Rice soars by Tk6-Tk8 per kg in two months despite duty cut

Infographic: TBS

Rice prices keep surging – going up by Tk300-400 per 50kg sack or Tk6 to Tk8 per kilogram at the wholesale level in the last two months – despite various government measures to rein in the overheated local market, including sizable cuts in its import duty and commencing its sale at subsidised rates.

According to information from rice mills in Chaktai commercial area of Chattogram's Khatunganj, one of the country's largest wholesale hubs for household essentials, each sack of boiled coarse rice is selling at Tk2,300, Swarna at Tk2,550, Beti at Tk2,800, Paijam at Tk3,000 and Jirashail (Katari) at Tk3,800.

At the end of July, the price of coarse rice was Tk2100, Swarna Tk2,200-2,250, Beti Tk2,500-2,600, Paijam Tk2,400-2,600 and Jirashail (Katari) at Tk3,000-3,200.

Among atap rice from sun-dried paddy, Beti is selling at Tk2,700, BR14 at Tk1,800 and Jirashail (Katari) at Tk3,800. Two months ago, the prices were Tk2,300-2500, Tk1,700 and Tk3,600, in that order. According to the market rate, the price of almost all types of rice has increased by Tk300-400 in a span of just two months.

Rice traders at Chaktai and Pahartali markets in Chattogram said the price of the staple has been on the rise for more than three months. On 28 August, the government reduced duty one more time to increase imports and so control the market. After that import from India increased and the price stabilised to some extent.

But on 9 September, when the Indian government imposed new tariffs on rice exports, its price in the domestic market increased one more time. Since then, the price has risen by at least Tk100-150 per sack. Before this, the rice market had another increase at the beginning of August. Accordingly, in the last two months, the price of a sack of the food grain has increased by Tk300 in the wholesale market, the traders added.

Farid Uddin Ahmed, a trader at Chaktai rice wholesale market, said, "After various initiatives taken by the government, the price was on a downward trend. But after India's imposition of tariffs on rice exports, the price has suddenly increased again."

"Although India imposed a 20% tariff atap rice exports, the prices of both atap and boiled rice are increasing in the domestic market. Now rice is coming from India but it is not in the market. There is a syndicate of importers, mill owners and corporate groups behind this and they are controlling the entire import and supply of rice in the country. As a result, there is no positive impact on the market," he added.

Asim Kumar Saha of Khawaja Auto Rice Mill at Chaktai said that to control the market, the government should make rice import open for all.

"If the import is open, everyone will start bringing in rice according to their choice. That rice will reach the market quickly and then prices will come down. Consequently, industrial groups will not be able to stockpile rice through syndication."

Shanto Dasgupta, former president of Chattogram Rice Mill Owners Association, said the lowest booking price from India was $280-300 per tonne of atap rice while the price was $380-420 for boiled rice.

"But the import is slow owing to a strong dollar and India's tariff. As a result, although the price was expected to decrease with an increase in imports that is not happening," he added.

According to the Directorate General of Food, after the announcement by the National Board of Revenue on 28 August to reduce the rice import duty, the imports picked up slightly.

The government agency has so far allowed 398 companies to import 12.41 lakh tonnes of food grain. Among them, over 1.33 lakh tonnes arrived in the country as of 18 September. All but 24 tonnes of rice came from India.

To tame an unrelenting rise in the prices of rice, the revenue authorities on 23 June issued a notification reducing import duty on rice from 25% to zero. Besides, regulatory duty has been brought down from 25% to 10%. Then on 28 August, regulatory duty was further slashed by 5% to only 5%. Traders will get this facility to import boiled rice and rice until 31 December.

SM Nazer Hossain, vice-president of Consumers Association Bangladesh (CAB), said that the government has taken many initiatives, including reducing duties and selling rice, at a fair price.

"But importers and traders have benefited more than consumers. In order to reduce the price, vigilance on the importers, millers and wholesalers has to be increased."