Accuracy of data can help resolve market volatility

FE Team | Published: February 27, 2024 21:07:11

Though the government claims that the country has no shortage of rice and that it maintains a comfortable amount of (1.45 million tonnes) the item in stock, one wonders why the price of the nation's chief staple is constantly on the rise. To arrest price hike, recently the government even drastically reduced duty including value-added tax (VAT) on rice import thereby bringing down the total tax incidence on it from 62.5 per cent to 15.5 per cent. But still, according to a recent report published in this paper, the prospective importers are still not keen to take advantage of this substantial duty cut. They argue that with the price hike of rice in the global market – UN's Food and Agricultural Organization (FAO), for instance, says, the price has surged by 13 per cent in January, 2024 compared to that in 2023 – any import of rice will not help matters. Moreover, there is also the issue of scarcity of foreign exchange required for import. In that case, even if they go for import, the price of the rice so brought in would be higher than that in the domestic market. No doubt, the reason the rice merchants showed has some merit.
But still the puzzle of rice price in Bangladesh remains unresolved. The retailers say it is the wholesalers, the wholesalers say it is the hoarders, some say it is corporate traders, others say it is the millers who are to blame for the unreasonable price volatility of the nation's chief staple. The government, on the other hand, is using its carrot of duty cuts and the stick of strict market monitoring along with various penal measures and threats thereof against delinquent traders to bring rice price under control. All concerned seem to be clueless about the conundrum of unstable rice market, while the common people continue to pay through the nose to buy the staple. The question is, if the government has dependable data on the land under cultivation of different varieties of rice and of their possible yields in the harvesting seasons. Claims of surplus production and government's duty cuts on rice import do not match.
On this score, there is the complaint of discrepancies in reports on rice production provided by the different agencies of the government. The Bangladesh Bureau of Statistics (BBS), for instance, held that rice production reached over 38.9 million tonnes in FY22 leaving a surplus of 3.0 million tonnes after consumptions and damage. But still import of around one million tonnes of rice had to be made in that year. Even in FY23, going by the BBS report, the country produced 39.1 million tonnes of rice with proportionate surplus. But again, more than one million tonnes of rice import had to be made in FY23.
Regarding another staple, potato, the department of agricultural extension (DAE), for example, informed of a yield of 11.2 million tonnes in FY23, while BBS indicated it to be at 10.4 million tonnes. But the Bangladesh Cold Storage Association said it was around 8.6 million tonnes. Which of these agencies would the government depend on to have its assessments? So, the government needs to make the relevant agencies efficient enough for providing reliable data on production, supply situation and stock of the main staples like rice. Only reliable data can help the government get a grip on the market of essentials, especially of rice.