Flour prices decline as importers find alternative sources

With increased supply of wheat, flour prices are on a downtrend in retail markets as importers are buying from alternative sources after India’s ban on wheat exports and supply chain disruption caused by Russia-Ukraine war.

To meet the demand for wheat in the local market, importers and flour producers have been importing wheat from 4-5 countries including Argentina, Bulgaria, and Romania since last month.

Wheat is even being imported from war-ravaged Ukraine also, although the quantity is small, said importers.

They said the market of the country’s second staple food grain was in crisis due to shortage in supply. As a result, prices of flour and flour-made foods doubled in retail and wholesale markets.

However, after more than two months of continuing production of flour-based foods with buffer stocks, producers are now getting wheat supply from alternative sources.

As a result of the increased wheat supply, the price of flour already decreased in the market.

In the last week, the prices of packaged and loose flour decreased by Tk 3-6 per kg.

Meanwhile, the importers claimed that although alternative sources are available in the global market, they are unable to import according to the demand as they cannot open LCs due to the ongoing dollar crisis.

The importers said now the price of wheat has come down in the international markets. If we can resolve the LC crisis by reducing the dollar price and shortage, the price of flour will come down more in the local market.

According to kitchen market sources, loose flour was sold for Tk 58-62 per kg on Thursday which was Tk 62-65 per kg two weeks ago. The refined flour was sold at Tk 68-72 per kg on Thursday which was Tk 72-75 per kg two weeks ago.

According to officials of various brand companies, the price of packaged flour and refined flour decreased by Tk 6 per kg recently. Goods with new price labels have already reached the market.

The one kg packet of flour is now selling for Tk 68 which was Tk 72 while a packet of one kg refined flour is selling for Tk 78 which was Tk 82 earlier.

According to the Trading Corporation of Bangladesh (TCB), flour prices increased by 64 per cent after the beginning of the Russia and Ukraine war.

Bangladesh’s domestic average annual wheat production is around 10 lakh tonnes against a demand of 75 lakh tonnes and 62 per cent of the imported wheat used to come from Russia and Ukraine. After the beginning of the war, the country started wheat imports from India.

Redwan Rahman, executive director of Bashundhara Food and Beverage, a major producer of flour in the country, told The Business Post, “We imported 55,000 tonnes of wheat from Bulgaria last month. Earlier, the same amount of wheat was imported from Ukraine. At present, we are importing most of the wheat from Argentina while a small amount from Ukraine.”

“Wheat import is still less than the demand due to the crisis centring the LC opening. A few banks open LCs to import a small amount of wheat. The problem has become more complicated because the exporting countries fix the banks to open LCs,” he added.

He said, “Now we are buying wheat at $320-340 per tonne from the international market, which two to three months ago had to be bought at $400 from India.”

He observed that if the complexity of LC is resolved, the price of flour in the country’s market would decrease further.