Russia offers wheat, fertiliser import seems easing

Clouds of uncertainty that have overhung Bangladesh's imports of wheat are finally going to be dispelled as Russia offers 3 lakh tonnes of wheat and a senior US official states that sanctions do not "stop Russia from exporting its grain or fertiliser".

Russia, the world's biggest wheat exporter, on Thursday offered exports of 3 lakh tonnes of wheat within 60 days, officials said after a virtual meeting over signing the supply deal.

Food Minister Sadhan Chandra Majumder also informed parliament yesterday of the Russian offer to export wheat to Bangladesh.

Officials who attended the virtual meeting said Bangladesh has agreed to the proposal but it wants wheat supplies in two phases – 2 lakh tonnes in 60 days and another 1 lakh tonnes in 90 days to avoid congestion at the port.

Moscow has quoted Dhaka a rate of $440-$450 per tonne.

Both the parties will reach a final decision over wheat prices and delivery time in the next meeting to be held on 4 July. 

Meanwhile, US State Department Bureau of Economic and Business Affairs Assistant Secretary Ramin Toloui has made it clear that importing Russian food and fertiliser is not subject to US sanctions over Moscow's war in Ukraine.

He suggested that countries should ask the United States for help if they have any problems in importing Russian food and fertiliser, according to a Reuters report.

The news has come as a relief for Bangladesh struggling hard to find countries to source wheat and fertiliser.

Agriculture Secretary Md Sayedul Islam told The Business Standard that they would look into how to resume fertiliser imports from Russia following the US official's statement.

The resumption of imports of fertilisers from Russia will ease the government's subsidy pressure to a great extent, he thinks.

"The United States does not want there to be impediments to the ability of countries, companies to purchase Russian food, Russian fertiliser, and for those goods to access international markets," US official Toloui was quoted as saying.

He encouraged countries to contact the US Treasury Department or local US embassies if they were having issues.

Foreign relations analyst Humayun Kabir told TBS, "We have to inform the West first prior to importing wheat and fertilisers from Russia so that no confusion arises."

Besides, there is a need for a diplomatic initiative for negotiations with Russia and making sure that Western countries do not object to the imports, he added.

So, the foreign ministry should also be engaged in this regard, he also said.

"Our main weakness is a lack of cooperation among government agencies in dealing with any foreign issues," Humayun Kabir, also a former ambassador to the US.

In FY22, there is a demand for 57.50 lakh tonnes of chemical fertiliser – 26 lakh tonnes of urea, 7.5 lakh tonnes of TSP, 7.5 lakh tonnes of MoP and 16.5 lakh tonnes of DAP.

Russia is the main import source of non-urea fertiliser for Bangladesh. Besides, Bangladesh imports 7.5 lakh tonnes of MOP every year from Belarus and Canada.

Food Secretary Md Ismail Hossain led the Bangladeshi side in the bilateral virtual meeting organised to finalise the wheat supply deal with Russia.

After the meeting, he told TBS they had a positive discussion with the officials of Russia's food and agriculture ministry to procure wheat from the country in a government-to-government deal.

"They expressed interest in exporting 2-3 lakh tonnes of wheat to us and we agreed to it," he said.

An agreement will be signed with Moscow on wheat imports after finalising wheat prices and payment method in the next few meetings, he noted.

A food ministry official, speaking on condition of anonymity, told TBS that Russia recently informed Bangladesh of its interest in exporting wheat to the latter. Earlier, Dhaka through its embassy in Moscow also requested Moscow to supply the food grain to it.

The food secretary said although there is a plan to import 2 lakh tonnes of wheat from Russia, the amount may increase to 3 lakh tonnes in the final negotiations.

Bangladesh is now trying to source wheat from different countries after its main supplier India banned exports of the grain last month to rein in its local prices.

Bangladesh's domestic production of wheat stands at 10 lakh tonnes a year. In FY22, the government set a target to import 9 lakh tonnes and has so far signed deals with different countries for supplies of 6.5 lakh tonnes. The total imports now stand at 4.7 lakh tonnes, according to the food ministry.

On the other hand, private imports drastically fell to 31 tonnes in FY22 from 48 tonnes in FY21 and 60 lakh tonnes in the pre-pandemic year of 20.

