Food stock highest in a decade
The government’s food stock rose to 14.3 lakh tonnes, the highest in a decade, raising hopes that prices of rice will remain stable until the end of the year.
A rise in domestic production and imports from India raise optimism that the prices of rice, a major determinant of food price inflation, may not turn volatile so soon.
Millers and food officials expect a marginal decline in prices due to release of stock by farmers and millers in the face of imports from India, good aus harvest and prospects of good aman crops.
“Supply is adequate in the market. So, prices will not increase in the next three months,” said Abdur Rashid, managing director of Rashid Agro-food Products Ltd, a rice miller and marketer.
Also, a huge stock of grains in public stores and market intervention have helped keep the prices of coarse rice steady at Tk 32-34 a kilogram in the past two months.
“The government is continuously intervening in the market to ease prices,” said Rashid.
By the end of September, the food stock in government stores doubled to 14.3 lakh tonnes from the same period a year ago, the highest since January 2000, according to data from the Directorate General of Food.
Food officials also linked the rise in food stock to increased procurement from domestic markets and arrival of rice and wheat from previously signed contracts with foreign sellers.
Usually, the government sets aside 10 lakh tonnes to tackle any emergency.
“The government is in a comfortable position. Businesses monitor government food stocks. Our latest position will stop them from hiking prices, even if they want,” said Ahmed Hossain Khan, head of the Directorate General of Food.
To keep prices stable, the food agency begins to distribute food at fair prices in both urban and rural areas and continues open-market sales of rice and wheat flour at subsidised rates.
The distribution of grains under the fair price scheme that will benefit 67 lakh rural families will continue through November, said Khan.
Usually, rice prices go up during this period as the time gap from the immediate past big harvest boro increases.
Economist Mahabub Hossain, who follows agriculture and rural economy, expected rice prices to remain stable until December because of the prospects of a ‘very good’ aman crop due to good monsoons.
“The coastal area also had very good aus harvest due to adoption of hybrid varieties, and cultivation in previously fallow land,” he said.
Hossain, also executive director of Brac, rather hoped that prices might fall slightly due to release of stock by speculative traders and large farmers, who have kept some of boro harvest in stock to reap a better price from off-season sales.
“Since the upward trend is not there and the Indian market has been opened, the large farmers as well as the rice millers are releasing their stocks that have been depressing the market,” he said in an email interview.
Hossain however cautioned that price will rise early next year, influenced by an increase in procurement prices by the Thai government to implement its pledge to farmers.
“Since Thailand controls a third of the global rice market, Thai domestic policy will have an effect on the international rice market,” he said.
The effect will not be apparent within the next two months because this is the time for rice harvest to come to the market in most rice growing countries.
“But the price will rise early next year.”