Bangladesh has kept “in abeyance” its decision to sign contracts with Indian cooperatives to import two lakh tonnes (lt) of parboiled rice under government-to-government (G2G) deals. 

Initially found hesitant, Dhaka has decided to put the deal in cold storage as it has got a few offers at lower prices and the Sheikh Hasina Wajed government is facing problems on the foreign exchange front. 

Caught on wrong foot?

Trade sources said Bangladesh may have been caught on the wrong foot for its indecisiveness since prices in the global rice market have shot up by 10 per cent over the last couple of weeks.

Sources said Dhaka is looking to source rice from other origins but India’s main competitors - Thailand and Pakistan - have priced their produce at over $100 a tonne. 

According to the Thai Rice Exporters Association, Thailand’s parboiled rice is quoted at $523 a tonne and Pakistan’s at $533-37 a tonne. The association pegged the Indian price at $388-392, up $15 in the past couple of weeks. 

However, exporters said Bangladesh will have to pay more when it comes to making purchases in the market. “Parboiled prices in India have increased by over 30 per cent this month mainly on reports of Bangladesh importing rice from India on a G2G basis,” said VR Vidyasagar, Director, Bulk Logix. 

Low quotes in tenders

India’s NCCF and Kendriya Bhandar (National Cooperative Consumers Federation of India Ltd) were to supply the two lakh tonnes under G2G deals at $433.60 and $433.50 a tonne, respectively in December. Bangladesh’s Food Ministry issued letters of intent for the purchases of one lakh tonnes each from the two cooperatives before stepping back. 

At that time, prices quoted by the two cooperatives were $35/tonne higher than what private traders offered Dhaka in two global import tenders of 50,000 tonnes each.

In a tender opened on December 21, India’s Bagadiya Brothers was the lowest bidder offering the foodgrain at $393.90/tonne. In the next tender opened on December 27, Singapore’s AgroCorp International offered the most competitive rate of $397.03.

The G2G deals and tenders were part of Bangladesh’s efforts to procure 3 lakh tonnes of parboiled rice for the public distribution system.  

6-day delay

Official sources said they had charged more for the supplies since Bangladesh asked for the new crop besides wanting the consignments to be delivered in two months.

 “Had it given more time and opted for an older crop, it could have got the rice at a cheaper rate,” an official said on condition of anonymity.

The LOI was issued after accepting the Indian cooperatives’ offer. The Indian agencies were to furnish bank guarantees but as it got delayed by six days, Bangladesh utilised the opportunity to put the deal on hold. 

A trader said: “If it wanted, Bangladesh could have accepted the guarantee.”  

According to Bangladesh media reports, the Wajed government’s Food Ministry and its Cabinet committee that decides on public procurement have cleared the imports.

Bullish market

Trader sources said the additional amount sought from Bangladesh was justified since it is looking for guaranteed delivery.  

The global rice market has turned bullish on a lower crop in India, China and Bangladesh. India’s kharif rice production has been estimated lower (104.99 million tonnes vs 111.76 million tonnes last season) and stocks with the Food Corporation of India (FCI) are at a six-year low.

In view of this, India has banned exports of fully broken rice and imposed a 20 per cent export duty on white rice. Parboiled and basmati rice have been exempt from these curbs.