Wheat imports in limbo

Wheat supply in the local market is becoming increasingly uncertain as the export corridor for the grain from Russia and Ukraine has not opened yet even though the warring countries reached a deal recently.

The situation has worsened further due to the ban on wheat export in neighbouring India, according to grain importers.

Traders say the current stock of wheat and the consignments on the pipeline can meet the demands for at best two months.

If Bangladesh cannot import wheat from India or Russia and Ukraine, the local market and its future would turn volatile and uncertain, they said.

The price of wheat in the country’s market is on an upward trend at the moment. Last year, in Khatunganj, Chattogram, the wholesale price of wheat imported from Canada was Tk 1,400-1,500 per maund (37.32 kg).

At present, the same wheat is being sold at Tk 2,150-2,180 per maund at the wholesale market, which was once the largest for essential commodities. On the other hand, the price of wheat imported from India has recently increased from Tk 1,100 to Tk 1,600 per maund.

Talking about the problems, TK Group Director Mohammad Mustafa Haider told The Business Post, “We are unable to import wheat from India. The corridor from Russia or Ukraine has not been opened yet despite the export pact.

“Suppliers who import wheat from Russia and Ukraine could not give us any price offers till Saturday [July 30].”

“However, we still have enough wheat stored that will last a few months. If the Russia-Ukraine export corridor opens by then, India will also allow exports,” Haider said.

Along with the war, which started in February, adverse weather conditions disrupted the production in other wheat-producing countries in recent times and exacerbated the crisis, increasing Bangladesh and other countries’ dependency on India. But then came India’s export ban in May.

Under the circumstances, the Russia-Ukraine grain export agreement came as a ray of hope to the importers in Bangladesh and all around the world.

Russia, Ukraine, the United Nations and Turkey signed the deal on July 22 to reopen three Ukrainian Black Sea ports for grain exports. The deal is valid for 120 days and targets monthly exports of five million tonnes.

However, the Russian attack on a Ukrainian seaport just a day after the pact’s inking put a halt on the mechanism again, leaving countries worried and the reopening of the export corridor uncertain.

The Indian conundrum

As the war hindered Bangladesh’s attempts to import wheat, India on May 13 banned all exports with immediate effect because a sudden spike in the crop’s price had threatened the food security of the world’s second-largest wheat producer.

The Indian government in that notice also said that it will only export shipments for which Letters of Credit (LCs) were opened on or before May 13. Limited exports will also be allowed at the request of neighbours and individual governments whose own food supply is vulnerable.

As a neighbouring country, Bangladesh was initially hopeful of importing wheat from India. However, due to dwindling stocks, supply from the country has stopped.

While the neighbouring country’s emergency stock of wheat has fallen to the lowest since 2008, Indian traders are also not showing interest in exporting wheat to Bangladesh.

Chittagong Chamber of Commerce and Industries President Mahbubul Alam said, “Because of the Russia-Ukraine war, we had planned to import most of the required wheat from India to avoid any shortage here.

“However, since that’s not happening and the global food prices are rising due to the war, the government and the traders are getting worried about the food grain shortage that may hit us.”

He also said that importers were yet to get any green signal to use the Ukrainian ports or any news on when food grain exports from the region will begin.

Echoing his concerns, Bashundhara Food and Beverage Industries Limited Executive Director Redwan Rahman told The Business Post, “We usually import wheat from different countries through the suppliers. But none of them has been able to supply wheat from Russia or Ukraine so far.

“The last wheat shipment from India is now on the way. Imports from India will stop after this. We are not sure what will happen after that.”

He added, “The amount of atta (wheat flour) and maida (refined/all-purpose flour) we have in storage will last a month and four months, respectively. We hope there will be some positive development by then.”

Up until a few years ago, Bangladesh’s main sources for importing wheat were Russia, Ukraine and Canada. Very little was bought from India.

However, India has lately become the main source and the reasons behind this include an increase in transportation costs amid the Covid-19 pandemic and the Russia-Ukraine war that has severely disrupted the global supply chain of food grains.