Rice importers, despite having the facility of a slashed import duty, failed to import less than one-fourth of what the government had permitted, leading to soaring prices of the staple in the local market.
On 30 August, the government, in a bid to rein in rice prices in the local market, authorised 415 private companies to import 17 lakh two thousand tonnes of rice, of which only 3.86 lakh tonnes have been imported so far, according to food ministry sources.
The government also reduced the duty to 25% from 62.5% and made it easier to import rice, a facility that was in effect until 30 October.
Speaking with ministry officials and importers, it appears, the rice traders, despite having the import permit, were in fact reluctant in importing rice. Besides, the ongoing pandemic limited the scope of importing rice from India.
Asked on the matter, Senior Assistant Secretary at the food ministry Muhammed Mahbubur Rahman told The Business Standard, "When prices dropped a little in the local market, the importers chose not to import. Citing global market prices, they are saying, they will have to sell imported rice at a price higher than that of the local market."
Information from the ministry's food planning and monitoring unit, however, contradicts such claims. According to the unit's data as of 3 November, imported rice from India, Thailand and Vietnam would cost Tk32.88 – 37.77, which after adding duty and relevant cost, should be sold at Tk40 per Kg. But, prices of coarse varieties of rice in Dhaka markets is currently Tk48-50 per Kg. According to data by the Trading Corporation of Bangladesh, prices of rice have increased 2.15% in the last one month. Prices for medium quality rice varieties increased 0.97% while price rose 3.28% for premium quality rice.
Chitto Majumder, importer and owner of an auto rice mill, told The Business Standard that he imported 1.5lakh tonnes of rice from India, which he sold at Tk40-40.10 per Kg.
"Importing rice from India was challenging due to complications in port, where every consignment was delayed by one month," he said.
Food ministry sources say importers with little experience initially were enthusiastic about importing but their interest plummeted when they assessed little profit based on the market. Many also failed to open letter of credits for importing from India, due the Covid-induced lockdown at the time.
The food ministry, however, is not unhappy about the low rice imports.
Explaining it further, Secretary at the food ministry Mosammat Nazmanara Khanum told The Business Standard, "Many who stored rice were waiting to manipulate the rice price market. But, when the government gave the permission to import, they started to market the stored rice, which essentially increased the supply."
She also said that the government imported 5 lakh tonnes while private importers imported nearly 4 lakh tonnes, which was sufficient to meet the need.
"With the Aman harvesting season, which has already begun, there is no reason to worry about a volatile market for the staple grain," she claimed.
During the last Boro season, the government set a target of collecting 20 lakh tonnes of paddy, of which not even half was met. As a result, the government's rice reserves hit rock-bottom. Taking advantage of the situation, unscrupulous traders created an artificial crisis in the rice market, with the millers didn't deliver rice to the government warehouses as stipulated, which led to the government's decision to import rice.