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Wednesday | 15 January 2025 | Epaper

Price hike: Policy matters

Published : Saturday, 23 September, 2017 at 12:00 AM  Count : 245
Haradhan Ganguly
Today's talk on soaring price of rice is not only showing the result of mismatch of supply and demand and the misdeeds of dishonest traders, but policy pursuit also matters in this regards. Government's success story in agriculture proves its way in achieving self-sufficiency in food production. But such self-sufficiency does not mean to be sustainable always.
Since vagaries of nature of the countries like us always have been playing a critical role, particularly in agriculture. Sustainable self-sufficiency in food cannot be kept in place only by ensuring smooth production, other dynamics are equally important to be addressed.
That imply production, marketing, storage, pattern of distribution, export and import, fiscal and financing support, psycho-factors of the farmers and scenarios of international market etc. all issues are being embraced with the question of food autarky. Role of the government purchase and private investment and political decision towards this are equally important to be addressed. That means all supply side and demand side dynamics are to be earmarked in food policy.

***Any shortage of food due to production damage in a particular year for natural calamity cannot be the whole answer to the suspicious minds whether country is really self-sufficient in food or not. It is to be seen whether other issues relating to food economy are being properly followed or not.***

Any shortage of food due to production damage in a particular year for natural calamity cannot be the whole answer to the suspicious minds whether country is really self-sufficient in food or not. It is to be seen whether other issues relating to food economy are being properly followed or not.
It is not denying, rice production is expected to decline by 2 million tonnes in the last boro season amid flash flood in the haor and northern regions. Here we have nothing to do than to accept production deficit. But question raise from the steps government has taken to cover the gap.
It is found that a big cut in import duty on rice has hardly made any impact on the prices of the major staple in the city markets. Market observers said big importers and traders are cashing in on the duty slash, depriving limited income people of buying rice at low prices.
Though the government reduced the import duty on rice to only 2 per cent in August last, the prices of coarse rice are still hovering between Tk 46 and Tk 48 a kg at retail markets. May be, the prices has now lower trends, when this article will go to readers. But that does not deny the facts of evil manipulation in rice markets by traders defying benefits of big cut in import duty.
In June last, the government cut the import duty on rice to 10 per cent from 28 percent earlier and again reduced it to 2 per cent last month aiming to raise the supply of the staple in the flood hit country. At this import of rice increased sharply in the first two months of the current financial year following a significant cut in the import duty.
The food ministry's data shows that private importers brought 0.401 million tonnes of rice just in last 60 days of the current financial year when the total import was 0.133 tonnes in FY 17. LC (letters of credit) have been opened for importing another 0.15 million tonnes of rice which will be brought into the country within in a month.
However, the government also imported 0.14 million tonnes of rice this fiscal year. While another 1.36 million tonnes of rice will be brought in the country gradually. That means, there is abundance in rice available in stock. So why do rice market see soaring up? Here demands for some analysis of the policy pursuits by the government.
Why after cutting 26 per cent import duty in two phases and 3 per cent regulatory duty, the poor and lower middle class will not feel comfort in rice markets. Though at this government has to incur a hefty loss of revenue income. On other side, importers and traders are flourishing their pockets at the cost of the commoners. This is one scenario. Other causes of rising price are like this.
Firstly we know in recent times, agriculture particularly rice subsector is giving a dismay growth picture. That is rice production is showing declining trends. In analyzing economic trends published by the government, in last few years, we see the growth of rice has been declining to 0.1 or up to 1 per cent.
In 2012-13, and 2015-16 had negative growth. In 2016-17, the target of boro production was 1 crore 91 lakh tonnes. Not only flash flood has reduced 20 lakh tonnes, experts view boro production was far behind the target due to negative growth trend of rice production. This deficit adds water to fire in soaring up rice.
Secondly, in past few years, price of rice was stable due to more import both by government and private sectors. Say for example, in 2010-11, total rice import was 15 lakh 54 thousand tonnes.
Out of this amount, government imported 12 lakh 64 thousand tonnes and private sectors 2 lakh 90 thousand tonnes.  In 2011-12, both government and private sectors imported 5 lakh 13 thousand tonnes of rice. 2012-13 and 2013-14 financial years saw declining trends of rice imports.
But reverse was happened in 2014-15. It saw up trends of rice imports to 14 lakh 90 thousand tonnes. But in 2015, 10 percent import duty was imposed on rice imports. As a result rice imports in financial year 2015-16 stood at 2 lakh 57 thousand tonnes.
Government imported 1 thousand 28 tonnes and private sector 2 lakh 55 thousand 96 tonnes. To discourage rice import, government enhanced import duty from 10 percent to 25 per cent with a follow up result in declining import of rice in 2016-17.
To face paucity crisis, government decided to import 15 lakh tonnes of rice. But it remained far behind the target of import. Media reports, only 1 lakh 27 thousand tonnes was imported during three months after the decision of new target was taken.
This unfulfilment is added with government's failure in fulfilling the internal purchase target. The last website report of food ministry told us up to 6th Sept ministry was able to purchase only 2 lakh 55 thousand tonnes of paddy and rice. Whereas target was 7 lakh tonnes of paddy and 8 lakh tonnes of rice.
So government's stock of rice and paddy has become weak than before, it apprehends. But there is none to be afraid of. We have a strong information from a media source that a huge so to say 1 crore tonnes of rice are kept in possession of rice mill owners and rice traders.
They are not selling it to the government due to lack in competitive market price. That means, market price is higher than that of government rate of purchase. We suggests, government should shun policing steps to find out rice stock, expecting for those are indulging in dirty politics using people's agony.
It is heard government is going to launch a wide open market policy (OMS). Definitely it will have its salutary impacts on the supply of rice in the market. Otherwise only by using police to unload stocks kept in possession of unscrupulous traders and rice mill owners would be suicidal. Government has huge foreign exchange reserve. She can purchase rice from abroad to forge a huge stock to dent dishonesty for windfall profiteering.
In a study of BBS, it is learnt, 54.81 per cent of total expenditures of a family go for food. Out of this 39.95 per cent of monthly expenditures go for rice purchase. So price hike of rice makes poor poorer and makes lower middle class poor. Not only this, price hike of rice accentuates nutritional crisis also. Consumption of meats, eggs, milk, fruits etc. is curtailed because of lion share of poor and lower middle class family expenditure goes on purchasing rice due to its price hike.
Government must take two ways traffic to mitigate the present crisis in rice markets. In short term measure, the government must expedite rice import under G to G (government to government) pact and facilitate import under private sectors.
Here maintaining a smooth running condition is the need of the hour. Strong monitoring is a must, so that rice markets cannot be manipulated by mill owners and traders. In the long run, in order to enhancing rice productivity, market price must be kept competitive to the encouragement at producers' level.
Production cost is to be made low like what the US, Japan and countries in European Union do for their food production. We hate profiteering at the cost of human plight. So government will do no wrong if she becomes stern here.

Writer is a freelance contributor





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