Millers benefit from rate hike while farmers miss out
Rice procurement for the Aman season is progressing rapidly thanks to the high level of participation from millers who are attracted by the competitive government offer. Within just one month since the start of the procurement drive in mid-November, the government has already purchased more than 230,000 tonnes of rice, exceeding 30% of its initial target of 700,000 tonnes. Encouraged by this success, the food ministry has announced a further increase in its target by 200,000 tonnes.
Thanks to consecutive successful harvests in the past Boro and ongoing Aman seasons, the government currently has no plans for rice imports. Instead, it is focused on maximizing domestic procurement to support the public distribution program. This year, the food ministry initially targeted 500,000 tonnes of rice and 200,000 tonnes of paddy purchases. The ministry also increased the offer price for rice by Tk 4 per kg and paddy by Tk 2 per kg.
Currently, millers are supplying parboiled rice at Tk 44 per kg and white or sun-dried aatop rice at Tk 43 per kg, while farmers are selling paddy at Tk 30 per kg. However, the strong pace of rice procurement has not translated to paddy purchases. This is because farmers are able to fetch similar prices in the open market, making the government’s offer less attractive to them.
Out of the 230,000 tonnes of grain procured so far, only 13,000 tonnes are paddy, which falls significantly short of the 200,000-tonne target. Farmers are not enthusiastic about selling to government warehouses as they can get better prices elsewhere. Hazarat Ali, the owner of Olima Traders, mentioned that paddy prices are 8-10% higher compared to last year, with the key Aman variety Guti Swarna trading at a minimum of Tk 28 per kg.
On the other hand, millers stand to gain a minimum of Tk 4 per kg profit by selling Guti Swarna or hybrid varieties. Despite having to pay bribes to officials and influential figures, millers are still making a healthy Tk 4-5 per kg profit. Md Shakhwat Hossain, Director General of the food directorate, confirmed that there is a current rice stock of 1.25 million tonnes in public warehouses and a stable retail market price over the past year.
The government’s paddy purchase target is primarily to ensure profitable prices for farmers and indirectly benefit all farmers by influencing market prices. According to the Department of Agricultural Extension, 90% of the Aman harvest has been completed, with a target to produce 17 million tonnes of rice this season.
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