Volatile staple market

A volatile staple market is a dangerous development for any country, let alone Bangladesh. Farmers produce paddy but are not usually in charge of husking it for consumption of the consumers. This is the responsibility of millers who actually take advantage of their mobilising and organising power to control the country's rice market. The difference between the two stages of cultivation and turning paddy into rice gives the millers an undue leverage in protecting more than their fair share in the food market. Nothing else explains the latest slump in paddy price by Tk 150-200 a sack of 50 kg in the rice-growing local market in the country's north. In fact, a tug of war between the government and millers has been going on for long over setting prices of rice. Several rounds of negotiations produced no concrete result and the millers started selling different varieties of rice at prices higher than the set ones in defiance of the government instruction.

Against this background, the government acted decisively. It went for import of rice and the first consignment has already been received. The price of the imported rice is Tk 33-34 a kg as against Tk 46-48 for similar local coarse variety. In fact, the government's failure in rice procurement drive is responsible for the market jitteriness. At this time of the year last year, the food reserve was to the tune of more than 1.0 million tonnes but presently it has only half that amount. Millers wanted to take advantage of this situation. But because of coronavirus and lower production, farmers also demanded higher prices for paddy and Tk 1,100-1,200 a sack of 50 kg was the going rate.

Now that the government has gone for import in order to augment its stock, millers have suddenly stopped buying paddy. Maybe, they have by this time built sufficient stocks of their own. This is the reason behind this sudden slump in paddy price. Notably, the government procurement drive has ever remained faulty. For years together this has prompted middlemen and millers to manipulate the food market. Now as the government has shown its resolve to counter them by importing rice at much lower prices, they feel the heat. So they also will resort to all kinds of manipulation to retain their monopoly on the staple market. 

Reportedly, repeated floods may reduce production by 1.5million metric tonnes but Bangladesh Rice Research Institute (BRRI) officials expect a surplus of 3.0 million tonnes over the total requirement until June this year. So, it seems food security is not at risk. Possibly there was an attempt by market manipulators to create an artificial food crisis. Producers in this country have always found themselves at the receiving end because of such unholy market practices. If the government makes arrangement for a pool of transports for carrying produces to large markets in towns and cities and farmers are offered the ownership of such transports over a period of time under a cooperative management system, millers and middlemen can be kept at bay. Any direct government intervention in market for price stability in a free-market economy is undesirable but if it plays such an active supporting role for producers, market manipulation can perhaps be done away with.