A LOW government stock of food grains, especially rice, and a syndicate of millers and wholesalers appear to have caused a worrying increase in rice prices for more than eight months. The food grain stock, as New Age reported on Monday, came down to five lakh tonnes when 10 lakh tonnes is considered optimal. The government has so far procured a fourth of the targeted amount of 6.5 lakh tonnes of aman while it failed to procure the targeted amount of boro. The government procured about nine lakh tonnes of boro against the target 2.1 million tonnes. Such a procurement shortage is caused largely by errant millers who breached rice supply contracts for both boro and aman. During the boro harvest, about 5,502 of the 19,230 rice millers that signed deals with the government failed to supply the stipulated amount despite a surplus production. In the wake of millers’ failure to supply the targeted amount of boro, the government took punitive action by way of forfeiting the security deposit, which, however, proved little effective as millers appear to be little helpful in the current aman procurement.
The government needs, as agricultural economists say, to have a stock of at least 1.3 million tonnes of rice to prevent millers and wholesalers from manipulating prices. When the country has produced about 20 million tonnes of boro and about 14 million tonnes of aman, rice price increases are not because of a shortage of rice, but because of the market manipulation by profit-mongering millers and traders. Such a manipulation has caused a price increase of about 41 per cent for the coarse variety of rice and about 17 per cent of the fine variety in a year. The Bangladesh Institute of Development Studies says that the top 50 rice millers with 20 per cent of the national milling capacity can influence the supply and prices of rice. A kilogram of coarse rice now sells for up to Tk 50 which sold for Tk 38 in 2019 while a kilogram of fine rice now sells for Tk 65 which sold for Tk 52 in 2019, Trading Corporation of Bangladesh records show. The increase has been a double burden for people, especially for the poor and low- and fixed-income people, whose purchasing capacity has already waned substantially because of the COVID-19 fallout.
The government must, therefore, raise its stock, bring errant millers to book and attend to the issues of market manipulation by any syndicate. The establishment of an agricultural price commission to set seasonal prices of agriculture produces to ensure fair price for growers and consumers also appears urgent. The government must also be cautious about rice import so as not to deprive local growers of fair prices.