As Bangla imports surge, rice becomes costly

Panic over potential foodgrain shortfall and opportunistic trading in Bangladesh have sent the price of rice soaring on both sides of the border.

Over the last three weeks, the price of common rice varieties in West Bengal increased by 10-20 per cent at the miller’s end. The price of Swarna has gone up from ₹22 a kg to ₹27 a kg, Ratna from ₹28 to ₹30 and Minikit from ₹32 to ₹35. Retail prices are ₹2 to ₹5 higher.

The buzz in the market is that prices will increase further after Durga Puja next week. Reason: The sudden rise in demand from Bangladesh, which reduced import duty from 28 per cent to 2 per cent in phases between June and August.

According to customs sources, approximately 2,300-2,400 tonnes of rice is exported to Bangladesh from West Bengal every day; taking the total to over 600,000 tonnes in the last four-five weeks. This is as much as the annual imports of Bangladeshi traders in 2014-15.

The intensity of trade can be understood from the fact that Bangladesh imported roughly 700,000 tonnes of rice in the whole of 2014-15. At least 230 trucks are crossing the Petrapole border, which hasn’t seen rice exports for nearly five years.

The rise in prices is yet to catch the attention of the West Bengal government. “We will assess the situation,” State Agriculture Minister Ashis Banerjee told BusinessLine .

Opportunistic trading The most confusing part of the whole story is that despite such heavy imports, the price of rice continues to rise in Bangladesh. The price of Minikitrose by around 18 per cent from approximately Taka 55 a kg to Taka 65 a kg in the retail market, says Golam Mortoza, editor of Dhaka-based Sapthahik.

That is not all; Bangladesh’s media was abuzz last week with fictitious news of export restriction by India. The Sheikh Hasina government in Dhaka, however, was quick to describe the reports as “fabricated” and blame opportunistic trading for the crisis.

‘Vested quarters are trying to create an artificial food crisis’ Bangladesh’s Commerce Minister Tofail Ahmed was quoted saying by ‘The Daily Star’ of Dhaka.

He is not entirely wrong; Bangladesh achieved self-sufficiency in rice production during the last five years with production reaching 34.5 million tonnes in 2015-16. Accordingly the government buying from overseas markets has also stopped.

However, private buying continued till 2015, when Bangladesh raised import duties to a steep 28 per cent to protect domestic farmers.

The situation tilted in favour of the traders due to a perceived 300,000-tonne production shortfall this year due to climatic conditions and flooding. To mitigate this, the government planned up to 600,000 tonnes.

However, Dhaka failed to implement the import plan till Sunday when it struck an agreement with Myanmar to import 100,000 tonnes of rice in three years.

Slashing the import duty sent panic waves and traders took full advantage of the sentiments.

The mismanagement on the part of Bangladesh came as a windfall opportunity to traders in Bengal. The rice industry in the State was affected for the last five years due to the drop in Bangladeshi imports.

West Bengal produced 15.9 million tonne (mt) of rice in in 2016-17 against an estimated domestic demand of 14.5 mt. Apparently, therefore, the state has enough stocks even after supplying 600,000 rice to Bangladesh. Yet prices are spiralling.

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