A pricier US dollar jeopardises the government's plan to cool off the local rice market through imports as traders are not showing any interest in bringing in the food staple from the international market.
Rice traders say imported rice would cost at least Tk5 more per kg than the local produce thanks to a strong greenback and high import duty.
Neighbouring India accounts for 80% of Bangladesh's rice imports through private channels. According to importers, the price of the crop has not gone up in the Indian market though the Russia-Ukraine war triggered a record price surge in the global food market.
"Rice prices in India did not spiral, but rather dropped slightly as the dollar went up. This will not hurt exporters, but it appears to be an issue for those who import," Shahidur Rahman Patwari, an importer and vice-president of the Bangladesh Auto Major and Husking Mill Owners Association, told The Business Standard.
In the first week of July, Shahidur obtained government approval to import 7,000 tonnes of rice. But he is yet to open a letter of credit for it.
"The dollar is now at Tk98 – it was Tk84-85 last year – causing rice import to cost around Tk6 more per kg," the importer said on 6 July.
According to importers, the price of BR-28, a medium-fine rice variety, is at $430-435 or Tk42,630 per tonne in India. There is a 25% import duty plus additional import processing charges. Ultimately, the price of the rice in the local market will stand at Tk54 per kg, while the locally produced variety is now selling for Tk48-Tk49 at mill gates.
Similarly, imported coarse rice costs Tk48 per kg while locally produced varieties are at Tk43 a kg.
Traders say besides India they can source rice from Vietnam, Thailand and Pakistan. But these alternatives cost even more.
Muhammad Mahbubur Rahman, senior assistant secretary (External Procurement) at the Ministry of Food, told TBS that some 218 private importers have been permitted to import 6.55 lakh tonnes of rice as of 6 July.
Millers say many of them obtained the permission, and rice can be imported from India within a week. But no one is stepping up for fear of losses.
According to the food stock report of the food ministry, no rice was imported from 1 July 2022 to 5 July 2022. However, import permissions have been issued since the last week of June.
The authorities issued permissions to 415 importers to bring in around 17 lakh tonnes of rice in late 2021. But only 3.31 lakh tonnes of the crop were imported as costs had been ticking up.
Food Secretary Md Ismiel Hossain said the government would allow 10 lakh tonnes of rice import initially. After verifying the impact on the local market, another 7 lakh tonnes might be allowed to be imported later.
"Our main objective is to increase supply. That is why we have to import," he added.
Food Minister Sadhan Chandra Majumder expressed concern that rice production may decline this year due to natural calamities. However, the agriculture ministry claims that production will surpass the previous year's 1.98 lakh tonne rice yield.
The government is now purchasing paddy and rice at the grassroots level to boost its food stock. However, procurement of paddy, parboiled and sun-dried rice is still far below the annual target.
At a food ministry meeting around a month ago, worries that procurement might miss the targets this year were voiced.