How to ensure a transparent rice supply chain

Food on the plate is the very first thing people need every day, and with rice being the staple, its price is a matter of overriding concern for the general public. When rice prices soar, the poor and low-income people become more food insecure. A steady rise in rice prices has already forced this low-income people to spend a disproportionate share of their earnings on rice alone, cutting back on fish, meat, and other vital sources of protein. As such, rice price is a major public concern and a particularly sensitive issue.

Yet the rice market remains highly vulnerable to manipulation, dominated by large millers and traders. This syndicate exploits the system for windfall profits by hoarding and creating artificial shortages. On one hand, they short-change farmers, leaving them barely able to recover production costs; on the other, they charge consumers exorbitantly high prices.

Large millers exert control over virtually every stage of the supply chain, from the initial procurement of paddy and its subsequent processing, storage to the final stages of distribution to wholesalers and retailers. This monopoly has created a fertile ground for market distortions.

For example, in this Boro season, large millers have purchased paddy from farmers at low prices before Eid, stored it in warehouses, and are now raising prices under various pretexts. Over the past week, rice prices have soared by Tk 2 to 8 per kilogram, despite the bumper harvest and adequate stock. According to the Department of Agricultural Extension, a record 21.4 million tonnes of Boro paddy have been harvested from 0.48 million hectares of land. So the question is, why is this sudden price hike in spite of the good harvest and adequate stock?

To curb persistent inflation, the government has been pursuing a contractionary monetary policy since assuming office about 10 months back. Besides, over 200 traders were given permission to import rice and the import duties were substantially waived. And yet, despite these significant initiatives, there has been little to no reflection of their intended impact on the rice market. Even though the overall inflation trend shows a modest downward trajectory and prices for most other consumer items have begun to cool, rice remains an exception. A brief, modest decline was indeed observed in the past month, largely due to the peak Boro harvesting season. However, as soon as the newly harvested rice left the hands of farmers and entered the supply chain, millers began increasing prices. This has been a recurring issue for years, and it is time to establish  much-needed transparency and accountability in this murky supply chain.

In order to do so, the policymakers can consider establishing a comprehensive and integrated rice supply network which would create a system of transparency and accountability. It could begin with a mandatory, dedicated rice supply chain registration and licensing system. Every single actor involved in the rice supply chain, from the individual farmer who sells directly to the market in large quantities, to intermediaries like wholesalers, millers, traders, dealers, and hoarders, and finally to large-scale retailers, would be legally required to hold a specific license to deal in rice. Only licensed individuals or entities would be permitted to engage in any rice-related trade activity, whether it's processing, large-scale storage, or marketing. Robust mechanisms should be established to collect and maintain accurate, up-to-date data on all license holders, including their legal identity, operational capacity (e.g., milling capacity, storage capacity), geographic location, and business history. All this comprehensive license holder data would be centrally stored at the upazila and district level for localised monitoring.

Besides, all the millers and traders throughout the supply chain should be mandated to submit weekly updates regarding their current stock levels of paddy and rice, volumes produced or processed, utilisation of their licensed storage capacity, purchase and selling prices, and total sales volumes from the preceding week. These weekly reports should be submitted directly to the respective Deputy Commissioner's office, which would be responsible for receiving, verifying, and analysing this data. Such frequent data submission would allow for the early detection of unusual spikes in stock levels that could flag potential hoarding. This constant scrutiny would also act as a powerful deterrent against illegal stockpiling outside registered capacities, making it difficult for unscrupulous entities to manipulate supply or prices without detection. Furthermore, real-time data on supply, demand, and prices would enable the government to make more informed decisions regarding imports, exports, and market interventions.

While some consumer protection measures currently exist at the retail level, they are insufficient to oversee the entire complex supply chain. Department of Consumer Rights Protection (DCRP) will have to play a pivotal role, coordinating closely with district administrations. They will have to regularly inspect the licensed warehouses to verify reported stock levels against actual inventory, cross-check their transaction documents, and ensure full compliance with all licensing rules and reporting requirements.  

Lastly, it will require strong collaboration among relevant ministries, particularly the Ministry of Food, the Ministry of Agriculture and the Ministry of Commerce. Through such a unified, inter-ministerial approach, the rice supply chain can be managed in a coherent manner, rather than the current fragmented system. This will pave the way for a transparent supply chain.  

Ultimately, the successful implementation of such a unified licensing and monitoring framework can dramatically improve transparency and eliminate entrenched malpractice in the rice market. A transparent supply chain is not only essential for protecting consumers and farmers but also a necessary step towards ensuring food security and good governance.

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