Closure of BDR outlets and what's next
Shahiduzzaman Khan | Thursday, 19 June 2008
It is a piece of bad news for the country's hardcore poor living in urban areas that at least 75 BDR (Bangladesh Rifles) shops selling rice have been closed. According to the BDR sources, the suspension of sale on rice will remain in effect until the government's on-going rice procurement programme across the country is wrapped up. The rice procurement programme will end on August 30.
In fact, the BDR wanted Tk 2.0 billion as subsidy to purchase rice from the local markets and sell those to the poor people at subsidised prices from its outlets. But the food ministry has not agreed to provide further subsidy for the BDR. The government contended that with the successful bumper Boro harvest, rice price would start coming down and as such, there was little justification to carry on with the subsidised rice sales.
How far is this contention tenable? Immediately after the government announcement of withdrawal of subsidy on rice sales from the BDR outlets, the BDR wanted to continue with the rice sale. It started to procure rice at Tk 29 to Tk 29.50 and decided to sell it at Tk 30 per kilogram (kg). Once the rice price was raised by Tk 5.0 per kg from its subsidised price of Tk 25, the BDR outlets started to wear a desolate look. The hapless buyers were seen no more interested to buy rice from the BDR shops after such a jump in price. In most retail markets, coarse rice sells at Tk 30 to Tk 32. So why will the buyers crowd at the BDR outlets to buy rice at almost the same price?
In fact, rice price did not come down as per expectations of the general poor people. It was anticipated that with the harvest of bumper Boro crop, the price would come down to a reasonable level. But it did not.
Meanwhile, the government is trying to build a buffer stock of food grains in the country following short supplies of food across the world. There was also no sufficient stock of food grains early this year in the country that threatened food security. Global food market is also volatile. Purchasing rice, flour and edible from the world commodity markets was also difficult, even at higher prices. Even though food situation has improved in the country to a considerable extent after the Boro harvest, rice price is fluctuating -- remaining vulnerable to internal and external shocks.
In fact, the government turned down the proposal to provide further subsidy to the BDR as it was procuring rice now. Fund constraints apart, the government did not find it rational for procuring rice from the local markets while the BDR itself remains involved in the process thereof for maintaining supplies to its outlets. After the coarse rice price was enhanced by Tk 5.0 per kg, few people actually thronged the BDR sales centres. But those 'few' are not happy. They are now concerned over the rice price escalating further with the BDR folding up its outlets for sale of rice. They say although the price is almost the same at both BDR centres and retail markets, rice can be procured in 'exact' weights in BDR outlets. The improved quality of rice is also available there, they claimed.
According to market survey this week, the traders have raised the prices of coarse and fine varieties of rice on the pretext of the rice-price hike at the BDR outlets. With the same logic, the rice millers have enhanced the price. Many millers have justified their action saying that if the BDR markets could increase the price by Tk 5.0 per kg, then they could hike it by Tk 0.5 per kg too. Is the hike prompted by the recent budget announcement? The rice traders do not think so and said there is a short supply of the staple.
Asked if the difference between procurement prices of BDR and those of the government has any impact on the government's procurement of rice, a BDR spokesman said it would definitely give rise to some problems. As a consequence, prices of rice, potato, edible oil, fish, chicken and spices are rising in both retail and wholesale markets in the city over the last one week.
The BDR started 'Operation Dal-Bhat' programme on March 15, 2007 under the directive of the government at a time when prices of foodgrains have registered a phenomenal rise. Low-income groups of people heaved a sigh of relief after this opportunity to buy essentials at affordable prices. Even members of the middle class families started to queue up at the BDR outlets shrugging off their age-old "sense of dignity". In fact, the BDR programme brought some relief to such groups of people.
One wonders if the BDR outlets are closed, what will happen to these hapless people? Government's open market sale (OMS) programme has also been suspended now. In any case, the government should continue any of the two programmes -- out of which BDR programme appears to be acceptable to the general people. All concerned do need to keep it in mind that food is an issue that matters most for the poor countrymen. Any upswing factor on this count has a cascading effect on the overall economy.
