Govt move to tame rice price backfires as importers go tardy

The government move to rein in rice price in domestic market through an optimum supply yielded no efficacy as importers were found in the slow lane.

Sources said despite obtaining permits, rice importers were lackluster in their efforts to do the job, thereby shooting up the price of the staple in some cases instead of going down.

The food ministry decided to import rice in early August and sought applications for import permits on August 14 and it began issuing permission from August 20.

Till August 30, the ministry issued approval for bringing in 16.93 lakh tons of rice. The authorities concerned selected 415 importers to do the task attaching six conditions including a deadline for rice import by September 25.

The importers also need clearance from the Quarantine Department of the Department of Agriculture to import rice and the data from the department concerned as of September 21 shows that permits for bringing 11.83 lakh tons of rice were issued while importers opened Letters of Credit for only 4.62 lakh tons.

The food ministry said only 84,040 tons of rice arrived till September 21. The government, however, imported 3.26 lakh tons which would be used in different programmes.

The finer variety of the staple was selling at Tk 60 to Tk 65 per kilogramme in Dhaka and the BRRI-28 variety at Tk 50 to Tk 52 when the government decided to make import. The price of coarse rice was Tk 47 to Tk 48 at that time.

The price remained unchanged in retail markets on September 22 when the report was filed indicating that rice import or the news of import left no impact on the market.

Decision of rice import a “show off”

The importers, mostly millers, find the decision of importing rice a mere “show-off” as the government only issued permits but created no facility for them.

“Moreover, no bank is interested to open funded Letters of Credit,” said Abdur Rashid, president, Bangladesh Auto, Major and Husking Rice Mills Owners Association.

“A huge amount of money is required to import rice. Businessmen do not keep much liquidity in their possession all the time,” he said.

Some senior officials at the food ministry also echoed Rashid.

“The demand for rice across the country is around one lakh ton per day. So it (Import of 17 lakh tonnes of rice) will not impact the market a lot. Import permits were issued to trigger hype,” Khaja Abdul Hannan, additional secretary (Procurement & Supply Wing) of the Ministry of Food, told The Business Post.

“The market is on a somewhat downtrend,” he pointed out.

“We have heard that the Indian exporters increased rice price after hearing that Bangladesh was issuing import permits. Besides, getting clearance at borders is also time-consuming – all contributed to lacklurster import,” mainained Hannan.

The price of a ton of rice was $ 350 to $ 386 in the international market when the decision to import rice was made in August and the price of per kilogramme imported rice would stand at between Tk 32.5 and Tk 38.15, according to the food ministry.

The ministry officials were of the view that all kinds of imported rice should be sold at below Tk 40.

On September 22, rice price in the international market remained the same while the price of per kg imported price went down to some extent.

Asked about issuing import permits to millers, who are generally accused of making syndicate to raise rice price, Khaja Abdul Hannan said, “We did not want to issue permits only to millers. It was open but other importers did not show interest in it.”

A senior officer of the Department of Agriculture said they had proposed the food ministry to select those importers who opened LC in previous year for making import as they were proven. “But the food ministry rejected our proposal which led to this failure,” he said.

The food ministry on August 6 sent a letter to the National Board of Revenue to reduce the duty on rice import and the board in a gazette notification on August 12 lowered the import duty to 25 per cent from 62.5 per cent till October 30, 2021.

But the importers still have to pay 5 per cent Advance Tax and 5 per cent Advance Income Tax in addition to a 15 per cent customs duty, the notification added.