Is aromatic rice ban dragging down agri exports?

The export of raw and processed agricultural products including vegetables, fruits, dry foods, rice, and spices saw a steep fall in the last fiscal, which exporters attribute mainly to the ban on aromatic rice export.

Local traders said aromatic rice is a major item in the widely diverse export basket of the country's agricultural products as it alone fetched around $9 million in export earnings in the fiscal year 2021-22.

Fewer exports of potatoes and cabbages also contributed to the slump in exports. 

According to Bangladesh Export Promotion Bureau (EPB) data, around $843 million worth of agri-products were exported in the fiscal year 2022-23 against the target of $1394.12 million, which was around 39.53% less than the target. 

Besides, exports of agri products witnessed a 27.47% year-on-year decline. Around $1162.25 million worth of products were exported in the fiscal year 2021-22, EPB data shows.

On 30 June 2022, the commerce ministry imposed a ban on the export of aromatic rice to control its price in the local rice market, which became volatile after the Russia-Ukraine war broke out. 

The ban remains in place to date despite exporters' repeated calls for lifting it. A procedure to lift the ban is currently underway.  

Besides, around one lakh tonnes of potatoes and cabbages were exported in the fiscal year 2021-22. But in FY23, the amount did not even surpass 20,000 tonnes.

Exports of both commodities have declined, exporters say, due to a global economic slowdown created by the Russia-Ukraine war, weak packaging capacity, and a lag of competitiveness due to excessive cargo fares. 

Market analysts also believe that if exporters could not overcome packaging and processing weaknesses then Bangladeshi agri products have little chance of gaining a permanent hold in the global market.

Imran Hossain, a young entrepreneur who is working to develop the export market, told The Business Standard, "The initiatives taken by the government in testing, packaging and processing to increase the export of agricultural products will play a role in increasing exports. But the effort is very less than what is needed."

The government is working to modernise the central packing house at Shyampur, which is expected to be fully operational within a month. This packing lab will offer a set of tests for agri exports as well as facilities for advanced packaging, automated washing and drying plant, hot water treatment, and a cold room for cool shock to increase the safety and shelf life of vegetables and fruits.

At a recent event, Wahida Akter, the secretary of the Ministry of Agriculture, expressed hope about this packing house while admitting that it is less than the need. 

"The number of such packing houses in India is more than 500, and countless in Thailand. We are just getting started. For this, the private sector has to come forward and invest," she said.

The Bangladesh Trade and Tariff Commission sent a recommendation to the Ministry of Commerce to allow the export of aromatic rice in late May. Almost a month and a half have already passed and the ministry is yet to complete the process of granting permission.

Parvez Saiful Islam, chief operating officer of Square Food and Beverage Limited, told TBS, "Aromatic rice is a big product in the export basket. One product earning so much foreign currency is a big deal and a ban on its export has an impact on total earnings from agri exports. We are working to get permission for the export of aromatic rice."

According to the recommendation of the Trade and Tariff Commission, about 18.35 lakh tonnes of aromatic rice was produced in the country in the last financial year, which is several lakh tonnes more than the local demand. But our export of this product is below 10,000 tonnes. For this reason, there is no possibility of any negative impact on consumer demand for rice if the product is allowed to be exported.

More than 40 companies including Square, ACI, and Bombay Sweets are unable to export due to the ban. 

Traders concerned said if the permission is not given quickly, it will affect the export income in the current financial year as well.

Aromatic rice is exported to 136 countries of the world including the United Arab Emirates (UAE), the US, the UK, Malaysia, Singapore, Brunei, South Korea and European countries.

According to EPB data, tea, tobacco, and spices have done well in the export of agri products. But exports of dry food decreased by 19.84%, fruits by 81.10%, and vegetables by 38.80% in FY23.

Apart from this, the export of frozen food has also decreased by 20.76% in FY23 compared to the previous year.

Md Manjurul Islam, an advisor of Bangladesh Fruits, Vegetables and Allied Products Exporters Association, told TBS, "In order to increase the export of agri products, we need to be more efficient in various areas including packaging, transport, and testing in modern laboratories."