Wheat bran import hits flour mills hard

Local flour millers are facing an existential crisis as substandard imported wheat bran has flooded the market, undercutting local producers.    

Almost half of the flour mills have ceased operations after being unable to compete with the import of cheaper and low-quality wheat bran despite having a surplus production in the country.

Out of total 1,100 large and small flour mills across the country, only about 500 are currently operational, according to industry insiders.

Market data from the Tariff Commission reveals a stark increase in bran imports: 2,33,416 tonnes were imported from January to June 2022, which shot up to 4,39,53 tonnes during the same period this year.

Astonishingly, this surge comes even when the annual domestic demand for wheat bran is 21.90 lakh tonnes and local production capabilities stand at 22.50 lakh tonnes.

"The imported wheat bran is very cheap and of low quality, with various types of dust being mixed in," said Jasimuddin Mridha, president of the Narayanganj Atta-Flour Mills Owners Association.         "As a result, local mill owners can't sell their higher-quality bran, and are facing a crisis to maintain operations."

Mridha also pointed out that many mills have already stopped production and many more are teetering on the brink of crisis. He urged the government to impose the same import duty of 38 percent on wheat bran as is levied on imported wheat flour.

Stakeholders warn that the continuous importation of low-quality wheat bran poses two significant threats. First, it jeopardises the supply chain, potentially leading to a scarcity of flour in the market, which could subsequently raise prices. Second, low-quality bran imports pose a health risk to livestock, affecting the entire agriculture and food ecosystem.

The predicament also has broader implications for wheat imports. Currently, the country has an annual demand of around 75 lakh tonnes of wheat, of which only about 10 lakh tonnes are produced domestically.

The remainder is primarily imported from Ukraine, Russia, and India. However, given current global situations, import options have shifted to Brazil, Argentina, Romania, and Canada, which has resulted in increased costs.

Redhwanur Rahman, Head of Sales and Distribution at Bashundhara Food Division, said, "Even though we have surplus wheat bran production in the country, the local millers are still bound to face losses if bran import continues."

The crisis gripping domestic flour mills has downstream consequences that could lead to price hikes and supply shortages in both flour and livestock feed.

"Usually, 30% of bran is produced when milling wheat. The husk can only be stored for 4-5 days. Factories can't proceed with new production unless the previous stock of bran is sold, forcing many to halt production altogether," said Redhwanur Rahman.

He also warned that the import of wheat bran is depleting the country's foreign exchange reserves at a time when there is already a dollar crisis affecting the import of essential goods.

The regulatory landscape also seems to favour imported wheat bran.

"While there is a 38% tariff on imported flour, its by-product, wheat bran, only faces a 5% tariff. Moreover, animal feed companies can import bran duty-free," added Rahman.

These low-duty and duty-free imports have created a loophole for unscrupulous traders who repackage substandard bran in branded sacks, further exacerbating the issue.

Concerning quality checks, Rahman stated, "No BSTI certificate or standard test is required for these imports. Domestic companies are suffering, and the livestock sector is at risk due to the sale of this lower-quality bran."

Nazmul Hoque, Deputy Director (Health) at the Department of Livestock, confirmed that authorities are taking a strict stance against adulterated and substandard bran. "We should not spare anyone found importing adulterated bran. Continuous monitoring is in place," he assured.

The reputation of local producers is also at stake. Abanti Kumar Sarker, General Manager of ACI Food, echoed similar concerns.

"Lower-quality imported wheat bran has flooded the market, preventing us from selling our high-quality bran. Some traders are even repackaging these imports into sacks bearing the names of reputed companies, misleading consumers and tarnishing our reputation," he said.

Sarker also noted, "Many mills have already closed, and ours is on the brink. The production of atta and flour is stopping because the bran can't be sold. If this continues, we are looking at increased flour prices."

With the local flour milling industry in turmoil, the ramifications could be far-reaching, affecting the supply chain and prices of essential goods like flour and livestock feed.