Govt misses chance to import wheat at lower price

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Nizam Ahmed Despite fall in price of wheat in the world market following a record global production, the government is missing a chance to procure the item due to lack of storage facilities, officials. Bangladesh which produced some 35 million tonnes of food grains, mainly rice in last fiscal year to June 2011 needs to import around 900,000 tonnes of wheat to meet growing local demand in current fiscal year 2012. Out of the estimated wheat needs, the department of food under the ministry of food and disaster management (MFDM) has so far imported or offered deals to import some 350,000 tonnes. Part of the rest is scheduled to be imported by the food department in the next half of the fiscal following tender formalities. Private importers are also in the international market to procure wheat. However shortage of storage facilities has been discouraging the food department for normal procurement of wheat, which as of now is in abundant supply in world market and widely available at comparatively lower price following a bumper crop. Global wheat production was up to a record 689 million tonnes due to higher output in Australia, Argentina and Canada, said the United States Department of Agriculture (USDA). The global production in the current year was some 37.4 million tonnes more than the yield of the 2010-11 crop season. Following the record output, global wheat supply also rose by 9.3 million tonnes to 889 million tonnes and the global stocks also soared to by 5.9 milion tonnes to 209 million tonnes, an estimate of the USDA said. The higher supply and stocks have boosted prospects of the world wheat trade in 2011-12 crop season anticipating that Asian countries and Mexico will import more wheat to meet their demands. According to USDA market news, the FOB price of wheat (hard red winter grade) in the Gulf of Mexico was 266.39 per tonne Tuesday, down from $281.01 per tonne in late November last. In May, 2011, price for a tonne of the similar grade was $354.47. The price is also tending to slide down in the wake of higher supply, a graphics of the USDA said. At this stage Bangladesh should gear up its wheat procurement drive, and if it can, it should go for buying more than the target projected for the fiscl year 2012, traders said. Officials said the food department has recently rescheduled tender time-lines to delay procurement process for wheat due to lack of storage facilities. "Two tenders, each for importing 50,000 tonnes wheat were delayed over the last one month on fears of lack of space for storage," a food procurement official told the FE. However he said despite dealy tenders were furnished later and a foreign firm was awarded contract to supply 50,000 tonnes of wheat. Officials said a project to increase the storage capability to more than 2.5 million tonnes was being implemented and so far more than 1.6 million tonnes of grains could be stored, he said. By the next year all the projects to increase the storage capacity to boost emergency food stocks to projected 2.5 million tonnes will be completed. However following the delay, the Singapore-based Olam International Ltd. was awarded a deal to supply 50,000 metric tonnes of wheat to Bangladesh at $281.09 a tonne in the middle of December, officials of the Ministry of Food and Disaster Management (MFDM) told the FE. The wheat consignment will reach Chittagong port by late next month. Olam quoted the price including CIF liner out, in a tender invited by the department of food of the MFDM, that closed on December 5. The department of food earlier in 2010 planned to raise the storage capacity for emergecny food stocks to 2.5 million tonnes from some 1.0 million tonnes. "The storage capacity has crossed 1.6 million tonnes level so far and more food godowns are under construction and by the end of the current fiscal all the planned storages will be built," a senior official of the MFDM told the FE. Apart from tenders, Bangladesh also signed a state-to-state deals with Ukrain to buy 100,000 tonnes of wheat at $320 a tonne, including CIF. A source close to international trade suggested that both Bangladesh and Ukrain should review the deal if no delivery reaches Bangladesh so far, because the agreed price is too high at the present trade context. Bangladesh also receives thousands of tonnes of wheat as relief from donors and charities every year . Such a lot of 13,000 tonnes of wheat received from the USDA via the United Nations World Food Programme (WFP) arrived in Chittagong port last week.