Efforts on for wheat from other sources

Besides, efforts are underway to import 5-6 lakh tonnes of wheat from India on a government-to-government basis, Ismiel Hossain also said, adding, "We have sent a list of 13 Indian dealers to the Indian government through the High Commission. If they agree, wheat imports from the country will begin."

"We have come to know from the Indian media that the Indian government has taken a positive decision in this regard. We will be happy to get at least 2-3 lakh tonnes of wheat from the country," he noted.

Apart from Russia and India, the government is working on procuring 1 lakh tonnes of wheat each from Canada and Australia in a G2G deal, the food secretary said, adding that they will meet with these countries virtually within next week.

Besides, negotiations are underway with the Argentine government to import wheat. There will be a virtual meeting with it very soon, he said.

The food directorate has also taken initiative to increase stocks by importing wheat through tenders. As part of this, a tender for the import of 1 lakh tonnes of wheat will be floated on 5 July 5, the food secretary said.

Private import from Russia hinges on success of G2G initiative

Millers say if the government's initiative to import wheat from Russia sees success, the private sector will also resume imports. 

But, they are keeping an eye on what payment system is adopted as it will be a challenge to pay for Russian wheat considering Western sanctions on Moscow, they point out.

Taslim Shahriar, senior assistant general manager at Meghna Group of Industries, told TBS that it will be great if the government can bring in Russian wheat by removing the complexities over the payment system. 

But whether the private sector will be allowed to use the payment system finalised by the government will be understood later, he said.

When the Russia-Ukraine war  began on 24 February, the European Union, the United States and their allies imposed sanctions on Russian and cut off its number of banks from the main international payment system, Swift.

The US also warned more than once that the West would impose sanctions on countries that would import goods from Russia in defiance of the sanctions, which stopped imports of goods from Russia to many countries in Asia and Africa, including Bangladesh.

In response, Russian blockade of food exports in Ukraine's Odessa Sea Port led to a halt in the country's food exports.  In this situation, the United Nations has taken initiative to start exporting stocked food products of Ukraine, expressing fear of famine in different parts of the world, including Africa and Middle East.

The US and the EU have blamed Russia for creating a global food crisis. 

On the other hand, Moscow argues that Western sanctions on its banking and shipping industries make it impossible for Russia to export food and fertiliser and are scaring off foreign shipping companies from carrying it. Russian officials insist sanctions be lifted to get grain to global markets.

Against all these backdrops, both the superpowers have softened their stance over exports of food products. During a recent foreign ministerial meeting with Turkey, Russia agreed to allow ships carrying grain supplies to leave the port of Odessa in Ukraine.

In a statement, the US State Department Bureau of Economic and Business Affairs Assistant Secretary Ramin Toloui ‍said, "Nothing is stopping Russia from exporting its grain or fertiliser except to its own policies and actions," reported Reuters. 

"The United States does not want there to be impediments to the ability of countries, companies to purchase Russian food, Russian fertiliser, and for those goods to access international markets," Toloui said.

Softened US stance may open up window of Russian fertiliser imports

"The US statement may reopen the way for fertiliser imports from Russia, which will benefit us a lot," said  Agriculture Secretary Md Sayedul Islam.

However, the payment system will be decided by the Bangladesh Bank and the Ministry of Finance, he also said, adding, "We will take initiative to import fertilisers after examining the whole matter."

The agriculture secretary said before the start of the war in Ukraine in February, Bangladesh had approved a proposal to import 1.8 lakh tonnes of fertilisers from Russia, but it was not possible to do so due to complications centring payments, he noted.

There have been fertiliser crises around the world since its exports from Russia and Belarus came to a halt, resulting in several-time hikes in its prices. As a result, global food production is expected to decline further in the coming years, fear global agencies. 

They think that the food crisis could take a more terrible form.

Bangladesh is also suffering from its negative effects. 

Agriculture Minister Abdur Razzak said the government used to import fertiliser at $300 per tonne from Russia before the beginning of the war, but now it has to import it from Canada at $1200 per tonne. 

Due to the inability to import fertilisers from Russia, it is becoming difficult to ensure the supply of fertilisers to farmers in the coming Boro season, he added.

The subsidy on fertilisers amounted to Tk28,000 crore in the current fiscal year because of imports at four-time high prices.