Loading...

Expensive rice procurement and foreign trips


Expensive rice procurement and foreign trips

This year, the government has been facing an uphill task in procuring rice. On the one hand, rice harvest is less than expected for three crops. From what has been published in the media, we know that due to floods during the 'boro' season, crops losses were substantial. This happened because there was heavy rainfall in the coastal belt and the north east region of the country triggering floods. If climatic interventions were responsible for decline in boro production, the same can be said about 'aus' variety. According to the international rice research institute, the country has had 40 per cent more rain when compared to previous years. The third variety of rice - 'aman' has also fallen short of target by as much as 10 to 15 per cent.

When all this is taken into consideration, the manner in which procurement has been going on domestically gives hardly a reassuring picture. The government has been offering a rate lower than that of the open market, according to a report in The Financial Express on November 28. Hence the drive to procure Aman is not really going anywhere. So far about 287 tonnes had been procured during the month of November. Indeed, we learn from the food division that the target for the Rangpur division alone was to procure 0.121 million tonnes. In reality, about 100 tonnes could be bought. This is good enough to give an idea of why the authorities are scurrying for rice all over Asia.

Against the backdrop of failing to meet production targets of boro, aus and aman rice varieties, the authorities decided to import rice to ensure food security and approved import of 630,000 tonnes of rice from Vietnam, India and Myanmar. There is nothing wrong here. What did raise eyebrows, however, is that rice being imported from Vietnam is reportedly US$78 costlier than the same quality in Indian rice for each tonne. The other troubling question is, why the government procurement of rice from foreign sources is more expensive than private imports? After all, private importers are also buying rice from destinations such as Vietnam, India, etc. It is not as though public procurement shipments are of a higher quality.  The authorities concerned, however, are quick to state that the media have little knowledge about how international market for the staple operates, so it would be more prudent not to make such statements. Because in the age of the internet, finding out what the price of a particular type of rice is in any country is basically, a few clicks (of the computer mouse) away! Contrary to what the powers-that-be may think, getting a comparative analysis of the international market for any particular commodity, is actually easier than one may think.

The government's food stock is somewhat healthy at the moment. As of 30th November, the silos belonging to the food directorate had 1.3 million tonnes of rice and 0.29 million tonnes of wheat. However, given the deficit in the production of Aman this year, the government needs to make its buffer stock bigger than the normal time. But, for procurement of anything from abroad these days, one does not need to visit the sources of procurement, as it can be done online. So why should a six-member team including food minister, food secretary and director general of food directorate travelling to Vietnam, Cambodia and Thailand to "discuss" rice import? Could it not be done online? This is, moreover the time when the central bank has instructed all banks to follow "austerity" measures because the foreign exchange is so precious these days. Legitimate importers are having trouble opening letters of credit, foreign travel has become more difficult because banks are averse to endorse dollars, and one even hears of the problems associated with payment of fees of our students studying in foreign countries (and for which parents have 'dollar' accounts in banks). It would appear that we are living in George Orwell's' 'Animal Farm' where some animals are more equal than others.

All this is very disturbing. Because even the prime minister's office has issued instructions discouraging such travel by high dignitaries and functionaries in an effort to conserve precious foreign exchange. It would seem that there are two sets of austerity measures in play here. One for the common people and one for whom the directive is an optional one.

Notwithstanding the volatility in the international market for rice, should policymakers not be trying to clinch deals at the lowest possible price for the grain in question? Rice alone does not make up the food basket. Items like onion, garlic, etc. are also imported to varying degrees. While it is highly commendable that Bangladesh is setting up G2G (government to government deals), the last thing one expects to see is that public procurement of rice per tonne is much dearer than private procurement of the same rice (per tonne). If not for any other reason, the government's audit department should, at the very least, scrutinise these deals to ensure that the rules have been followed and the government is getting the best deal it can, under the circumstances.

 

[email protected]

 

Share if you like