Russia's withdrawal from the Black Sea Grain Initiative (BSGI), the deal that allowed shipment of Ukrainian food grains to the rest of the world, is evidently going to leave its negative impact on the world's food grains market. For the UN says the BSGI helped keep the food grain price lower by 20 per cent globally. It no doubt was of great help for the global poor and the food deficit countries.
Notably, Russia and Ukraine are big players in the global food grains market with Ukraine alone accounting for 12 to 14 per cent of the total cereals supply to the world market. The agricultural crops of these two countries include wheat, barley, maize, edible oil and oil seeds (rapeseed, its oil; sunflower seed and its oil).
Understandably, with the supply of Ukrainian food grains, especially wheat in the global market getting uncertain, Bangladesh will have to look for alternative sources of this food grain for import. In fact, Russian and Ukrainian wheat meets 40 per cent of Bangladesh's demand for this particular food grain. Of its total demand for wheat ranging from 7 million to 7.5 million tonnes annually, Bangladesh meets 85 per cent of its need from import. But import restrictions due to forex (US dollar) crunch affected the supply of this important staple that constitutes a sizeable portion of the population's standard diet. Due to increased price, wheat went beyond the reach of the poorer section of the population-- the main consumers of the staple. And for reasons stated in the foregoing, import of wheat reduced markedly over the last few years and in the FY 2022-23, it came down to as low as about 3.87 million tonnes.
Given wheat's importance as a vital food item for the population, the government needs to replenish its dwindling stock through imports. And it should be considered an emergency. And taking into consideration any possible uncertainties in global food grains market attributable to the crop losses from the unrelenting heat waves accompanied by droughts, downpours, floods and other seaborne calamities, the government's efforts need to be redoubled to import the food grain from whichever sources it is available. And so far as the Ukrainian and Russian wheat is concerned, it won't be wise to bank on the optimism that the stalemate over the BSGI will be soon over. Especially, Ukraine is a warzone where the world's big powers are involved. And until there is any concrete step towards a rapprochement between the US and Russia to end the war, the grain deal will remain dicey.
Despite the fact that the BSGI has not been renewed after its expiry on July 17, food grain prices in the world market have still been on the decline. Published on July 18 (Tuesday), a World Bank (WB) report said that compared to what it was two weeks before, the prices of agricultural products, especially of food grains, fell by 4 to 12 per cent in the world market. And that has been due to better crop production before El Nino had struck and better supply situation following the pandemic. Strangely, a reverse trend is being observed in Bangladesh. Here both the overall inflation and the food price inflation are on the rise. The WB report further noted that in August 2022, the rate of food price inflation was 9.9 per cent. Though it later fell to 8 per cent, in June this year, it has nearly touched the 10 per cent level.
Interestingly, even in Sri Lanka, the most economically wrecked nation in South Asia, the rate of food price inflation has declined to 4.1 per cent.
In the prevailing volatile food price situation in Bangladesh, food security is clearly under stress. The government should take urgent measures to build adequate food stock to tide over any unforeseen crisis in food supply in the market.
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