Rice prices may rise further as Aman harvest fails to tame market

Despite assurances that rice prices would fall after the Aman rice harvest, traders in Dhaka say the price of rice has gone up.

Though farmers are happy with the higher price, others worry that it may lead to a further price hike.

New rice retailed at about Tk 32-34 per kg last year, Mirpur-based rice trader Mohammad Mohiuddin Harun told bdnews24.com on Thursday. This year, the price is Tk 40-41 per kg.

Prices of a 50kg sack of coarse rice have risen to Tk 2,050-2,070 from Tk 2,000 in a week, he said.

“Accordingly, the prices of other types of rice have risen by around Tk 50 per sack in the past week,” he said. “Compared to last year, a 50kg sack has risen in price by Tk 400.”

Biplob Hossain, the manager of Badda’s Satarkul Rice Agency, said prices may continue to rise.

“For the past few months, we believed rice prices would fall with the Aman harvest, as they have every year. But this hasn’t happened.”

“From experience we can say that there is a hike in the price of rice at the end of the season. Though farmers have gotten a good price this season, the market price has not fallen. We think the price may rise further at the end of the season.”

Various factors have contributed to the high price of rice, including high tariffs on rice imports, the loss of Boro rice crops due to floods and the  depletion in rice stocks. The price of coarse rice is currently Tk 55-58 per kg and fine grain rice is Tk 65-70.

On Sept 19, the retail price of fine grain rice fell to Tk 60 and coarse rice fell to Tk 40 after the government reached a deal with millers and traders on lowering the import tariff on rice. Traders had said they expected rice prices to fall after the Aman harvests.

But, on Nov 30, after the government announced that it would buy 300,000 tonnes of rice from the domestic market at Tk 40 per kg, the price of rice at the mill gates rose to Tk 41 per kg.

Millers say that, prior to the announcement of the government’s purchase, the price of new rice was Tk 700-750 per maund, which was the price last season. The price of rice rose to Tk 900-1,000 per maund afterwards.

“Rice prices this year are good,” said Belayat Hossain, a farmer from Norail. “We can make a bit of profit.”

Rice production is low due to the high price, say farmers and agriculture officials. The harvest was also affected by floods in several districts and pests.

The Aman harvest began in the first week of November. According to the Department of Agricultural Extension, 80 percent of the crops have been harvested as of the first week of December.

In fiscal 2015-16, Aman rice was harvested on 5.59 million hectares of land across the country. The total harvest was 13.483 tonnes of rice, according to Khondker Mohammad Rashed of DAE’s Field Services Wing. Bangladesh produced 13.656 tonnes of rice on 5.58 million hectares in fiscal 2016-17.

Though Aman rice was planted on 5.77 million hectares this year, the total amount harvested has not been calculated yet due to flood damage. The information will be available at the end of December.

Md Layek Ali, a Joypurhat-based miller, said that 90 percent of the rice in his district has been harvested and is arriving in the market. But the price of rice is nearly Tk 200 per maund higher than last year.

He called the increased price ‘positive’ and said the yield had been lower.

“Farmers can make a profit by selling the rice at Tk 24 per kg. But as the government has set the price at Tk 39, the minimum market price is Tk 25.”

The Trading Corporation of Bangladesh estimates the price of rice to be 12 percent higher than last year.

Rice mill owners and rice traders say Aman rice prices are 23 percent higher than last year.