Artificial supply crisis prompts rice price hike

At present, harvesting of Aman paddy is in the last stage in the country. The government and rice mill owners have already started buying the newly harvested paddy.

But rice prices have suddenly gone up due to a shortage of supply. Wholesale rice traders have alleged that prices are being hiked, thus creating an artificial supply crisis. 

Sources concerned said the retail price of rice has gone up by Tk2-Tk4 per kg in a week. The government's rice procurement at increased prices and the recent fuel price hike have affected the country's rice market.

A recent visit to Khatunganj, the country's largest wholesale market for consumer goods, revealed that supply of rice from different warehouses across the country has declined over the past week. The rice market was already showing a slightly upward trend in prices due to the increased transportation cost triggered by the recent fuel price hike. After the supply of the new season's rice started reaching the market, a syndicate of regional rice traders, who buy rice from the farmers and sell it to wholesalers, reduced the supply to the wholesale markets, creating an artificial supply crisis. As a result, the price of a sack (50 kg) of rice has increased by Tk100 to Tk250 in a week.

According to the ​​Khatunganj wholesalers, the prices of almost all types of rice have gone up in the last two weeks. A sack of Swarna Siddha rice is now being sold at Tk2,100, increasing by Tk100. Increasing by Tk200, Miniket Siddha is being sold at Tk2,300-Tk2,500. As an impact of the wholesale price hike, rice prices have gone up in retail markets also by several taka per kg.

In this regard, Layek Ali, general secretary of Bangladesh Auto Rice and Husking Mill Owners Association, said, "The supply of new season's paddy and rice has not gained momentum yet. Rising prices of imported Indian rice have also affected the price of the locally produced rice."

Siddique Ahmed, a wholesaler from Khatunganj, said, "There is a sufficient supply of newly harvested and old rice to regional rice markets; but mill owners and regional wholesalers have created an artificial supply crisis to make additional profit, which ultimately resulted in increased rice prices during the last week."

Asked, Shanto Dasgupta, a rice trader and former president of the Chattogram Rice Mill Association, said, "The government has increased the procurement price of rice. In the case of farmers, the price has increased by Tk1 per kg while the price of rice procured from mill owners has increased by Tk3 per kg. Moreover, the price of rice in the country has already gone up a little after the recent fuel price hike."

He thinks that the price of rice has started rising again during the harvest as farmers are not selling rice in the open market due to the increased prices of rice procured by the government from mill owners.