Global events narrow food grain sources for Bangladesh
The situation is more complicated as procuring wheat from Russia remains a challenge since banks are reluctant to open letters of credit for imports from the heavily sanctioned country.
Russia ending the Ukraine grain deal and India keeping its rice and wheat exports halted have put Bangladesh in a complicated situation over procuring food grain to meet its demand.
Although local markets are yet to be impacted by these global events, the government must immediately move to find alternative sources to avert any possible food crisis, importers say.
The situation is more complicated as procuring wheat from Russia remains a challenge since banks are reluctant to open letters of credit for imports from the heavily sanctioned country.
Moreover, the El Nino climate pattern now seen in various countries, especially in Latin America, is threatening global commodity supplies. The price of rice has already increased in Vietnam and Thailand.
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Abul Bashar Chowdhury, chairman of BSM Group at Khatunganj wholesale market, warned that Bangladesh may soon find it hard to import enough food grain as the number of sourcing countries has narrowed.
He said initiatives should be taken quickly to increase the collection of wheat from alternative sources.
Muhammad Mahbubur Rahman, senior assistant secretary (external procurement), Ministry of Food, told TBS that the government stocks are in good position and they have no immediate plans to import food grains, especially rice.
However, acknowledging a potential crisis, he said the government is prepared to import quickly in case of any urgent need.
The government on 12 June approved the purchase of 5 lakh tonnes of rice and 6 lakh tonnes of wheat so that they can be imported quickly if needed.
These purchases will be made under G2G (government to government) basis and open tenders.
Stakeholders say the government may find it difficult to import rice through open tenders as only Thailand, Vietnam and Myanmar remain the only sources.
But, wheat import should not be too much of a problem under the G2G system, they added.
Wheat sourcing
India banned wheat export on 13 May, and Russia refused to extend the Ukraine grain deal (Black Sea Grain Deal) on 18.
The news caused wheat prices to go up by 3% in the global market. However, later the price settled back down.
Bangladesh has a demand of around 70 lakh tonnes of wheat annually. Of which, about 10 lakh tonnes is produced locally and the rest imported.
The private sector imported 40 lakh tonnes of wheat in FY22, but it came down to 38.75 lakh tonnes in FY23. The number used to be between 50 and 60 lakh tonnes before.
India accounted for 62.3% of Bangladesh's wheat import in FY22, followed by 8.7% from Ukraine, 13.3% from Canada, 7.6% from Australia, 2.1% from Russia and 4.7% from Argentina.
Importers say wheat from India and Ukraine have been the top choice for private importers in recent years for their price and quality.
Amitabh Chakraborty, advisor of City Group, the country's top food grain importer, said there is no opportunity to import wheat from Ukraine or India now.
AMitabh said they are desperately looking for new sources. "We are now trying to increase imports from Brazil, Romania and Bulgaria."
In Khatunganj market on Sunday, the wholesale price of wheat from Russia and Ukraine was Tk1,600 per maund, while Canadian wheat was at Tk2,000.
Rice sourcing
India announced a ban on rice exports on 20 July to stabilise the local market amid unseasonably hot weather (El Nino).
However, the Bangladeshi market remains stable as there is no immediate shortage of rice in the country due to the production of 2.15 crore tonnes of rice in May, according to the Department of Agriculture Extension.
The food ministry's daily food grain situation report shows the price of Indian rice was $375 per tonne in the last week of May. Thailand rice was $486 per tonne.
On 12 July, the prices jumped to $414 for Indian rice and $538 for Thai rice.
Shahidur Rahman Patwari, vice-president of the Bangladesh Auto Major and Husking Mill Owners Association told TBS, "The local rice market is not impacted yet because we are not importing rice now."
Bangladesh has a demand of 3.5 crore tonnes of rice annually. The country imported 10.55 lakh tonnes of rice in FY23.