The rice price has to be at a tolerable level for the urban poor who toil hard as day-labourers, hawkers or rickshaw pullers. It has to remain consistent, at the same time, with prices of other produces and match with the rice-import parity. On its part, the government has to be very careful about maintaining an adequate reserve of food grains in its stocks year-round so that it can release some from such stocks to the market in the event of any need to help keep the price of rice within a tolerable limit. That will then help ensure food security for the country.
szkhan@thefinancialexpress-bd.com
In fact, the BDR wanted Tk 2.0 billion as subsidy to purchase rice from the local markets and sell those to the poor people at subsidised prices from its outlets. But the food ministry has not agreed to provide further subsidy for the BDR. The government contended that with the successful bumper Boro harvest, rice price would start coming down and as such, there was little justification to carry on with the subsidised rice sales.
How far is this contention tenable? Immediately after the government announcement of withdrawal of subsidy on rice sales from the BDR outlets, the BDR wanted to continue with the rice sale. It started to procure rice at Tk 29 to Tk 29.50 and decided to sell it at Tk 30 per kilogram (kg). Once the rice price was raised by Tk 5.0 per kg from its subsidised price of Tk 25, the BDR outlets started to wear a desolate look. The hapless buyers were seen no more interested to buy rice from the BDR shops after such a jump in price. In most retail markets, coarse rice sells at Tk 30 to Tk 32. So why will the buyers crowd at the BDR outlets to buy rice at almost the same price?
In fact, rice price did not come down as per expectations of the general poor people. It was anticipated that with the harvest of bumper Boro crop, the price would come down to a reasonable level. But it did not.
Meanwhile, the government is trying to build a buffer stock of food grains in the country following short supplies of food across the world. There was also no sufficient stock of food grains early this year in the country that threatened food security. Global food market is also volatile. Purchasing rice, flour and edible from the world commodity markets was also difficult, even at higher prices. Even though food situation has improved in the country to a considerable extent after the Boro harvest, rice price is fluctuating -- remaining vulnerable to internal and external shocks.
In fact, the government turned down the proposal to provide further subsidy to the BDR as it was procuring rice now. Fund constraints apart, the government did not find it rational for procuring rice from the local markets while the BDR itself remains involved in the process thereof for maintaining supplies to its outlets. After the coarse rice price was enhanced by Tk 5.0 per kg, few people actually thronged the BDR sales centres. But those 'few' are not happy. They are now concerned over the rice price escalating further with the BDR folding up its outlets for sale of rice. They say although the price is almost the same at both BDR centres and retail markets, rice can be procured in 'exact' weights in BDR outlets. The improved quality of rice is also available there, they claimed.
According to market survey this week, the traders have raised the prices of coarse and fine varieties of rice on the pretext of the rice-price hike at the BDR outlets. With the same logic, the rice millers have enhanced the price. Many millers have justified their action saying that if the BDR markets could increase the price by Tk 5.0 per kg, then they could hike it by Tk 0.5 per kg too. Is the hike prompted by the recent budget announcement? The rice traders do not think so and said there is a short supply of the staple.
Asked if the difference between procurement prices of BDR and those of the government has any impact on the government's procurement of rice, a BDR spokesman said it would definitely give rise to some problems. As a consequence, prices of rice, potato, edible oil, fish, chicken and spices are rising in both retail and wholesale markets in the city over the last one week.
The BDR started 'Operation Dal-Bhat' programme on March 15, 2007 under the directive of the government at a time when prices of foodgrains have registered a phenomenal rise. Low-income groups of people heaved a sigh of relief after this opportunity to buy essentials at affordable prices. Even members of the middle class families started to queue up at the BDR outlets shrugging off their age-old "sense of dignity". In fact, the BDR programme brought some relief to such groups of people.
One wonders if the BDR outlets are closed, what will happen to these hapless people? Government's open market sale (OMS) programme has also been suspended now. In any case, the government should continue any of the two programmes -- out of which BDR programme appears to be acceptable to the general people. All concerned do need to keep it in mind that food is an issue that matters most for the poor countrymen. Any upswing factor on this count has a cascading effect on the overall economy.
The rice price has to be at a tolerable level for the urban poor who toil hard as day-labourers, hawkers or rickshaw pullers. It has to remain consistent, at the same time, with prices of other produces and match with the rice-import parity. On its part, the government has to be very careful about maintaining an adequate reserve of food grains in its stocks year-round so that it can release some from such stocks to the market in the event of any need to help keep the price of rice within a tolerable limit. That will then help ensure food security for the country.
szkhan@thefinancialexpress-bd.com