if only the government had imported boiled-rice instead of non-boiled rice.

Also Read- Rice prices continue to go up

 

“The OMS programme can not achieve full success in halting the price hike of rice, as imported non-boiled rice is being sold under the programme, which is unfamiliar in most parts of Bangladesh,” Agro-economist and former director general (DG) of Bangladesh Institute of Development Studies (BIDS), Dr Quazi Shahabuddin, told the Dhaka Tribune.

 

The government has been conducting open market sale (OMS) of imported rice at the retail price of Tk30 per kg through 672 centres across 64 districts. The OMS programme started from September 17 and will continue till October 15.

 

“If the government had imported boiled rice and sold it in the retail market, it would have been most helpful to the low-income people,” Shahabuddin said. The agro-economist said the price of rice might not drop any time soon as the prices usually increase ahead of the Aman and Boro harvesting seasons: “We might have to wait until next year’s Boro season (May-June) for the rice prices to go down.”

 

Echoing the same view, Nirod Boron Saha, president of Naogaon Rice Wholesalers Association, told the Dhaka Tribune: “There is no way to drop the price to a previous level, as we are importing rice at a high cost.”

 

“The import of rice is enough to counter the present shortage of rice, but the prices cannot be dropped further,” he added. Nirod Boron Saha is however optimistic that the prices might come down by the third week of November, depending on the successful harvest of the Aman crops.

 

Source:http://www.dhakatribune.com/bangladesh/2017/10/11/will-rice-prices-return-reasonable-level/

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