With Bangladesh under pressure to have ample rices stocks, its Directorate-General of Food has reportedly signed a deal with an Indian public sector firm to import one lakh tonnes of rice on a government-to-government (G2G) basis.
According to trade sources, this is Bangladesh’s first G2G agreement for rice imports with an Indian public sector firm. Though more details are awaited, the neighbouring nation will buy parboiled rice at $422 a tonne cost and freight (C&F) liner out, which includes all expenses the vessel will incur in delivering the consignments.
Separately, the Bangladesh Food Directorate-General is also believed to have signed a deal with a South-East Asian country to import 2.3 lakh tonnes of par-boiled rice at $522 a tonne, a cost considered “unacceptable” by traders. This is also a G2G agreement.
Both the deals are expected to be made public over the next couple of days, sources in the know told BusinessLine. Dhaka plans to import at least one million tonnes (mt) of rice from India on a G2G basis as well as through private trade. “Already, private traders in Bangladesh have imported 1.4 lakh tonnes of rice from India in the past few weeks at an average of $464 a tonne,” said a trading source, not wishing to identify.
The deal comes on the heels of Bangladesh issuing a tender to buy 50,000 tonnes of parboiled rice on August 21. The tender closes on September 6.
Weather impact on crops
Bangladesh’s purchase comes amid fears over problems with domestic rice production this year, besides India and Myanmar. Rice stocks with the Sheikh Hasina Wazed government are a precarious 1.8 mt.
The neighbouring nation’s Aush, Aman and Boro crops have been impacted by dry weather as well as floods this year. At least 6 lakh tonnes have been lost in the Aush crop, while its Aman crop makes up 39 per cent of the total rice production.
“Even if 10 per cent of the Aman crop is affected, it makes a huge impact,” the source said.
Mulls zero import duty
According to the US Department of Agriculture, Bangladesh will likely import 6.5 lakh tonnes of rice this year. Trade sources said Dhaka has been buying a good volume of rice after June and is responsible for the spike in Indian prices.
During the first quarter of the current fiscal, Bangladesh imported a meagre 4,413 tonnes from India compared with 1.62 million tonnes (mt) last fiscal.
Keeping food security in mind, the Sheikh Hasina Wazed government is planning to cut the import duty for rice to zero from the current 25 per cent. Earlier this year, it reduced the duty from 65 per cent to facilitate the foodgrain’s imports.
Indian prices gain
In the past few weeks, it has sourced premium rice varieties such as Sona Masuri from the Raichur region in Karnataka to meet its needs. According to the Ministry of Consumer Affairs data, rice prices are currently retailing at ₹37.64 a kg, up 2.2 per cent month-on-month. The rates are over 5 per cent higher year-on-year.
At various agricultural produce marketing committee (APMC) yards in the country, the net weighted average modal price (the rate at which most trades take place) is currently ₹3,209 a quintal compared with ₹2,841 a month ago.
A second trade source said Bangladesh has offered to pay an “unacceptable” price for rice from the South-East Asian country since it does not want to risk a food emergency like Sri Lanka.
On the other hand, sources said India was not even trying to “encash unofficially” the neighbour’s dire need for rice stocks.
Paddy area down 8%
Reports said Bangladesh is currently eyeing rice imports from all available sources, including Cambodia. The trading source said Wazed will likely seek exemption from export ban with Prime Minister Narendra Modi during her scheduled visit to New Delhi during September 5-7.
According to the Ministry of Agriculture and Farmers’ Welfare, the area under paddy during the current kharif sowing season is 8.1 per cent lower at 343.73 lakh hectares (lh) compared with last year. The coverage of the crop has been badly affected in Jharkhand, down by 11.4 lh, and Bihar, lower by 6.3 lh.
Uttar Pradesh, another key rice producer in the kharif season, is witnessing over 2 lh drop in the acreage. The acreage is lower in these States since they have experienced deficient monsoon this year.
Due to the lower area, India risks losing at least 10 million tonnes (mt) of rice production this kharif season. Last year, kharif rice production was a record 111.76 mt with the total production for the season (July 2021-June 2022) being a new high of 130.29 mt.
Rice stocks in the central pool, maintained by the Food Corporation of India, have declined to 27.95 mt as of August 1 from 29.1 mt a year ago. Unmilled paddy stocks have declined to 19.46 mt as of August 1 from 22.91 mt a year ago. The paddy can yield 13.03 mt of rice.
The trade feels that Bangladesh is trying to secure its supplies taking all these developments into consideration.