Aman paddy procurement only 8.75% of target despite price hike

The government's Aman paddy procurement has hit only 8.75% of the target, with the deadline expiring last Friday, due to farmers' unwillingness despite a Tk3 per kg price hike.

The producers are preferring the open market due to higher prices and to avoid the hassles of the government procurement process.

According to the food ministry, Aman paddy and rice procurement began on 17 November, with targets set at 3.5 lakh tonnes of paddy at Tk33, 5.5 lakh tonnes of parboiled rice at Tk47, and 1 lakh tonnes of Atap rice at Tk46.  

So far, only 26,277 tonnes of paddy have been collected, along with 430,206 tonnes of rice and 77,000 tonnes of Atap rice. While the paddy and rice collection period has ended, Atap rice procurement will continue until 15 March.  

Last Aman season, the government procured paddy, rice, and Atap rice at Tk30, Tk44, and Tk43, respectively – Tk3 less than this year. However, the Directorate General of Food failed to boost procurement despite the price increase.  

Farmers say unfavourable weather and floods during the Aman season affected the harvest, driving up market demand and prices. Despite the government's price increase, farmers preferred selling in the open market to avoid transportation costs and regulatory hassles of government storage.  

Sohel Rana, a farmer from Sadar Upazila in Jhenaidah, told The Business Standard, "I planted Aman paddy on four bighas but got only 20 maunds due to rain. I sold it at Tk1,350 per maund (Tk34 per kg) in the open market since government warehouses offer lower prices and involve transportation costs. On the other hand, Humidity testing is another problem at government storage." 

Biswajit Debnath, a farmer from Natore's Sadar Upazila, echoed the same sentiment, saying, "We sold Swarna-5 paddy at Tk1,480, while the government offers much less. Why will we sell to the government? This year, yields were 5-6 maunds per bigha lower, driving up demand, and mills paid higher prices."  

The government has consistently struggled with paddy procurement. Last year, it procured only 12% of paddy and 96.15% of rice during the Aman season. 

In the fiscal 2022-23, the figures were 1.56% for paddy and 86.02% for rice, while in the fiscal 2021-22, they stood at 28.16% and 98.74%, respectively.  

The government's rice stock relies on domestic procurement and imports, which help regulate the market. Last fiscal year, no rice was imported, and repeated procurement failures led to stock depletion by year-end, causing prices to rise by Tk4-10 per kg in December. However, government-driven imports later helped stabilise prices.  

Experts say the government's primary tool for controlling the rice market is stock management. During market instability, it sells rice from government stocks at lower prices to maintain stability.  

Due to the dollar crisis and rising international rice prices, the government's reliance on domestic procurement has increased, and insufficient domestic procurement could destabilise the rice market in the future, they added.  

Jahangir Alam, a professor at the Department of Agribusiness and Marketing at Bangladesh Agricultural University, told TBS that maintaining a strong stock and monitoring it through import planning and domestic procurement based on production is key to market stability.  

"Accurate information is crucial, as research shows discrepancies between government-provided production data and reality. Disruptions in any of these areas can lead to market instability," he added. 

Professor Alam stated that the government's objective in procuring paddy and rice is to strengthen stocks and ensure fair prices for farmers. However, directly collecting paddy from farmers is not feasible, as it would require going door to door, which is impractical. 

Additionally, the transportation costs involved in sending paddy to government warehouses would be burdensome for small farmers. Therefore, the primary focus remains on rice procurement, he added. 

By purchasing paddy and rice during the harvest season, the government can influence the market and help farmers secure fair prices. Nonetheless, he emphasized the need for the government to be more proactive in rice collection, he further said.

Officials at the Directorate General of Food say the rice procurement target is set slightly higher to ensure farmers receive a minimum reasonable price. Since rice is mainly supplied by millers, the procurement target for rice is also raised.

An additional secretary of the food ministry told TBS that the primary objective of rice procurement is to ensure fair prices for farmers, rather than just stockpiling. The focus is mainly on purchasing rice, with specific targets set for mills. However, challenges often arise in the procurement process. 

He noted that in previous years, deadlines were extended when targets were not met, but no such decision has been made this time.