Why should rice become costlier immediately after harvest?

The rice syndicate has, once again, become hyperactive. Earlier, the millers and their cohorts took the opportunity of the lean season to raise prices of rice. But they targeted the peak harvesting period to manipulate market last year. This year sees a repeat of their intrigue. During the harvest of Amon paddy, they raised prices of rice by Tk 1.50-3.0 a kilogram. Now immediately after the harvest of Boro has been completed, they have triggered the unholy move aimed at making the staple market volatile. Reportedly the jittery rice market has registered a price rise of up to Tk5.0 a kilogram.

The majority of farmers had to dispose of their paddy soon after harvest because of a lack of adequate barn capacity. Paddy, unlike potato, does not require cold storages for its storage. But small to medium farmers are compelled to sell their crop in order to meet their pressing needs including repayment of their loans. It is exactly here millers and stockists take the opportunity of excessive supply to lower prices on various pretexts, one of which is that the newly harvested paddy is not dried enough. Purchased at low prices, the cereal is now released to the market at their own pace to raise the price. 

This could be obviated if the government also launched an aggressive drive for procurement of paddy or rice during the harvesting season. Every government has faltered on this basic plan and thus surrendered the rein to the syndicate. The incumbent government is no exception to the rule. But it is not only on this count, but also in terms of market monitoring and intervention, it is the same old story. No government can dictate terms by just strong words; there is a need for active and pragmatic intervention in the market. If the government had built a very large stock of the staple, it could now release enough rice to stabilise prices.

The ploy resorted to by trade syndicates is quite known. They create an artificial crisis of essentials before raising prices to astronomical height. In rare cases, when crops are damaged for some reason, there may be a crisis but if the government uses AI-driven data, it is possible to take timely action geared to managing the crisis. Market monitoring is casual and unscientific. Authentic data give a clear picture of bumper production or loss of crops and thus help adopt a comprehensive policy well in advance to tide over any reversal. In case of the staple, this is even more relevant. 

What usually happens here is that cursory actions follow when the market situation is out of control. But a sound administration is one that can pre-empt any move by market actors to manipulate the terms in their favour. It has happened in case of both locally produced crops such as rice, potato and onion and imported commodities like cooking oil and spices. Even when prices of certain commodities have fallen in international market, those have registered outrageous hikes in domestic market. 

Now that the government employees are going to receive a pay hike, traders in general would try to make the most of it. With the increased money supply, inflation will also go up. The price hike of rice can be considered a preamble for pushing the inflation trajectory further up. If the government does not have a plan of action for the anticipated market volatility, the raise in pay package will be neutralised by rising inflation. This will particularly affect the lower and middle income segments of society employed in the private sector. 

When the staple becomes particularly costly, it hurts the lower class of people the most because the major portion of their income is spent on cereals. Now that the harvesting season is over, the government should gather authentic data to know if there will be a shortfall in the lean season ahead and trigger its apparatus for import of rice. For a long-term measure, silos or warehouses for storing paddy and rice should be constructed across the rice-growing areas, where farmers can stock their crop during harvesting. This will serve as a deterrent to market manipulation by the syndicate of rice traders. 

nilratanhalder2000@yahoo.com