The rice market has become volatile as soon as the government declared the nationwide weeklong lockdown to contain the recent rise in coronavirus infections.
In the last four days, the wholesale and retail prices of rice have increased by around Tk200 a bag.
Traders said the price of rice has gone up due to higher demand, a lack of adequate stocks and shortages in supply.
After the government had reduced tariffs and allowed private imports, the price of rice started to decline. The import duty was further reduced to 10% as the price did not decrease as per expectation. However, due to insufficient imports and increased prices in the global market the price of the staple did not come down as expected.
Traders at Chattogram's Khatunganj, the country's largest wholesale market for consumer goods, said the rice supply chain in wholesale and retail markets across the country broke down after the government announced the one-week lockdown from 5 April. Since then, the country's rice market has become volatile.
Basically, the wholesale prices of various daily essentials, including rice, are determined by supply management, sale on credit or supply contracts against cheques. In normal times, one or two transactions are conducted at rice warehouses. After the purchase of the product, the transaction is processed by cashing the cheque in installments subject to sale.
But after the announcement of lockdown on 5 April, rice sale on credit from warehouses has practically stopped. Moreover, in addition to the sudden increase in demand, a temporary cash crisis has arisen in consumer goods markets due to the shortening of banking transaction deadlines. That is why rice prices have gone up, argued the stakeholders.
Omar Azam, a wholesale rice trader in Khatunganj, said the price of rice has gone up by Tk200 to Tk250 per bag before the all-out lockdown starting from 14 April. In the wholesale market, newly harvested aman rice is also being sold at increased prices along with the newly imported rice.
Traders are selling rice at a higher price than the wholesale price in the retail market due to the increase in the wholesale market. As a result, people are being forced to spend extra money on rice before the countrywide lockdown.
Within the last few days, the price of jira siddha rice has increased by Tk150 per bag (50 kg) to Tk3,150; pari siddha (new) increased by Tk50 to Tk2,350; Pari siddha (old) increased by Tk50-70 to Tk2,470; swarna siddha increased by Tk200 to Tk2,290; miniket siddha increased by Tk160 to Tk2,560 and katari siddha (25 kg sack) increased by Tk200 to Tk1,700.
On the other hand, among the atap varieties, price of beti atap (old) has increased by Tk200 per sack to Tk2,700; beti atap (new) is being sold at Tk2,500-Tk2,600; miniket atap increased by Tk150 to Tk3,100, while price of eri atap has increased by Tk160 to Tk2,150.
Moreover, although the costing price of beti, imported from India, is low, at present this rice is being sold in the wholesale market at Tk2,300 to Tk2,350. On the other hand, per sack (25kg) of nazir siddha rice, imported from India, is being sold at Tk1,470 to Tk1,480 whereas only a few days ago, this Indian rice was sold at Tk1,350 per sack.
Traders have been increasing the price of rice in the wholesale markets across the country every day as the supply of rice from the northern part of the country has reduced since the lockdown started on 5 April. The wholesalers have increased the price of rice out of the thought that they might have to procure rice at a higher price after selling rice bought at lower prices earlier.
According to the Food Department, the collection of aman started from 6 November, 2020. As on 15 March this year, 70,136 tonnes of aman siddha rice, 4,863 tonnes of atap rice and 12,342 tonnes of aman paddy have been procured. In total, only 83,202 tonnes of rice has been collected at the government level.
The government has not been able to procure rice as per the target for the last few seasons. The government had set a target of procuring 17 lakh tonnes of rice in the 2020 boro season. But the government could not procure more than 10 lakh tonnes.
Meanwhile, after rice stock came down to less than 5 lakh tonnes, the government allowed the private sector to import rice from different countries.
Although the import duty on rice was reduced several times, the import of rice did not meet the target due to the complexity of the import process and increased rice prices in the global market.
According to the Ministry of Food, as of 11 April last, there is a stock of 4.82 lakh tonnes of food grains where 3.72 lakh tonnes is paddy and the rest is wheat.
Nusrat Jahan, a resident of Chattogram's Chakabazar area, said she bought conch-branded basmati rice (50 kg sack) at Tk2,200 six months ago. The same rice is now being sold at Tk3180 which was sold for Tk2,800 two months ago. In other words, the price per sack of rice has increased by Tk1000 in six months.
The traders complained that although the government reduced the import duty on rice to 10%, complexities in the import process discouraged the private sector importers.
Following an application of the commerce ministry, the government is allowing various companies to import rice. As a result, due to the delay in government approval and reluctance of private sector importers, the import price of rice was more than the actual price. For this reason, the government initiative to allow the private sector to import rice did not become fruitful.
Moreover, the Finance Minister's statement in the last week has also played a role in increasing the price of rice, the general traders complained.
Contacted, Shanta Dasgupta, former president of the Chattogram Rice Mill Owners' Association and a wholesale rice trader, said the price of rice has gone up in the wholesale market since the announcement of the all-out countrywide lockdown.
He said the actual traders could not import rice as the import facility was not open to all. Even after the import of rice, the government agencies have failed to control the market.
"It has become difficult to control the market in times of crisis as the rice market has been occupied by a certain class of traders," he alleged.