As fresh paddy hits market, can it cool spiralling rice prices?

Consumer anger remains unabated and low income families are struggling due to the rising cost of rice

Despite an abundant harvest and steady imports, the price of rice in Bangladesh is defying seasonal trends and continuing to rise, leaving consumers frustrated and questioning the market dynamics.

Newly harvested Aman rice has flooded the markets, supplemented by imports that include a recent shipment of 25,000 tonnes through Chattogram Port and a significant consignment from Myanmar after a two-year hiatus.

The government has also slashed the import duty on rice from 62 percent to a nominal 2 percent to stabilise prices. Yet these measures have not translated into relief for consumers, who are paying significantly more for the staple grain.

Consumer anger remains unabated and low income families are suffering due to the rising cost of rice. They argue that the prices are soaring even though it was supposed to decrease during Aman season.

Traders and millers attribute the price surge to multiple factors, including the government’s dwindling stock, corporate procurement, and flood-related crop damage.

Additionally, the cost of Aman rice has risen, with prices in northern districts ranging from Tk 1,330 to Tk 1,350 taka per maund—above the government-set price of Tk 1,320.

In Naogaon, known as the rice capital of Bangladesh, local authorities have launched a task force to investigate alleged price manipulation. Preliminary findings suggest a “cycle” of market actors driving prices higher during peak Aman season.

The price of fine and coarse rice has increased in the region, ranging from Tk 100 to Tk 150 per kg sack. However, small rice traders claim that the price of rice per 50kg sack has increased by Tk 200 to Tk 300.

Meanwhile, the price of coarse rice has also been seen increasing in Dhaka’s markets. Wholesalers say that the price of fine rice like Miniket, Nazirshal, and Kataribhog has increased by Tk 200 to Tk 250 per sack (50 kg) in the last one month.

Data from the state-run Trading Corporation of Bangladesh, or TCB shows a week-on-week increase of at least Tk 2 per kg for fine rice varieties.

WHAT ABOUT THE GOVERNMENT’S STOCK?

To ensure a steady supply of rice and to keep prices within the reach of buyers, the government is supposed to keep 1.1 million tonnes of rice in stock at all times.

As of Dec 19, 2024, food warehouses across the country held 744,000 tonnes of rice, 448,000 tonnes of wheat, and over 4,000 tonnes of paddy, according to data from the food ministry.

The government is in the process of importing 500,000 tonnes of rice to augment its reserves. Of this, 300,000 tonnes are being brought in through government-to-government agreements, with an initial shipment of 54,690 tonnes recently arriving at Chittagong Port. Another 200,000 tonnes will be procured through open tenders.

To keep prices stable, the National Board of Revenue, or NBR, has reduced the duty to 2 percent by allowing private rice imports. According to the NBR, this should reduce the price of imports by Tk 24 per kg.

According to the central bank, rice worth Tk 220 million was imported until September of the current fiscal year. After that, rice has been regularly coming from India through various land ports in addition to sea ports.

“MINOR” FLOOD DAMAGE

Despite the flood damage in the southeastern region, Sarker Shafi Uddin Ahmed, director of the field wing of the Department of Agricultural Extension, does not see any reason for the increase in rice prices.

He told bdnews24.com, "Rice production has been sufficient. There is no scope to say that there is a crisis. The amount of rice damaged in the flood is very small, these are small districts. There are many upazilas where rice is produced more than the production in these districts."

“Moreover, most farmers have re-cultivated their land after the flood waters receded. That crop will come towards the end of the season. Therefore, information from the field has come that the flood's impact on rice production is "minor”.

AMAN PADDY COLLECTION ON THE RISE

In an effort to bolster food reserves and mitigate potential shortages, the government has raised its Aman paddy procurement target to 0.35 million tonnes from the domestic market.

Specific collection quotas have been assigned to districts, including 17,991 tonnes for Dinajpur, 10,968 tonnes for Rangpur, 13,804 tonnes for Naogaon, and 12,610 tonnes for Bogura.

So far, 43 percent of rice has been collected from Dinajpur. Last week, District Food Controller Subir Nath Chowdhury told bdnews24.com: “We have emphasised on the collection process. We hope that the collection of rice will be 100 percent by mid-January.”

He said, "There is a lot of rice in the market. The government price is Tk 1,320 taka per maund of rice. The rice that is available at this price has more moisture, and if you collect so much wet rice, it will be spoiled. Rice has to be dried and crushed. Farmers are able to sell rice for Tk 1,330 to Tk 1,340. That is why rice collection is now decreasing."

Naogaon district has the highest number of auto rice mills. It has been alleged that the stock of paddy and rice has increased in this district this time in general mills, auto rice mills, chatals, and mills whose licenses have been closed or expired. Therefore, the procurement of paddy and rice at the government level is ongoing at a very slow pace.

