Securing supply of foodgrains
Thursday, 24 July 2008
NOTWITHSTANDING bumper production of the boro rice crop in the country, a warning came recently from a seminar that government needs to pay more attention to the issue of importing food grains in time to keep prices stable. Already, the prices of all categories of rice in the normal markets are noted to be rising. The woes of rice buyers, specially the poor, have turned worse from the unabated rise in the price of rice. Exploring the reasons for the rising price, it was found out that the volatile price of rice in local markets was caused mainly by the private importers of food grains ceasing their operations completely or nearly so during the last several months. Even after a good harvest, import of a large amount of food grains is allowed through the private sector and the government also attempts to engage in imports in situations requiring such import as in the last year after natural calamities. According to a report sourced to the food ministry, a total of 3.45 million tonnes of foodgrains were imported in the last fiscal out of which about 2.56 million tonnes were imported by the private sector.
The import requirement was thought to be considerably lower this year because of the exceptionally good boro harvest. Nonetheless, there is still a food gap that needs to be plugged well in time so that even some shortages do not create the grounds of scarcity to bid up prices and create further hardships for consumers. Thus, there is a need to be steady and timely in import activities by both the government and the private sector for the simple reasons of bringing the foodgrains well in time so that shortages and their consequent effects are not allowed to be created.
Government had plans to procure 2.0 million tonnes of rice from within the country. But according to a report in this paper last Tuesday, only 0.6 million could be actually procured. If a big shortfall from the procurement target is to be avoided, efforts will have to be stepped up immediately to buy an optimum quantity of rice for government stocks, as the boro harvesting season ended nearly two months ago. Meanwhile, the government has announced the programme for re-starting the open market sale (OMS) of rice from its stocks from August. This would mean a big drawdown from its existing reserve when that might come under pressure if boro rice procurement target is missed. The government, meanwhile, will need to take a fresh and hard look at resuming purchases of food grains from the overseas market to head off any possible adverse situation.
Private importers have not imported food grains in any significant amounts for the last five months. The unusually high prices of foodgrains in international markets plus prohibition on rice export from India through private channels, have added to the incapacity of the private importers. They maintain that they would have to sell rice at the price of at least Taka 50 per kilogram to make any profit if they import from unconventional sources at the current prices. Local consumers would not be able to buy rice at such high prices and there could be pressures on them to reduce prices which they would not be able to do sacrificing their normal profits. Thus, in their calculation it is best not to import under such risks and that is largely what they have been doing for the last five months or so. The government has to take stock of these developments quickly and step up its own import operations of food grains before prices become even higher in overseas markets. It should also do whatever can be done to facilitate and create interest afresh among the private importers of food grains.
The import requirement was thought to be considerably lower this year because of the exceptionally good boro harvest. Nonetheless, there is still a food gap that needs to be plugged well in time so that even some shortages do not create the grounds of scarcity to bid up prices and create further hardships for consumers. Thus, there is a need to be steady and timely in import activities by both the government and the private sector for the simple reasons of bringing the foodgrains well in time so that shortages and their consequent effects are not allowed to be created.
Government had plans to procure 2.0 million tonnes of rice from within the country. But according to a report in this paper last Tuesday, only 0.6 million could be actually procured. If a big shortfall from the procurement target is to be avoided, efforts will have to be stepped up immediately to buy an optimum quantity of rice for government stocks, as the boro harvesting season ended nearly two months ago. Meanwhile, the government has announced the programme for re-starting the open market sale (OMS) of rice from its stocks from August. This would mean a big drawdown from its existing reserve when that might come under pressure if boro rice procurement target is missed. The government, meanwhile, will need to take a fresh and hard look at resuming purchases of food grains from the overseas market to head off any possible adverse situation.
Private importers have not imported food grains in any significant amounts for the last five months. The unusually high prices of foodgrains in international markets plus prohibition on rice export from India through private channels, have added to the incapacity of the private importers. They maintain that they would have to sell rice at the price of at least Taka 50 per kilogram to make any profit if they import from unconventional sources at the current prices. Local consumers would not be able to buy rice at such high prices and there could be pressures on them to reduce prices which they would not be able to do sacrificing their normal profits. Thus, in their calculation it is best not to import under such risks and that is largely what they have been doing for the last five months or so. The government has to take stock of these developments quickly and step up its own import operations of food grains before prices become even higher in overseas markets. It should also do whatever can be done to facilitate and create interest afresh among the private importers of food grains.