Rice market volatile again

Imtiaz Ahmed

The rice market has become volatile again in the local market against backdrop of the price spiral in the international market, sharp drop in import, Indian ban and temporality halt in trading with Myanmar in recent days, sources said.

In Bangladesh during the holy month of Ramadhan, prices of some consumer goods skyrocket against surging demand, but the price hike of the rice during this period is unusual against drop in demand.

According to the Bangladesh Bank (BB), import of rice during the July-January period during 2023-24 plummeted to 12.5 million US dollars compared to 490.60 million US dollars imported during same period of 2022-23 fiscal year showing 97.5 per cent drop.

After visiting several markets in the city, this correspondent has witnessed prices of rice of different qualities have risen by taka 2-5 per kg.

Ahmed Rasel, an employee of an English language while talking to this correspondent  has expressed his resentment over the price rise of rice in the local market.

Besides, the price of rice in the international market rose some 30 per cent with Thailand being the main source of import. The price of one tonne  623 million US dollars on March 8, 2024 in the international market compared to 479 million US dollars one year back, showing some 30 per cent rise in the price, according to data of the Bangladesh Trade and Tariff Commission (BTTC)

India imposed a ban on July 20, 2023 on the export of non-basmati white rice. The move followed a ban on the export of broken rice, which was announced in September last year and is still in place.

India’s reasons were domestic — rising food prices, high inflation and fear of rice shortage due to El Nino disruptions as the country heads into a festive season and elections — but the bans’ impact is now being felt globally, with prices shooting up.
“Earlier rice was trading for $550 per metric tonne, now prices are hovering above $650,” Nitin Gupta, senior vice president of Olam Agri India Private Limited, one of India’s biggest rice exporters, told Al Jazeera.

India, the world’s biggest rice exporter, accounted for nearly 40 percent of global rice trade in 2022, exporting 22 million tonnes worth $9.66bn to 140 countries. That included 4.5 million tonnes of basmati rice, 8 million tonnes parboiled rice, 6 million tonnes non-basmati white rice, and 3.5 million tonnes broken rice.

India continues to export parboiled and basmati rice, meeting its international commitments halfway, but global rice prices have increased by 15-25 percent since the ban. Worst hit are the poor in countries like Bangladesh and Nepal, who depend on Indian white rice, and those in African countries like Benin, Senegal, Togo, and Mali, which import broken rice — the cheapest and most filling variety.

India, Thailand, Vietnam and Myanmar have been main sources of import of rice in case of Bangladesh over the years.
Myanmar is a major supplier of rice to Bangladesh. But the recent intense civil war has halted Myanmar’s export of rice to Bangladesh in recent months deepening crisis in the local market, source said.

According to newspapers  in Myanmar during April, 2023, Myanmar shipped 200,000 tonnes of rice in total, including 2,500 tons grown in Rakhine State, to Bangladesh.

According to the  US Department of Agriculture (USDA) last year, Bangladesh’s rice production may decline slightly in marketing year (MY) 2023-24 as a result of partial damage to Aman rice crop, now being harvested in Southern coastal districts, Farmers will likely bag 3.63 crore tonnes of milled rice in the current marketing year beginning from May, down from 3.64 crore tonnes the previous year, the US agency said in its Grain and Feed Update on Bangladesh.

“This revision is due to partial damage to Aman season rice in some coastal districts caused by cyclone Midhili,” the report said. The cyclone had hit Bangladesh on November 17 last year.

Aman, grown under monsoon rains, is the second largest rice crop after Boro, which is a dry season crop cultivated with the help of irrigation.

The USDA counts Aman season rice as the last crop of a marketing year. It said the crop is known as post-monsoon rice and is traditionally fully rainfed.

“Therefore, adequate and timely rains are important for good production,” it added.

The cultivation usually begins in August and harvesting mainly takes place in November and December.

The US agency said, “Due to delayed rainfall during this year’s Aman rice cultivation, farmers had to use supplementary irrigation for land preparation, transplantation, and irrigation purposes.”

This incurred additional costs for farmers, adding to the already high input costs, the USDA said, revising downward its estimate on the cultivation area to 57.50 lakh for the current year, down 2.54 percent from its estimate the previous year.
In addition to reduced acreage, cyclone Midhili affected about 5-10 percent of the standing Aman paddy in the southern coastal districts, mainly in the Barishal and Chattogram divisions.