District food controller Farhad Khandaker told bdnews24.com: "So far, 30 percent of the target rice has been collected. There is rice in the markets, and with farmers. We are increasing rice collection activities. Rice has not yet reached the food warehouses as per demand."

He said, "We have specific information on where there is excessive hoarding. We have received information about some mills and chatals that do not have licenses. Some of their licenses have expired. We have decided to conduct raids in these places in a day or two. Hopefully, the supply of rice in the market will increase after the raids."

Adding that more rice is going to private traders due to the high market price, he said: "There is rice in many warehouses. They are storing it at a higher price than the government price. Now the moisture in the rice is more, and after a while more dry rice will be available. Then the rice will be collected. For now, more attention is being paid to rice."

Despite the hurdles, Naogaon has reported significant progress in uncooked rice collection, with 97 percent of its target achieved. Nationwide, as of Dec 22, 2024, the food ministry reported a total procurement of 159,454 tonnes, including 4,423 tonnes of paddy, 136,409 tonnes of parboiled rice, and 20,106 tonnes of uncooked rice.

GOVERNMENT EYEING COARSE RICE

In an effort to stabilise food prices and extend crucial support to vulnerable populations, the government employs a strategic approach of procuring coarse rice for storage in state-run warehouses. This stockpile is subsequently distributed at subsidised or no cost, ensuring access to affordable staples in the market.

The procurement policy, which prioritises coarse rice, plays a pivotal role in determining market dynamics. Government-fixed rates for paddy and rice exert a significant influence on market prices, with fluctuations closely linked to the volume of coarse rice collected and stored by the authorities.

Historical trends reveal that dwindling reserves in government warehouses often coincide with rising market prices, underscoring the critical function of these stockpiles in mitigating volatility.

IMPORTED RICE

The food ministry has allowed the private sector to import a total of 120,000 tonnes of parboiled rice and 55,000 metric tonnes of parboiled rice to keep the markets normal.

Mahbubul Alam Food Products, which received approval to import 10,000 tonnes, has brought 1,000 tonnes of rice. Giving information that another 200 tonnes are on the way from India, its owner Mahbub Alam said that the bank is not able to provide dollars. That is why the import is slow.

WHAT ARE THE TRADERS SAYING?

Mohiuddin Shah, manager of Jamuna Enterprise, a rice warehouse in Jatrabari, said: “This time of year, the price of a sack (50 kg) of rice is estimated to be Tk 2,500. A few days back, the price was decreasing, and I sold rice for Tk 2,600. Later, it was Tk 2,700, so now I am selling it for Tk 2,850.”

Faruk Hossain, owner of Sardar Traders, said: “Suppliers in Chapainawabganj say that there is no rice at this price. When I go to buy paddy in the market, the corporates buy it all. They buy in large quantities, and those who come to the market give them everything at a slightly higher price.”

“Only Allah knows why the price is increasing. The corporates and millers have increased the price. Now I am afraid whether to buy at a higher price or not. After buying at a high price, I heard that the import of rice is increasing. If it decreases even a little, there will be a loss of Tk 100,000 per cart (of rice). That is why I have not been picking up fine rice for the past one week.’’

Saiful Islam, the owner of Sajjad Traders, said that sales have been reduced due to the increase in price.

He said, “There is no shortage of rice. The price of rice is high. Now I am buying less because rice goes up in Dhaka at the beginning of the month. If I buy at a high price now, I may lose money.”

Masud Hossain, a sales worker at Alam Enterprise, a retailer in Karwan Bazar, said: “If we do not make a profit of Tk 3 per kg after deducting the cost of the coolie and van, how will the shop run?”

Kawsar Azam, a trader from Babubazar, reported that the price of fine rice has increased by about Tk 4 per kg in a week at Babubazar, another major wholesale rice warehouse in the capital.

Kawsar Azam, vice-president of the Bangladesh Rice Merchants Association, said: “The mills are announcing the price by the day. Their (mill) SR (sales staff) fixes the rate if you deposit the money immediately after taking the order. We do not stock. There is nothing we can do if the miller increases the price. Customers go from shop to shop and buy at a high price. If someone tries to make more profit, they will be caught.''

Bangladesh Auto Rice Mill Owners Association President AKM Khorshed Alam said that although the price of rice in the market is higher than last time, the supply is more than sufficient. But as big corporations have increased their collection, ordinary millers are having to rush to collect rice.

In this regard, Consumers Association of Bangladesh (CAB) Vice President SM Nazer Hossain said that there should be no reason for the price to increase now. However, the rice market is not under much government supervision, and so, the traders have seized this opportunity.

"Now there are no extortionists on the roads and in different places like before. So, increasing the price during the peak season is contradictory."