BD to import food items from Russia under G2G deal

REZAUL KARIM | Published: December 29, 2023 22:54:54

To run subsidised commodity drives smoothly, Bangladesh is set to import key food items from sanction-hit Russia under a government-to-government (G2G) arrangement, according to official sources.
To establish a framework for this trade, both countries are expected to finalise a Memorandum of Understanding (MoU) soon.
The commerce ministry has already sent the draft of the MoU to the Bangladesh Embassy, Moscow, through the foreign ministry, said foreign ministry sources.
The Bangladesh Trading Corporation (TCB) and Russia's state-owned Prodintorg will be the implementing agencies of the deal. Under this, Dhaka eyes purchasing products like yellow peas, chickpeas, lentils and sunflower oil, offered by Moscow at "competitive prices".
The deal's validity will cover from the signing date until June 2026, with a possible extension through mutual agreement.
According to official documents, the MoU is to "initiate and ensure" timely communication at the beginning of each fiscal year to "facilitate" efficient planning and potential purchases of specific essential commodities.
The draft MoU mentions that all transactions will comply with the respective countries' laws and regulations.
Price negotiations will occur on a case-by-case basis, ensuring competitive terms for both parties. Likewise, individual purchase and sale contracts will be negotiated separately,
detailing standard terms and conditions, according to the draft.
Throughout 2023, Russia has been pushing Bangladesh for food product purchases. Understandably, this export market diversification will help ease economic pressure on Moscow stemming from Western sanctions following the Ukraine war.
In June 2023, the Russian Embassy in Bangladesh expressed interest in expanding cooperation through a G2G supply of lentils, sunflower oil, peas and chickpeas to Bangladesh at competitive prices.
Ambassador Alexander Vikentyevich Mantytskiy further confirmed this intention during a September meeting with Commerce Secretary Tapan Kanti Ghosh, agreeing to establish an MoU between the Bangladeshi Trading Corporation (TCB) and Russian state-run company Prodintorg.
Prodintorg subsequently sent the draft MoU to the Bangladesh Embassy in Moscow in October, which forwarded it to the TCB. The agency has provided a positive response.
Speaking on condition of anonymity, a senior commerce ministry official said the MoU aims to facilitate essential goods imports, particularly for TCB's 10 million low-income cardholders who benefit from subsidised food.
He added that import challenges from traditional sources often force TCB to rely on the local market, hindering operations.
This proposed deal comes amid skyrocketing food prices in Bangladesh, fueled by the Ukraine war and dwindling foreign exchange reserves for food imports.
Bangladesh heavily relies on wheat and edible oil, both significantly impacted by the conflict.
Prodintorg, already Bangladesh's sole G2G supplier of agricultural products and fertilisers since 2013, boasts of supplying over 1.3 million tonnes of potash fertiliser and 1.5 million tonnes of milling wheat since their partnership began, according to the Russian company.
The commerce ministry official said they are trying to cool off the "overheated" local commodity market by ensuring increased supply.
Apart from Western sanctions, another official preferring anonymity said that the lack of direct banking transactions between Dhaka and Moscow could pose challenges to the trade deal.
Previously, Bangladesh relied on both Russia and Ukraine for critical food imports, particularly wheat, sunflower oil, and fertilisers.
The disruption caused by the war has necessitated exploring alternative sources, including neighbouring India, to address domestic shortages and price fluctuations.
Despite repeated attempts, The Financial Express could not reach Senior Commerce Secretary Tapan Kanti Ghosh for comment on the food deal with Russia.
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