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The Financial Express

Bumper Boro output bane of farmers, boon for millers

Indian prices ease to lowest in a year


| Updated: May 27, 2018 13:36:11


Bumper Boro output bane of farmers, boon for millers

Bumper Boro production in the wake of hefty rice import has turned out to be a bane of the country's farmers.

Paddy prices have dropped to a three-year low with only millers and traders benefiting from it.

Experts said both the consumers and farmers could get little benefit from higher production of paddy due to market domination by the biggies.

They also said the government's drive to procure 1.05 million tonnes of the staple will help benefit only the millers and influential political quarters.

But the farmers will be deprived of fair prices.

Data with the Department of Agricultural Marketing (DAM) and the Trading Corporation of Bangladesh (TCB) showed that paddy prices declined by 35-40 per cent in last one month.

During the period, rice prices dropped by only 2.0-6.0 per cent.

Birridhan-28 was selling at Tk 625-Tk 680 per maund (40 kilogrammes) in Rangpur, Rajshahi, Pabna and Kushtia. The prices hit a three-year low, according to the DAM.

The production cost of paddy was Tk 780-Tk 800 a maund in the northern regions during the time, the Department of Agriculture Extension (DAE) data showed.

Prices of paddy also dropped significantly during the Boro harvest in Haor areas in April last.

Haor farmers were forced to sell their paddy at only Tk 550-Tk 600 a maund last month against their output cost of Tk 760-Tk 780, DAM and DAE said.

The government has set a target to buy 0.15 million tonnes of paddy at Tk 26 per kg (Tk 1,040 a maund) under its current procurement drive.

The government has will also procure 0.9 million tonnes of rice at Tk 38 a kg mainly from 8,500 rice millers across the country, according to the food ministry.

A senior official at the Directorate General of Food (DGoF) told the FE that it would not be possible for them to buy paddy or rice directly from the farmers this year.

The acreage of Boro, however, increased to 4.84 million hectares in the current fiscal year from 4.4 million hectares in FY'17.

The government expects a record output of 19.5 million tonnes of rice, Director General of DAE Mohammad Mohsin said.

Above 65 per cent of harvest has been completed so far in the country, he said. High prices of rice have encouraged the farmers largely to cultivate Boro this year, he added.

He said rain has been hampering rice processing across the country this year, resulting in low prices of paddy.

Flash flood in Haor areas wrecked havoc on standing crops in the fiscal year (FY)'17. The production of Boro fell to an eight-year low at 18.1 million then tonnes.

Aman production also dropped to 13.0 million tonnes from 13.5 million, he said.

But rice production in Haor has set a record this year. "We got 1.5 million tonnes from the region", he said.

Azizul Hoque, a farmer at Tahirpur in Sunamganj, said the production cost was minimum Tk 11,500-Tk 12,000 per bigha (33 decimals) this Boro season.

But they were getting 14-15 maunds of paddy worth only Tk 8,000-Tk 8,500 per bigha.

He said they have no access to government procurement offices. Only local traders and millers were benefitting from the process with the help of their local political quarters, he added.

Meanwhile, rice import hit an all-time high of 3.75 million tonnes this fiscal year (FY'18). It surpassed the past record of 2.8 million tonnes, according to DGoF.

DGoF director general Md Badrul Hasan said import may surpass 4.0 million tonnes by the end of this fiscal year. Global prices of rice are much lower than that of last year - between US$ 415 and US$ 440 a tonne now, he added.

"We are now focusing on buying rice from local sources after bringing 1.4 million tonnes from global sources," he said.

Centre for Policy Dialogue (CPD) research fellow Toufiqul Islam Khan told the FE that both bumper output and hefty import have been resulting in the paddy price fall, hurting the farmers.

He said rice import was necessary due to a fall in local crop production last year.

But time has come to restrict the import to some extent this season as local Boro production is set to increase after two years, he said.

He said the government should take measures to buy rice and paddy directly from the farmers so that they can make some profits.

Dr Md Asaduzzaman, professorial fellow at Bangladesh Institute of Development Studies (BIDS), said rising dependence on rice import might affect the private sector as they could stop milling, finding import more profitable.

At the same time, local paddy production cost should be reduced by providing the farmers with direct cash subsidy and also input subsidies.

He said the government should raise the stock of rice to at least 2.0 million tonnes to put some impacts on the mainstream market so that limited income groups could buy rice at reasonable prices.

Agri-economist Golam Hafiz Kennedy said a dilemma always persists over initiating the rice import policy as the policymakers take into account fair price for the farmers in one hand and interest of the consumers on the other.

"As local production has been showing good sign, import should be restricted for next three months," he said.

He said the government should make it sure that the farmers could get Tk 26 for per kg paddy as per its procurement price.

"And buying rice or paddy, directly from the farmers, only could make it happen," he said.

Rice prices in India fell for the third straight week to their lowest level in a year as the rupee slipped to a 16-month low, while markets in other top exporters remained relatively muted.

Rates for India's 5 per cent broken parboiled variety dropped by $10 to $394-$398 per tonne.

"Indian rice is very competitive compared to supplies from Thailand and Vietnam. Export orders have improved as in dollar terms Indian prices have been falling," said an exporter based at Pune in the western state of Maharashtra.

Bangladesh emerged as a major rice importer in 2017 after floods damaged its crops, sending domestic prices to record highs.

The summer-sown crop 'Boro' usually contributes more than half of Bangladesh's typical annual rice production of around 35 million tonnes.

Rice prices in Bangladesh jumped around 40 per cent last year due to depleting inventory, forcing the government to seek supplies from Asian countries like India, Thailand and Vietnam.

The price increase prompted farmers to expand areas under Boro to more than 4.9 million hectares, exceeding the target of 4.7 million hectares, Mohsin said.

"Farmers didn't leave any land unplanted this season due to higher prices," he added.

Rice is a staple food for Bangladesh's 160 million people and high prices pose a problem for the government which faces a national election this year.

In April, industry officials said Bangladesh's rice imports could plunge 66 per cent from a year ago to 1.2 million tonnes in 2018/19 on expectations of a bigger summer crop.

In August, the government cut an import duty on rice for the second time in two months. The lower duty has prompted purchases by private dealers, with most of the deals struck with neighbouring India.

Bangladesh imported more than 3.7 million tonnes of rice in the July-April period, the highest ever, data from the country's food ministry showed.

Thailand's benchmark 5.0 per cent broken rice narrowed slightly this week to $435-$438 per tonnes, free on board (FOB) Bangkok, as against $435-$440 last week.

The country has sold rice to the Philippines in an international tender this week, a Bangkok-based rice trader said.

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