Food grain stock dips
Govt fails to achieve rice procurement target; private importers active
The government is finding it hard to stock up on food grains because of their high price in local and international markets.However, food import by the private sector is on the rise, as traders seek to maximise profit amid the government's procurement shortfall.
The government had a target to procure 12 lakh tonnes of boro rice at Tk 25 per kg from the local market between May 1 and August 31. But it achieved only 38 percent of the target.To better the response from the suppliers, the government has offered an incentive of Tk 3 per kg, pushing the procurement price to Tk 28 a kg.
It has also taken steps to import food grains from the international market. But importers have been dilly-dallying to supply food grains as per the agreements with the government.
The food division has so far forfeited security deposits of three suppliers for failure to deliver. The suppliers had signed agreements with the government in the last fiscal year to import 1.60 lakh tonnes of wheatComing to power in January 2009, the government announced it would build up a stock of 15 lakh tonnes of food grains, 5 lakh tonnes more than what is considered to be a safe stock.
But the stock, in fact, has almost halved over the past year. It was 7.19 lakh tonnes on August 21, compared to 13.75 lakh tonnes on the day last year, says the food ministry in a report to the purchase committee.
Within the original time limit for the procurement drive, the government could buy only 4.66 lakh tonnes of rice. Against this backdrop, the food ministry has extended the deadline until September 30, said ministry sources.
The target, however, is still unlikely to be met since the price of rice in the open market is higher than that fixed by the government, notes the food ministry report.At present, the price of coarse rice in the open market is Tk 30 to 32 a kg, whereas the government-set price is Tk 28 including the incentive.
Meanwhile, Russia, a major wheat exporter, has banned export of all cereals for this fiscal year in the wake of draught and unprecedented heat wave. As a result, wheat price in the international market has become unstable.
Import of 3 lakh tonnes of wheat from Russia was finalised at government-to-government level. Later, the country agreed to supply only 1 lakh tonne, but stepped back from that pledge too.
The efforts to procure food grains through import could not succeed because of high prices in the international market, the report says.
The price of a rice variety, which was $460 per tonne on June 3, increased to $470 per tonne on August 10. In July, the price of a wheat variety was $223 per tonne, around 25 percent up on the corresponding period last year.
Amid these constraints, the government has made a move to import food grains from Vietnam and India through state-to-state level agreements.The purchase committee has already approved a proposal to import 1 lakh tonnes of rice from Vietnam. The price, which was first set at $389 per tonne, has been revised to $407 due to a recent hike in the international market. Now the government will buy 80,000 tonnes at $407 and the remaining amount at the previous rate.Besides, a food ministry delegation is visiting New Delhi to discuss rice import from India.
Meanwhile, the private sector has increased import of food grains.A data from the Bangladesh Bank shows that 31.60 lakh tonnes of rice and wheat were imported from July 2009 to May 2010, while the amount was 29.52 lakh tonnes during the same period last fiscal year.
Also, statistics show that L/C issued for rice and wheat imports during fiscal year 2009-10 are 61 and 259 percent up respectively, compared to FY 2008-09.
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