Delhi offers wheat help

When the war waged by Russia in Ukraine broke out, the reverberations could be felt more than 4,000 kilometres away in Bangladesh.

Both countries, among other things, were also the two main sources of wheat imports. The disruption in those markets meant the price of the staple shot up in the Southeast Asian country.

From breads to biscuits, most daily food became dearer.

The resolution to the crisis, which threatened upending much of Bangladesh's success, may finally be in sight.

In response to Bangladesh's request of exporting wheat from India, the country has now asked to know how much wheat Bangladesh needs to import both on a government-to-government basis and privately at the moment.

The response has generated hope among domestic importers, who have already begun seeking permits from the Plant Quarantine Wing of the Department of Agricultural Extension. 

Farhana Haque (Import), additional deputy director, Plant Quarantine Centre, told The Business Standard that traders had started applying for permits to import the wheat despite India's ban so that they can open the letter of credit (LC) quickly in case the ban is lifted.

Importers say that if wheat exports from India start again, the market for flour, bread and biscuits will stabilise in the country.

Md Taslim Shahriar, assistant general manager of Meghna Group, told TBS that the crisis could be averted if wheat could be imported from India. At the same time, prices will be lower than that of the wheat imported from Canada and Australia.

Due to the conflict, the price of wheat in the international market increased by more than 50%. The price per quintal in the Bangladesh market also increased from Tk900 to 1,600.

At the time Bangladesh turned to its neighbour, India, the most reliable source of wheat at the moment in the world. But even that door almost closed when India banned wheat exports on 13 May.

Although some wheat is imported from Canada to alleviate the crisis, its price is much higher, meaning it had a negligible effect on the cost of the staple.

The Bangladesh government then officially reached out to India, urging it to relax the ban.

In response to a letter from the Bangladesh Ministry of Foreign Affairs and the Ministry of Food, Bangladesh High Commissioner in New Delhi Muhammad Mahbubur Rahman on 18 May requested the Indian Ministry of External Affairs to export at least six lakh tonnes of wheat to Bangladesh as soon as possible on a G2G basis.

In a return letter to the high commission, the Indian Ministry of External Affairs sought information on the current demand for wheat in Bangladesh and how much it needed to be imported officially and privately.

Besides, in a recent meeting with the foreign secretary of India, the Bangladesh high commissioner also repeated the request for exporting wheat to Bangladesh.

During the meeting, the foreign secretary assured of his full cooperation in resolving the issue within the shortest time possible upon receiving detailed information.

Afzal Mehdat Adnan, second secretary (political) of the Bangladesh High Commission in India, sent a letter to the food ministry on 25 May, asking whether Bangladesh had opened the LC to import 6-7 lakh tonnes.

India also sought details on the LCs opened, the import price and the list of LCs Bangladesh had opened before India banned wheat exports.

Besides, India has also asked Bangladesh to provide information on how much G2G, B2G and B2B wheat needs to be imported.

How much wheat is already imported?

New Delhi has further sought detailed information from importers and exporters on the latest developments in Bangladesh's wheat imports from India, especially whether Bangladeshi imported wheat is stuck anywhere in India.

Director General of Food Directorate Md Shakhawat Hossain told TBS that one lakh tonnes of wheat has already been imported from India, which is now awaiting unloading at Chattogram port. There is another one lakh tonnes which is being imported officially.

Abul Bashar Chowdhury, chairman of BSM Group, a wheat importer, said about three lakh tonnes of wheat has arrived so far since India announced a halt to wheat exports. Some more imports are on the way.

Additional Secretary of the Ministry of Food (Procurement & Supply Wing) Md Mozibor Rahman said, "We have officially requested the high commissioner to take steps to import 1.2 million tonnes of wheat from India considering the demand for the next financial year."

He said the commission had asked how much of this would be imported on a G2G basis and through tenders.

Besides, the high commission has also been asked about the amount of wheat that needs to be imported privately.

"We have written to the commerce ministry to find out what the private sector needs. After receiving the information, we will inform the high commission," he added.

Food Ministry officials said that the National Federation of Farmers' Procurement, Processing and Retailing Cooperatives of India Ltd, an organisation of Indian exporters, had expressed an interest in exporting wheat to Bangladesh.

A market under threat

Bangladesh's wheat stocks have already hit its lowest mark in three years, reaching 1.18 lakh tonnes, about one-third of that in the same period last year.

Wheat imports have also declined this year as exports from Russia, Ukraine and India stopped.

Although countries like Australia, Canada and the US emerged to fill the gap, their prices are much higher.

In 11 months of the current fiscal year, wheat imports stood at 34.58 lakh tonnes of which the government imported 4.44 lakh tonnes and the private sector imported the remaining 30.13 lakh tonnes.

In the last fiscal year, government imports amounted to 4.78 lakh tonnes and 48.64 lakh tonnes were brought in at the private level.

In the meantime, prices of all processed food, such as bread, biscuits, noodles, and other items made from wheat have shot up.

Bulk flour prices went up to Tk46 per kg from Tk36 per kg. Prices of roti, paratha and frozen food have increased as well.

The rising food cost has led many low-income people to cut back spending on food. 

Insiders fear that if the instability persists, then prices will rise further.