Target food security

The government has taken several steps to provide relief to the vulnerable from high staple prices.

The annual inflation rate climbed to over 7% in June this year, the highest since July 2013, and the government intends to protect the low- and middle-income people from the price shock in the market.

The government will sell rice and flour to 4.4 lakh families every day by expanding the open market sales (OMS), while ensuring 10 kilograms of rice at low price for 1 crore Trading Corporation of Bangladesh (TCB) family cardholders, according to food ministry officials.

To increase the stock of rice in the country, initiatives are also being taken to import rice from various countries, including India and Vietnam.

A letter has been sent from the Cabinet Division to the National Board of Revenue to fully withdraw the existing 25.75% import duty and tax to ensure sufficient rice imports to meet the country's food needs.

Apart from this, the government is planning to reduce the price of diesel used for irrigation to cushion any effect on next season's Boro production amid a hike in fuel prices. Discussions in this regard are going on between the agriculture ministry, the Energy Division and the finance ministry.

The Russia-Ukraine conflict sparked a chain of events that sent supply shocks reverberating throughout the globe. Food prices shot up alongside sea freight rates. At the same time, the taka depreciated rapidly against the greenback, hiking the price of commodities in the domestic market.

All these series of events might pose a threat to food security for citizens, especially for the poor and the lower middle class.

Economists have for months warned that a large number of people will fall below the poverty line if the situation is not managed.

Against this background, Prime Minister Sheikh Hasina directed the food ministry to ensure food security of the people.

Food Secretary Md Ismiel Hossain told The Business Standard on Monday that the government is currently distributing low-cost soybean oil, sugar and lentils to 1 crore families through the TCB. Now they were instructed to provide the 10kg rice, he said.

The price of rice has not yet been finalised, but the PM is expected to do so soon and make an official announcement in this regard.

Calculations on other issues such as the duration, amount of subsidy needed and source of funding are now ongoing.

The final decision on whether to provide the rice to cardholders once a month or a few times a year will also be taken by the government.

The food secretary said there were still some issues to work out, such as whether the rice will be given through TCB dealers of the Food Directorate, but nothing has been finalised yet.

OMS expanded, more on offer

From 1 September, the food ministry will start distributing rice at a rate of Tk15 per kg under OMS, up from the earlier price of Tk10. Rice will be distributed to 50 lakh cardholders who will be able to purchase 30 kgs per month.

Besides, the OMS coverage is being extended across the country. Currently, rice and flour are being sold through 800 OMS dealers nationwide. The number of dealers will be increased to 2,013. Some 4,44,000 people will be able to buy rice and flour from OMS shops every day.

More rice, less price

Officials of the Ministry of Food said despite having sufficient stock of rice, the government is planning to import rice on a government-to-government (G2G) basis to expand the food friendly programme to protect the poor from the effects of inflation.

They said an initiative has been taken to import rice from Vietnam on a G2G basis and the ministry will contact the Bangladesh Embassy in Vietnam to take necessary steps.

The food secretary said the current stock of rice was satisfactory, however, more will be imported as required.

"We have MoUs with other countries for importing rice as well," he said.

He said the Russia-Ukraine war led to wheat stocks falling, but a process to import wheat from Russia is underway and will be finalised soon.

In addition, the ministry has sent a letter to the Cabinet Division, explaining the rationale for withdrawing all existing customs duties and VAT on rice to ensure the import of 10.10 lakh tonnes of rice which was approved for the private sector.

At present, there is around a 25.75% customs duty on rice import, said officials of the food ministry. Withdrawing it completely would increase import and ensure food security, the ministry believes. At the same time, it will also reduce the cost of the staple.

After receiving the ministry's letter, the Cabinet Division has written to the National Board of Revenue.

An officer concerned of the NBR confirmed they had received a letter, but no decision on the duty withdrawal had been taken yet.

Sayema ​​Haque Bidisha, a professor at Dhaka University and research director of SANEM, praised the initiatives taken by the government to ensure food safety, suggesting more transparency in the identification of beneficiaries of the social security programmes. 

Speaking to TBS, she said, "I see the initiatives to distribute 10 kg of rice at a low price to one crore families positively. However, it should be ensured that only those deserving subsidised food products get it." 

She also said apart from the one crore families, there were many lower-middle income families with fixed incomes, with many being the urban lower-middle class, who also needed support through ongoing programmes or new ones. 

A large part of their income is spent on house rent and transportation, so increase in food prices makes their lives difficult, she said.

Bidisha said in the current economic situation, private sector industrial owners should also take steps to ensure low-cost food for their workers. 

For example, a garment owner can allocate some money himself for his workers, while the government can also give some subsidy. Workers will be able to buy food products at low prices if the employers and government subsidise those, she said. 

Supporting the proposal on the withdrawal of import duties on rice, she said the existing duties on sugar, oil and other essential commodities should also be withdrawn. 

"This will give some relief to the consumers," she said, adding that the revenue lost by the NBR can be collected from other sectors through minor reforms. 

Shahidur Rahman Patwari, an importer and vice-president of the Bangladesh Auto Major and Husking Mill Owners Association, told TBS that due to the drop in dollar price, the import of rice has started, although the quantity is low.

 If the duty is removed, imports will start on a large scale and the price of rice will also come down in the market. As the dollar price falls and if duties are removed, rice price may fall by Tk6-7.

He, however, said there was a concern as India stopped exporting wheat after the Russia-Ukraine war broke out. 

As 90% of wheat imports came from India, if the ban is imposed again, then it will create more difficulties.