Indian fine-quality rice is fast grabbing a share of the Bangladesh staple market after the long dominance of Swarna, one of its coarse varieties.
The domestic fine rice market has been expanding significantly in recent times, with analysts attributing the trend to the rise in middle-class.
People familiar with the development say such type of rice is entering the local market on two grounds: zero-duty import of the staple allowed following the shortfall in production due to two spells of floods last year and mismatch between demand for, and supply of, fine varieties in the country. Besides, the imported varieties do enjoy price advantage over the same grown locally.
Market insiders told the FE that so far around 40,000 tonnes of fine-quality rice had entered the local market. The varieties are being sold as miniket, Najirshail and Kataribhog in the local market. However, plastic bags containing the Indian fine rice do not carry any of such names.
Indian Swarna variety has been dominating the coarse variety market for long in the country.
Importers and some traders, however, note that import of fine varieties of rice will destabilise the local rice market. But the fact remains that the consumers are benefitted by such imports.
Some people, however, favour restricting rice import for the interest of the domestic agriculture sector by imposing tariffs. Farming sector involves approximately 42 per cent employment and contributes over 16 per cent to the economy.
Robiul Islam, chairman at the AR Group, a rice importer, told the FE that the demand for the Indian fine-quality rice varieties is on the rise as its prices are cheaper by at least 7.0- Tk 8.0 a kilogramme (kg) than that of locally grown ones.
"I heard from many that these varieties do also taste good," Mr Islam said.
The importer said his company had already supplied 3000 tonnes of such rice to the local market.
"The fine-quality variety is also becoming popular in India," he noted.
Abul Bashar of top product importer BSM Group in Chittagong told the FE that Indian exporters play foul often with the intention of dumping their produce.
"They even show us fake SRO (statutory regulatory order) to sell their produce when they aggressively market it," he said.
Mr Bashar also said that Indians lower the prices of rice and other food products when they have surplus of those.
But he said Indian traders are ordered to cut or stop exports when their output is lower.
He said that if the import trends continue the rice market will fall further and the farmers will be discouraged from growing the staple.
Layek Ali, secretary of the Bangladesh Auto Husking Mill Owners Association, said rice import was a necessity in 2017-18 amid shortfall in production. "But its continuation is illogical," he added.
He said if the rice production situation was better this year the government should restrict import again, for the greater interest of local production.
He said coarse rice, Swarna, comprises 60 per cent of rice import from India and the variety is produced mostly in the Indian state of Paschim Bango.
In the meantime, traders at different wholesale outlets in the city told the FE that there is a gap between supply of, and demand for, fine-quality rice and this is being compensated mainly through the import of rice from India.
They said the demand for the fine-quality rice now is around 30 per cent.
"If I sell 100 bags a day then around 30 bags are Indian ones," proprietor of M/s Rezaul Enterprise at Akmal Khan Road at Babubazar in the city.
There is no authoritative study on the size of the fine-quality rice variety market in the country.
Officials at the Department of Agriculture Extension (DAE) told the FE that the production of fine-quality local varieties of rice accounts for roughly 17 per cent of the annual output of the country's main staple.
In Bangladesh, farmers produce mainly the fine-quality rice for their own consumption. Because of low yield, farmers have gradually switched over to high-yielding varieties (HYVs) developed locally and outside. The per-acre yield of HYVs is several times more than that of local varieties. The attainment of near self-sufficiency in food production is attributed to the mass-scale cultivation of HYV rice in the country.
"Actually, many want to cash in on the expensive rice price in the country," said an official of the Directorate General of Foods.
Bangladesh's rice production cost is at least Tk 2.0 a kg higher than those of major rice producing counties such as Thailand, Myanmar, India, Vietnam and the Philippines, according to the directorate.
The data showed rice imports hit the all-time high during the current financial year. So, the country has imported 3.7 million tonnes and the import might surpass 4.0 million tonnes by the end of June next.
So far, the public sector has imported over 1.0 million tonnes, while the private sector import also increased to a record 2.65 million tonnes, of which 90 per cent were from India, DGoF said.
Abdur Rashid, owner of the leading rice company Rashid Agro Ltd, said his house was importing 0.1 million tonnes rice from India as requested by the government.
In the 1980s, the highest annual rice import was recorded at 2.6 million tonnes during the Ershad regime.
Meanwhile, the fine-quality rice varieties such as miniket, najirshail and jeerashail are selling at between Tk 62-70.
Economists say that the government should focus on how to reduce the production cost to survive in a free market economy.
Vice-president at Bangladesh Agricultural Economist Association Professor Golam Hafiz Kennedy said the production cost of rice should be reduced by ensuring the availability of farm inputs at cheaper rates.
He suggested efficient usage of farm subsidies as part of reducing the production cost.
"I am sure that the cost of irrigation and ploughing could be reduced by 80 per cent if efficiency is ensured."
Md Asaduzzaman, a professorial fellow at the state-run think-tank Bangladesh Institute of Development Studies (BIDS), said the rising dependence on rice import might affect the private sector, as it could give up milling by finding import more profitable.
He said local paddy production cost should be reduced by providing farmers with direct cash subsidies and also input subsidies to make local millers more competitive.
He said the government stock of rice should be raised to at least 2.0 million tonnes so that it could have impact on the mainstream market.
Executive director of the local think-tank Center for Policy Dialogue (CPD) Fahmida Khatun said that the policymakers have always been gripped by a dilemma while formulating the rice import policy, ensuring the fair price for farmers on the one hand and protecting the interest of consumers on the other.
"The import policy should have checks and balances. Import restrictions could be decreased for certain period of time to reduce the consumers' sufferings," she added.
