Duty cut could hardly impact the overheated rice market as strings binding the fiscal intervention delay import of the main staple in Bangladesh, worsening consumer woes.
Such conditions -- from LC opening to bringing rice within a time limit, introducing 'permit' system for limited importers -- might lead to insufficient import like that of last year, insiders say.
Last year over four hundred traders got permit to bring 1.79 million tonnes of rice but they could import only 0.305 million tonnes though the duty was only 15 per cent then.
The food ministry till July 13 had permitted 329 traders to import 0.906 million tonnes of rice at 25 per cent duty. Of the imports, parboiled rice is 0.77 million and white (Atap) 0.12 million tonnes, according to the food ministry.
After the announcement on June 23 reducing import duty to 25 per cent from a prohibitive 62.5 per cent, the government took another week (June 30) to declare names of 95 importers to bring 0.409 million tonnes of rice from global sources by August 11 deadline.
Later on July 4, another 125 traders were selected to bring 0.246 million tonnes within August 17. On July 13 another 47 traders got permit to import 0.073 million tonnes within August 25, said an official at the food ministry.
However, not a single gramme of rice could be brought from external sources so far till July 13, according to the food ministry website.
Rice prices, in the meantime, continue to rise on the domestic market as finer variety gets yet costlier at Tk 70-96 a kg, medium Tk 58-64 and coarse Tk 50-54 a kg in the city markets, according to the Trading Corporation of Bangladesh (TCB) and city groceries.
The current rice prices are 15-25 per cent higher than six months before, according to the TCB and groceries.
A Dinajpur-based trader, who got permit on June 30 to bring 5,000 tonnes of parboiled rice, told the FE that he couldn't open LC before the Eid-ul-Azha vacation.
He said most of the traders would fail to fulfil their target for delays in getting permission as well as several conditions tagged to the trade.
"I must have to open LC within July 21 or the permission will be scrapped. On the other hand, I have to bring and market all of the 5,000 tonnes of rice within August 11," he said.
Another importer from Nawapara in the frontier district of Jashore thinks such terms and condition have been encouraging exporters to raise prices.
"Before the government announcement of duty cut, Indian exporters were ready to sell coarse to medium rice at US$ 340-$ 350 a tonne. They have raised prices by $10-$15 a tonne already," he said.
He feels that the 25 per cent duty is still very high compared to the higher global price as well as rising prices of the US dollar.
He says minimum cost to bring parboiled coarse rice at 25 per cent duty will be Tk 44 a kg, which is Tk 42 a kg at local mill-gates.
"Most of the traders will target to bring medium and finer rice varieties which could give some profits," he adds about the arithmetic of the state-managed import trade.
Senior assistant secretary at the food ministry Muhammad Mahbubur Rahman claims imported rice started entering Bangladesh from Thursday.
He said they were expecting 1000 tonnes brought on the day through Bhomra, Hili and other land ports, which will increase from Sunday.
Asked about restrictions, he said the government would maintain such conditions so that local farmers couldn't be affected during the harvesting season for unregulated imports.
Traders are seeking permission knowing all the terms.
"So they should import the amount within the timeframe," he adds.
Consumers Association of Bangladesh (CAB) vice-president SM Nazer Hossain says as the government has a slab for the import (volume), it should lift import duty totally for now so that commoners could get rice at affordable price.
"The poor hardly could get any benefit from such restricted imports as it couldn't put impact on the mainstream market," he notes.
Farm economist and value-chain expert Prof Golam Hafeez Kennedy suggests the government should ensure smooth import for now amid a possible fall in production in the just-ended Boro season as well as existing rocketing trend in the domestic rice market.
He mentions that cultivation in the Aman season has also been delayed this year in seventeen districts so far due to early flooding which should also be taken into consideration.
He says cheaper import for certain months only could help in reducing price of rice which is going through an all-time high.
Meanwhile, the FAO All Rice Price Index for June 2022 showed a 1.1 per cent hike in 'Indica' rice segment mostly influenced by the Bangladesh government's announcement to ease import.
Bangladesh had allowed rice import at 15 per cent duty between August and October period of last year but private importers could bring only 0.305 million tonnes.
Later from November 1 last year, the import duty was re-fixed at 62.5 per cent.
Total rice import was 0.98 million tonnes in FY'22 which was 1.35 million tonnes in FY'21.
The country's rice import was an all-time-high 4.0 million tonnes in FY'18.
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