Curbing rice prices amid pandemic

Some recent reports from leading newspapers indicated that the price of rice in the domestic market of Bangladesh is higher than other major rice producing countries in the world such as India, Thailand and Vietnam. Usually, every year when the Boro harvesting season is concluding during the month of July, the rice prices come down. But it has not been the case this year which is quite alarming.

Boro is the single most important rice crop for Bangladesh as it accounts for about 55 per cent of the total rice production of the country. According to the Department of Agriculture Marketing database, the current retail price of Boro coarse rice is Tk 47, medium rice is Tk 51 and fine rice is Tk 64 per KG in Dhaka last week. Compared to prices in July last year, the prices of coarse, medium and fine rice have increased by 9.57 per cent, 13.73 per cent and 15.63 per cent respectively. Rice prices were also high last year after the first wave of the pandemic hit the country.

During these tumultuous times of lockdown and the Covid-19 pandemic, when people are losing their jobs and salaries and wages being cut down, this sharp increase in rice prices is putting an extra burden on everybody, especially the poor.

We all know that rice is the staple food in Bangladesh but what is not a common knowledge is that rice is also the primary source of calories and nutrients (e.g. protein, iron and zinc etc.) in Bangladesh.

The Bangladesh Integrated Household (BIHS) survey  data showed that rice accounted for about 71 per cent of total calorie intake in 2012 which decreased in 2018-19 but still points to the overwhelmingly dominant position of rice in diets in Bangladesh. Moreover, rice accounted for about 63 per cent of total zinc intake and about 40 per cent of total iron intake. Interestingly, about 58 per cent of total protein intake also came from rice consumption according to 2012 survey data. In addition, the BIHS survey data shows that the share of calories from rice decreases as income increases, indicating lower dietary diversity among poorer households.

Last year during the surge of the first wave of Covid-19 pandemic, International Food Policy Institute (IFPRI) conducted a telephonic survey on both rural and urban households. The data from that survey showed that, 20.2 per cent of main household earners in the urban sample were unemployed, as were 17.3 per cent of rural main earners. Moreover, about 90 per cent of the households reported that their incomes decreased during the first three months of the pandemic and lockdown last year.

When we shift our focus towards the food insecurity situation, after the pandemic hit the country last year, 55.4 per cent of the urban sample reported to be either moderately (39.7 per cent) or severely (15.7 per cent) food insecure during last year's data collection. Food insecurity increased dramatically among the urban sample during last year's lockdown. The situation in the rural areas was a bit less dire as the survey found that 45.6 per cent of the rural sample were moderately (33.9 per cent) or severely (11.7 per cent) food insecure.

We can only assume that people are facing a similar situation during lockdown this year-- they are losing their jobs and income and households are becoming more food insecure than ever as the country is being hard-hit by these new variants of coronavirus and the highest infections and deaths are being recorded each day. When we add this fact with higher prices of daily necessities, we can understand how bad the situation may turn out to be for the poor living in both rural and urban areas of the country.

So now the question is-- what needs to be done to mitigate the sufferings of the poor and the vulnerable? The government needs to at least ensure the supply of rice at a lower price so that the poor and marginal households can survive during the ongoing lockdown. It has already been speculated that the rice prices have been kept arbitrarily high by some market actors. There is no shortage of rice in the market so that rice prices should increase this much as even in the face of prolonged pandemic and frequent natural calamities, the country was able to increase the production of rice during Boro season from 19.6 million metric tons last year to 20.0 million metric tons this year. The public stock of rice now stands at 12 lakh 66 metric tons which was only 311,000 metric tons on April 20. So, there is no reasonable explanation why rice prices are rising during the end of the most important harvesting season of the year when there is no visible shortage of rice supply in the market.

The government must reinforce and increase the coverage of various social safety net programmes such as the open market sales (OMS) programme so that it can enable the low-income earners to buy rice at a lower price from the OMS outlets. It has been speculated that the social safety net programmes such as OMS remained quite limited this year during the Covid-19 induced restrictions.

The government must also ensure coordinated efforts to reduce leakage and improve the operational efficiency of various safety net measures. The policymakers need to consider the vulnerable groups living in the urban areas, especially as the data showed that they are facing more difficulties in terms of loss of income and loss of jobs due to lockdown in comparison with rural poor households. Urban poor households are suffering more by falling into poverty traps due to comparatively higher prices of daily essentials in the urban areas and becoming more food insecure during the lockdown, as survey data indicated. Social protection schemes are virtually nonexistent for the urban poor so these vulnerable groups will need special aid services.

If needed, the government may consider importing rice from abroad as other rice producing countries can offer rice at a lower price as various reports indicated. GOB can consider easing up rice imports by reducing excise duties as importing rice at a lower price may help market prices for rice to come down. As GOB has introduced strict lockdown since the start of July and it has been indicated that there will be prolonged lockdown after Eid, measures have to be taken to ensure enough rice supply for the poor and the vulnerable at affordable prices.

Md Sadat Anowar is a Research Analyst at the International Food Policy Research Institute (IFPRI). [email protected]