Rising food prices despite record stocks defies analysis

Staff Correspondent: The food stock of Bangladesh has reached a new height of 20 lakh tons, with warehouses full of rice and wheat. Despite that, food prices are soaring.
Market analysts and Food Ministry officials are mystified as to the reason behind food prices soaring in the domestic markets.
According to the daily food grain situation report of the Ministry of Food, the total food grain stock in the country on February 9, 2022 was 20.02 lakh tons. Of this, the stock of rice was 16.94 lakh tons, wheat 2.77 lakh tons and 49,000 tons was paddy. Whereas the secure food stock level for the country is 10 lakh tons, the stock of food grains crossed 20 lakh tons.
Past data shows that there has never been such an official stockpile of rice earlier. At this time last year, the amount of food grains stored in the government warehouses was 7.21 lakh tons. Of this, the stock of rice was 5.37 lakh tons, which was the lowest in a decade.
Citing “current stock is satisfactory”, the report said that aman paddy, rice and wheat procurement activities were being conducted from domestic sources and stocks of food grains were recorded due to import of rice from abroad.
Despite good yields of aman and record production of paddy in the last boro season, several markets in the capital were visited recently which showed that the price of rice (old) is rising.
According to the trading corporation of Bangladesh (TCB) coarse rice was sold at Tk 46 to 48 per kg in the capital’s markets on Wednesday, February 17.
It showed that prices have risen by 4.35 percent in one year. A fine variety of rice (Miniket-Nazirshail) has been sold at Tk 60 to 67 per kg. In a year it has increased by 7.6 percent.
Dr. Mosammat Nazmanara Khanum, Secretary to the Ministry of Food, told in this regard “The ministry has already set up buffer stocks of food grains in government warehouses to deal with any situation during the Covid-19 pandemic period.”
Currently the country’s food grain stock is more than 20 lakh tons. This buffer will help keep the market situation normal in the country, she said. “In addition to this, we have also strengthened OMS activities to keep the prices affordable at the market level. The purpose is to ensure that the low-income people of the country can buy rice or flour at a lower price,” Dr. Nazmanara said.
People of almost all classes and professions are under pressure due to rising commodity prices in this pandemic period. Despite bumper paddy production in the Amon season, price hike of food grains is a matter of surprise and it does not match with market analyzing theories.
Golam Rahman, president of the Consumers Association of Bangladesh (CAB), an organization working for consumers’ rights, opined that increasing the coverage of OMS for working and low-income people will help them to get rice at a fair price.
He also said that buffer food stock in the country will give relief to the consumers as markets would refrain from a drastic rise in the rice price.
“If the rice and wheat provided in the open market sales (OMS) will be intensified, the prices of other essential goods will be under control in the market and then the consumers will get the benefits,” Golam Rahman said.
“In order to keep the market situation normal, government warehouses need to have at least 10 lakh tons of rice considered as security stock,” he said.
It is better to have extra. With the current stock of food grains, it is possible to control the price of rice and flour / wheat in the country as well as deal with any crisis, CAB president said.
M Asaduzzaman, a former research director at the Bangladesh Institute of Development Studies (BIDS), and an agro-economist, told, “Food stocks have increased, it’s good. But we need to find out why prices are rising.”
In this case, if someone has manipulated or increased the price by forming a syndicate, the government should take action against them, he said.
Bumper food grains production in the country and record 20 lakh tons stock of food would indicate there is no reason for the food grains price to go up in the domestic markets and the current price of rice is not acceptable, Asaduzzaman said.
“A large number of people in the country are at risk of food insecurity after losing their jobs due to the shock of the pandemic,” he said.
Abdur Rashid, president of Bangladesh Auto Rice and Husking Mill Owners Association, (an association of rice mill owners) said mill owners are not at all responsible for the rise in rice prices.
“We buy paddy and produce rice, millers (rice mill owners) are not involved in raising rice prices at all, and such allegation is baseless” he said.