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Published : 06 Mar 2022, 01:22 AM
The two warring countries produce around 14 percent of the world's wheat and account for almost a third of global wheat exports. Wheat from Ukraine travels to Egypt, Turkey, Bangladesh, and many other countries.
Fighting has closed Ukraine's ports and threatened farms in the country's east. Russian supplies of wheat are also restricted, as widespread sanctions limit the ability for Russia to sell its products.
If Russia and Ukraine are excluded, other major exporters account for 16 percent of global stocks or enough wheat to feed the world for less than three weeks, according to a Reuters report.
Wheat prices hit a 14-year high on Mar 3 as importers scrambled for supplies following the closure of ports in Ukraine and disruption to supplies from Russia.
According to a report from the Trade Commission of Bangladesh (TCB), the retail price of atta (whole wheat flour) was Tk 45 per kg this month, while maida (refined flour) was Tk 58 per kg. A month ago the price of atta was the same, but the price of maida was Tk 55 per kg.
A year ago, the price of atta was Tk 35 per kg, while the price of maida was Tk 45. This means the price of atta has risen 25 percent in the space of 12 months while the price of maida is up 29.41 percent.
Officials at one of the world’s leading wheat importers and manufacturers of atta and maida believe Russia’s attack on Ukraine will hit the wheat market hard and cause the price of maida to spiral further. Atta may be affected as well.
“A few months ago, the price of wheat on the world market was $320 per tonne,” says Biswajit Saha, general manager of City Group, a major supplier of consumer goods. “Since the start of the Ukraine-Russia war, the price has skyrocketed to $520 per tonne. In a few days, the wheat arriving in Bangladesh will be priced at $500 per tonne.”
Saha believes there is no alternative to hiking the price of atta and maida in response to the volatility in the global market.
“There won’t be much demand for atta and maida after that. People will switch to rice. You can’t sell atta and maida at such exorbitant prices.”
But the price of wheat on the global market had begun to rise even before Russia invaded Ukraine. Mill owners say that fears of war between the two countries, both of whom are major wheat exporters, caused the price of wheat to jump almost 60 percent in the past three months.
According to the Ministry of Food and Bangladesh Bank, wheat imports have slowed recently as prices have increased. In the fiscal 2020-21, nearly 4.9 million tonnes of wheat were imported by the private sector, aside from the amount bought by the government.
In the first eight months of the current fiscal year, only 2.3 million tonnes have been imported.
Data from Bangladesh Bank also suggests the import price of wheat is on the rise. Their statistics show that import spending on wheat in the first six months of FY22 was over $1.19 billion, a 32 percent increase from the previous fiscal year.
Despite the worsening state of the world wheat market, the Directorate General of Food says Bangladesh has enough wheat in stock for rationing and other government initiatives.
The government’s silos are nearly full to capacity with paddy, rice and wheat and are capable of meeting wheat demands for the next six months, said Director General of Food Md Shakhawat Hossain.
Asked whether the government’s wheat procurement efforts were affected b the war, he said: “This fiscal year we initially planned to buy 500,000 tonnes of wheat, but this was later revised up to 650,000 tonnes. We have already received 450,000 tonnes and another 50,000 tonnes are on the way. We are on target.”
The situation will be considered before the purchase of the remaining 100,000 tonnes is finalised, he said.
“We have little storage space to spare. Our total capacity is 2.05 million tonnes and we already have stocks of about 2 million tonnes.”
“For wheat, having enough stock to meet three months of demand is usually considered sufficient. We currently have enough to meet the demand for five to six months. The situation is more than satisfactory. But if the price of grain rises on the world market, the effect will also be felt in Bangladesh,” he said.
According to the Ministry of Food, the government’s total stock of food grain was 1.99 million tonnes, with 1.74 million tonnes of rice and 224,000 tonnes of wheat. The remaining 45,000 kg is rice paddy.
