The prices of paddy have begun to rise in anticipation of the tariffs to be reintroduced on rice imports in the government's budget for the coming fiscal year (FY), reports bdnews24.com.
The impact of the tariffs is yet to be felt in the rice market due to the relatively low trade after Eid and lower rice imports, but traders say rising paddy prices may soon affect the prices of rice.
According to the director general of the Food Directorate, sufficient food reserves have prompted the government to purchase rice from domestic sources instead of imports this season.
Finance Minister AMA Muhith had announced reintroduction of the 28 per cent tariff on rice imports in the proposed budget for FY 2018-19 after it was reduced following a post-flood poor harvest in 2017.
Muhith said the tariff was aimed at protecting farmers and ensuring that they got fair prices.
"The government wants farmers to get fair prices for paddy," said Bangladesh Auto Major and Husking Mill Owners' Association General Secretary KM Layek Ali.
"If that happens, then rice prices could surely rise."
The new tariffs are preventing rice imports and have raised the prices of paddy by Tk 100-150 per maund, he said.
"The government is aware of the coming elections and they understand the benefits to farmers and consumers of the situation. I do not wish to say more on the matter. We just buy paddy from farmers and sell rice."
Kushtia Attara Rice Mill Owner Rezan Ali told the news agency that the prices of paddy had increased by approximately Tk 150 per maund.
"If the price of paddy rises, the price of rice must also rise. At that rate, the price of rice may rise by Tk 1-2."
At Kawran Bazar in the city on Friday, the price of a 50kg sack of Nazirshail rice was selling at Tk 2,800-3,000, Miniket was Tk 2,700-2,800 and BR-28 Tk 2,100-2,200.
At some wholesale stores at Babubazar in the city Nazirshail was selling at Tk 2,750-2900 per sack, Miniket Tk 2,600-2,750 per sack, BR-28 Tk 2,100-2,150 per sack and parboiled BR-29 Tk 2,000-2,100.
Traders say the prices were approximately the same around Eid.
Director General Md Arifur Rahman told the news agency that the tariffs would only have a small effect on imports.
"The good news is that there is no shortage of domestic rice, so falling imports will have little effect. The price of paddy will rise a bit due to the tariff, so the price of rice will rise by Tk 1-2."
Most domestic demand is for large-grained rice, said Rahman.
If the price rises, then the government would operate the Open Market Sale (OMS) programme for a target group, he added.
Food reserves this year are 'quite good' after the import of 4.0 million tonnes of rice last year, he said. The food directorate chief said he does not foresee any major challenges in the next five to six months and no real need for imports.
But, as tariffs rise, the prices of Basmati and other fine-grained rice may rise as well, he said.
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