Agri Business

Bangladesh says its dependence on Indian wheat rising, seeks 6.2 mt for imports

Subramani Ra Mancombu | | Updated on: Jun 07, 2022
Though Russia had been the main supplier of wheat to Bangladesh, the Ukraine war has affected supplies, forcing it to turn to India

Though Russia had been the main supplier of wheat to Bangladesh, the Ukraine war has affected supplies, forcing it to turn to India | Photo Credit: -

Dhaka spells out its overall requirement for the current fiscal; demand rises for wheat flour

Bangladesh has said its dependence on Indian wheat has increased and it will need to import at least 6.2 million tonnes (mt) of wheat from India this fiscal, its High Commissioner in New Delhi has been informed. 

While Dhaka will need 0.6 mt of wheat on a government-to-government basis, it requires a similar amount on a government-to-business basis, the Bangladesh Ministry of Food (Foreign Procurement) said in a communication to High Commissioner Muhammad Imran on June 3. 

Responds to MEA request 

For business-to-business transactions, Bangladesh will need another 5 mt, its senior assistant secretary in the Ministry of Food, Muhammad Mahabubur Rahman, wrote to the High Commissioner in a communication seen by BusinessLine

Rahman was responding to a May 25 letter from Imran, saying he required the details as India’s Ministry of External Affairs has sought them. It is not clear if the High Commissioner has conveyed to the Narendra Modi government the wheat it would require this fiscal. 

The Indian External Affairs Ministry had sought the details as the Centre has banned wheat exports from May 13. However, the government said it was open to supplying the cereal to neighbouring and vulnerable countries, mainly on a government-to-government basis. 

“The Bangladesh Government has already ordered one lakh tonnes of wheat. Private businessmen also ordered 3  mt of wheat,” the Food Ministry official said.

LCs opened for 2 tenders

The order for one lakh tonnes was placed by the Sheikh Hasina government after finalising two tenders by April end and opening letters of credit (LCs), the second one on May 12. 

“It is also learned that the private sector has already opened LCs for about 3 million mt of wheat under business-to-business basis from India,” he further said on the orders placed by private trade. 

Stating that the Hasina government had issued LCs to Singapore-based Agrocorp International Pte Ltd and India’s Bagadiya Brothers for the import of 50,000 tonnes of wheat each from India, Rahman said LCs to the tune of nearly 7 lakh tonnes had been issued by the private sector. “We have not yet received the full information regarding how many LCs (were) opened before May 13, 2022. We have not received any information regarding shipment from India to Bangladesh,” Rahman said, adding that information would be provided once the Ministry gets the details. 

Low prices, quick shipment

Bangladesh’s annual wheat demand is at least 7.5 mt. With the neighbouring country producing only eight lakh tonnes, it is forced to import the rest. 

“Our dependence on India has been increasing over the last few years due to low prices and short shipment time. Moreover, after the outbreak of war between Russia and Ukraine, India became our major source of wheat import,” the Food Ministry official said. 

During the 2020-21 and 2021-22 fiscals, Bangladesh imported 1.16 mt and 4.08 mt of wheat, respectively, from India. It was the top importer of the foodgrain. 

Though Russia had been the main supplier of wheat to Bangladesh, the Ukraine war has affected supplies, forcing it to turn to India. One of the advantages for Bangladesh to buy from India is that it can get the consignments by road, apart from the sea. 

Agricultural and Processed Food Products Export Development Authority (APEDA) data showed that wheat exports in 2020-21 were 2.08 mt in 2020-21 and a record 7.23 mt in 2021-22. During April this fiscal, exports were estimated at 1.45 mt. 

The Centre banned wheat exports after its prices surged in the domestic market and inflation soared. Besides, production this year was affected by a heatwave that swept the country in March and April. 

On the other hand, the Food Corporation of India was unable to procure stocks for the Central pool, to be distributed through ration shops, as open market prices were higher than the minimum support price of ₹2,015 a quintal. Following the ban, the national weighted average modal price (the rate at which most trades take place) has cooled to ₹2,047 a quintal.

Demand for flour

Meanwhile, demand for wheat flour has surged in view of the ban on wheat. “We are witnessing good demand from North Africa, West Asia with Egypt joining the countries seeking flour,” said VR Vidya Sagar, Director, Bulk Logix. 

“Wheat flour exports have doubled since the ban was imposed on May 13,” said Rajesh Paharia Jain, a New Delhi-based exporter.

Sagar said flour was priced at $350-400 a tonne free-on-board (f.o.b), while Jain said the price was $380. 

When India banned wheat on May 13, officials had said 97,000 tonnes of flour had also been exported in April. Going by reports that flour exports have doubled, exporters say nearly three lakh tonnes could have been exported by now.

A multinational firm’s export-import official said wheat flour exports were better than wheat, though their shelf-life is low and it can be shipped only to nearby destinations. “At least 90 per cent of the wheat exported will be milled. We are more competitive even in milling,” the official said.

Adi Narayan Gupta, a Delhi-based flour miller, said there is good scope for flour exports, though the demand is “still emerging”. “Some quantity has been exported but more of it from near port areas,” he said.

A flour miller from South India said demand for wheat flour is lukewarm and there was nothing worthy to take note of. 

Published on June 07, 2022
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