“The affected paddy plants either bent or flattened, but the resulting damage was minimal,” the USDA said.

As such, the agency revised its forecast for production of Aman rice, dropping it by nearly 5 percent to 1.39 crore tonnes from its estimate for the same crop the previous year.

The latest projection is one lakh tonnes lower than the USDA’s previous projection.

However, the US agency said the production of Aus rice, harvested in July and August, grew to 24 lakh tonnes in the current marketing year.

It also hiked its estimate regarding the output of Boro, the first crop of the current marketing year, by 1.52 percent to 2 crore tonnes.

The USDA also lowered Bangladesh’s rice import forecast to 5 lakh tonnes as the government maintains its high tariff at 62.5 percent on rice imports, down from its previous forecast of 6.5 lakh tonnes.

It however projected that Bangladesh’s wheat import would be 60 lakh tonnes in MY24, beginning from July, which is 17 percent higher from its estimate of the country’s wheat import of 51.2 lakh tonnes the previous marketing year.

The agency hiked its import prediction for the nation assuming “stable international prices and no supply chain disruptions”.
Citing an industry contact, the USDA said Bangladesh imported 22 lakh tonnes of wheat in the first five months of MY24.
“The industry contact expects that this will increase further if international prices and the supply situation remains unchanged,” it added.

Meanwhile, according to newspapers in Myanmar, Myanmar’s junta has prohibited the export of various food commodities to Bangladesh via Maungdaw, Rakhine State, after a decision by Bangladesh’s Sonali Bank to freeze two major Myanmar banks’ assets.

The regime’s ministry of commerce announced on September 1 that the restricted goods—including rice, beans, peanuts, and onions—must be shipped only through the commercial zone in the Rakhine State capital of Sittwe, saying the order would come into effect on September 4.

“Sonali Bank imposed restrictions, which could lead to the smuggling of people and goods,” said Myint Thura, director general of the junta commerce ministry’s trade department. “That is why people need to export through Sittwe, to prevent smuggling.”

The junta-controlled financial institutions Myanma Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB)—which were sanctioned by the United States Treasury in June of this year—together had balances amounting to over US $1bn at Sonali at the time of the asset freeze.

According to some Bangladeshi news outlets, the United States government had been pressing for the asset freeze after sanctioning MFTB and MICB, the two financial institutions in Myanmar through which most foreign-currency denominated transactions are conducted.

MICB and Sonali first signed a contract to allow for such transactions in 1995, under Myanmar’s previous military dictatorship, stimulating bilateral trade between Bangladesh and Myanmar.

While the recent freeze has stopped such transactions for both MICB and MFTB, it is still possible to transfer up to US $50,000 at a time from MICB’s Maungdaw branch to Sonali’s Teknaf Upazila branch using certificates of deposit.

Tin Aung Oo, chair of Rakhine State’s chamber of commerce and industry, said that the restrictions would not have a large effect on the state’s economy as goods could still be exported through Sittwe.

According to Tin Aung Oo, the Bangladeshi government had limited purchases from Myanmar to essential goods earlier in the year to control the depletion of its dollar reserves, which led to a decline in trade. However, he said, trade had improved in recent months despite continued restrictions on financial transactions.

“Before Thingyan, it dropped to virtually zero,” Tin Taung Oo said, referring to the traditional Buddhist holiday festival in April. “From there, trading has recovered gradually. Even though it’s not back to normal and Sonali has placed restrictions, for now exports are continuing.”

Having heard of the Bangladeshi government’s decision to freeze the Myanmar banks’ assets at Sonali, the Central Bank of Myanmar’s governor Than Than Swe reportedly responded with anger, saying at an August 19 meeting in Naypyitaw that she would not stay silent and would confront Bangladeshi officials head-on.

Bangladesh’s ambassador to Myanmar met with military junta chief Min Aung Hlaing on September 6, 2023 to discuss bilateral trade and cooperation between the two countries, according to reports in junta-controlled newspapers that day.

According to the junta’s commerce ministry, the total value of goods exported to Bangladesh via Maungdaw exceeded US $4.5 million between April and August of last year.

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