In a first of its kind arrangement between India and Bangladesh in recent years, India would be exporting around 5 lakh tonne of parboiled rice to Bangladesh for meeting its domestic demand and creating a buffer stock.
Sources told FE that the India government has authorised agri cooperative Nafed to export rice to Bangladesh. At present, Bangladesh is facing a shortfall of 1.5 million tonne (mt) of rice this year due to crop losses by heavy flooding in the recent months.
Bangladesh’s ministry of food has called a meeting on October 15 to decide on the prices and time-frame for supply of rice from India. As the rice exports would be carried on a G2G (government-to-government) basis, there would not be any tender for rice exports from India. Around 1.5 lakh tonne of rice has been already exported to Bangladesh by private trade this fiscal year.
Nafed is expected to source parboiled rice from eastern states such as Chhattisgarh, Bengal and Odisha for exports to Bangladesh as the region has similar food habits.
Meanwhile, in a bid to boost domestic rice supply, Bangladesh has cut import duty on rice twice in last couple of months. Recently, the import duty was slashed to 2% from existing 10%. In June, the import duty was slashed to 10% from 25%.
Earlier this year, the Bangladesh government had set a rice production target of 19.1 mt, but floods in the northeastern region have damaged around 2 mt rice. “One thing needs to be clear that the decision to import doesn’t mean that there’s a crisis. The stock in government warehouses as well as the supply in market is ample,” Bangladesh food minister Qamrul Islam said recently.
Currently, the price of common variety of rice in Bangladesh is around taka 50 ($0.62), which is an increase of more than 78% from 28 taka a kg prevailed about four month ago.
Around 75% of requirement in Bangladesh is of parboiled rice while the rest is of white rice
However, India’s domestic rice prices are expected to be soften as kharif paddy for 2017-18 crop year (July-June) has started to arrive in the market. India produced a record 110 mt rice in crop year (2016-17) while in the current year, the output could decline marginally because of patchy monsoon rains in some of the key growing areas. India is the world’s largest exporter of rice with annual shipment of more than 10 mt for last couple of years.
Trade sources said that India is well-placed to supply rice, because of physical proximity to Bangladesh compared to Vietnam, Thailand and Cambodia. The cargo consignment from India can reach Bangladesh within a day via land, or 3-4 days via the sea.