Bangladesh to cut rice import duty further to boost supply amid floods

Bangladesh moves to boost rice supply amid floods as it has decided to cut the import duty for the second time in two months.

The government decided to slash the duty to 2 percent from the existing 10 percent, Food Minister Qamrul Islam told the media on Wednesday. “A notice will be issued within a day or two.”

In an effort to curb prices in the local market, the government revised the duty on Jun 20. It was cut down to 10 percent from 25 percent. A 3 percent regulatory duty required to import rice was also withdrawn then.

Official data, often lower than market prices, shows a 37.5 percent rise in the prices of coarse rice while a fine variety saw a 13 percent spike in a year.

Amid the early April flashfloods in the northeastern region and spiralling prices, the government moved to import grains, but the stock is yet to improve significantly.

Until Jul 15, the government had 123,000 tonnes of food grains in stock against more than 750,000 tonnes in April last year.

With the rice shipments arriving from abroad, the stock stood at 287,000 tonnes as of Aug 10, far lower than in the same period in 2016.

The government’s efforts, however, failed to curb prices in the local market.

Moreover, a second round of floods late last month in the northern part of the country has caused commodity prices, including rice to hike.

The price of coarse rice stands around Tk 50 ($0.62) a kg while a fine variety more than Tk 60 ($0.74).

Food Minister Qamrul Islam addressing the media on Wednesday.

The government maintains that the price is well within the reach of people and that it will come down further.

"Prices will definitely fall further after the tax cut. The price is not that high now and it's stable. The prices are within the people's purchasing power," Qamrul said after a meeting of the government's committee on food planning and monitoring.

The target of rice production was 19.1 million tonnes, but floods in northeastern Bangladesh and blast (caused by a fungus) have damaged around 2 million tonnes of rice, he said.

The government plans to import 1.5 million tonnes of rice and 500,000 tonnes of wheat this year, said the minister.

At the media briefing, Qamrul claimed that there was no crisis of food grains.

"One thing needs to be clear that the decision to import doesn't mean that there's a crisis. The stock in government warehouses as well as the supply in market is ample."

According to him, they decided to import grains as a "precaution".