Spiraling rice price shows govt has no control over the market
PRICES of rice are yet to come down in local markets despite the rise in imports. Prices shot up in the local markets during last couple of months due to recent flash floods. The floods damaged over 200,000 hectares of Boro paddy. However, after the duty on rice import being slashed to 2 percent to encourage imports, it has failed to bring about the expected impact to bring down rice price as the government is working to import at least 1.5 million tonnes to overcome the shortage.
On the contrary, it prices have gone out of the hands in the market and government regulations which were never effective have utterly failed to rein in the situation. Meanwhile the government stock is now at 325,000 tonnes while it was supposed to be 600, 000 tonnes of rice based on imports. It has reduced the government capacity for market intervention and traders are taking the advantage to raise prices as they wish.
In fact, the government control over regulating rice price is clearly missing. Also, the efforts to boost imports made over the past two months have largely failed to resolve the crisis. The government signed several agreement to import rice from government to government level but rice is not coming for reasons not clear to many. Meanwhile the Food Ministry is repeatedly failing to increase stocks to ease supply and bring down price.
Generally, when the price per kilo crosses Tk 40 mark - the government is supposed to start selling rice in the open markets for catering to the needs of the country's nearly 25 million poor and below poor people. The ceiling of Tk 40 has crossed for well over three months now.
It is clear that the Directorate of Food has failed to maintain its food policy thus making people vulnerable to unbridled rice market. Selling rice in open market was a long strategy and its failure shows that the government is utterly failing to handle the food situation. Other social safety programmes also have been cut for shortage of food in the stock. The rice market clearly suggests the market mechanism to keep prices under control is not working and there are enough reasons to suspect dishonest traders are holding the market hostage.
According to Food Minister, 'there is no reason for the increased price' - then why is the price so high? In an attempt to justify his weaknesses he has further pointed the fingers at the Commerce Ministry's failure to monitor market price.
In the wake of such gross failure in controlling rice prices, the Ministry of Food should quickly introduce OMS operations (Open Market Sale) at a big scale, increase its existing capacity of storing rice and open all avenues for the private sector to import rice. It has to be very quick before the situation further worsens.