Marketing Scenario of Rice in Bangladesh Md.

Reza Ahmed Khan, Department of Agricultural Marketing

Rice is the staple food of around 162.2 million people of Bangladesh and with the green revolution, subsequent liberalization policies, and introduction of HYV or MV rice has turned a dependent nation into almost self dependent in respect of food grain production. The country produces around 27-28 million tons of rice annually, against the requirement of around 30 million tons of rice. An insignificant amount of Aromatic rice is also exported. The country requires around 5 million tons of wheat against the production of around 2.5 million to 3 million tons. In a nut shell to meet the local demand of food grain Bangladesh need to import 2-3 million tons of rice and 2-2.5 million tons of wheat yearly. In overall, agricultural production planning has turned to market oriented or market driven approach with little exception to the rice production for obvious reason of local food security particularly in turn of the global crises in the food grain market during the 2008-2010 period. Unlike the previous crises, the recent one showed that even money is not always enough to buy a particular produce from the world markets if the crises is too pervasive. Even the exporting country might need to restrict export for won security. In respect of open and free market economy, (from global to regional to local level) performance of the marketing system of any agricultural produce whether public or private will denote the market stability and consumer satisfaction completing and helping to continue the economic production cycle of any commodity. Particularly in the developing countries public food procurement and distribution systems are common as tools of providing market stability and meeting emergency. The General Picture of Rice Marketing The scenario should trace from the supply side up to the market clearance meeting the local demand and emergency need through both of the public and private marketing system in Bangladesh. Production Scenario
Year Paddy (All Major Varieties ) Land (000' Acre) Production ('000 MT) Land (000' Acre) Wheat Production ('000 MT)

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Source: BBS

26429 26344 26615 26746 25621 26018 26142 26129 28657 29146

24150 24299 25188 26190 25157 26530 27318 28931 33300 34200

1810 1833 1746 1586 1380 1184 988 958 1100 1010

1590 1606 1507 1253 976 735 767 844 958 102

Production Scenario of Foodgrains (Rice & Wheat)

40000

35000

30000

000 Acre & 000 MT

25000

Paddy (All Major Varieties ) Land (000' Acre) Paddy (All Major Varieties ) Production ('000 MT) Wheat Land (000' Acre)

20000

15000

Wheat Production ('000 MT)

10000

5000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Years

Yet there is seasonal vulnerability as analyzed belowIgnoring the insignificant spatial variation in seasonal patterns (due to low coverage of varied geographic area under Bangladesh) following seasonal production cycle of paddy, the main food item, is prominent in Bangladesh. This seasonal production pattern directly influences the supply of food grains in the market. The following table shows role of major type of paddy grown in Bangladesh and their timing, so it shows general crisis time of market in respect to harvest time of paddy. Paddy is less perishable of the agricultural produces and thus gives business margin with time difference and that instigate storing practices and in absence of efficient market monitoring may give rise to hoarding practices by private traders. Moreover, rice production requires milling time for transforming paddy into consumable rice it creates a small hallow during the harvesting period at consumers end. Seasonal Variety of Contribution in Sowing Period Production Period Paddy total supply Boro 68-70% December to mid of February April to May June to July April to May End of July to August November to December

Aush 5- 5.5% Aman 25-26% Source: DAE, Crop Calendar

Seasonal Critical Period From Last of February to March From June to Mid of July (Optional) From September to October Common critical months are June-July

Distribution Channel of Rice

Private Rice Importer

P A D D Y
Traders

G R O W E R S
Small Local Traders Brokers

P A D D Y

Rural Markets/Village/ Upazilla Bazzar Food Dept. procurement Centres Professional Huskers Miller Paddy Assembly Traders

Rice Mills* Home/Machine Milled

Rice Hullers Rice Assembly Market Milling Centre Commission agent Rice Distributing Traders

Rice Mills

Urban Rice Wholesale Markets Commission Agent/Rice Wholesaler

Food Dept. Local Storage Depot R I C E

Urban Retailers Food Markets/Grocers

Village Markets

Village Market Traders/Retailers

Simplified Rice Distribution Channel in Bangladesh Growers

Public Procurement Centre

Local markets, Traders, Pikars, Foria, etc.

Aratdar/Mojutdar Stockers Auto ricemills

Wholesaler

Rice Mills Retailer

FPC/OMS Retailer

OMS/FPC customers

General Customers

Supply Scenario The yearly trend in food production and supply shows general increase from 2005-06 to 2009-10 though total supply in 2008-2009 decreased slightly than that of previous year. Yet local production gradually increased from 27.79 million metric ton in 2005-06 to 36.94 million metric ton in 2009-10 a 32.93% increase. The import data of 2010 is unfinished as it reflects only up to month of March, 2010. Moreover, on 02 August, 2010 the parliamentary standing committee of MPs took decision to procure 0.13 million metric ton of rice and 50 thousand ton of wheat to increase emergency food stock. Other than public procurement plans Bangladesh is to import 80,000 tons of food as found from different news. To conclude, total food supply situation in the local market is satisfactory though it is not reflected in the prevailing market price in Bangladesh.

Lakh Metric Ton

Food Supply Situation Total Local Production Total Import Total Food Assistance Total Supply

2005-06 277.87 22.65 01.94 302.46

2006-07 289.54 23.30 0.9 312.93

2007-08 311.21 32.02 25.5 368.28

2008-09 328.96 28.97 01.16 359.09

2009-10 369.36 1.46* 0.6 370.88

Source: BBS, DAE, Department of Food, Department of Disaster Management; (Up to March10)
Food Supply Situation
400 350

Lakh Metric Ton

300 250 200 150 100 50 0 2005-06 2006-07 2007-08 2008-09 2009-10 Total Food Assistance Total Supply Total Local Production Total Import

Years

Constructs of Total Food Grain Supply Thousand M.Ton Government Import and Foreign Assistance Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 (30/04/10 Upto ) Food Aid Cash Purchase Rice Wheat Total Rice Wheat Total 4 27 34 25 80 30 3.6 285 263 160 65 175 86 56.1 289 290 194 90 255 116 59.8 0 72 0 0 536 386 7 29 30 103 121 97 294 268 29 102 103 121 633 680 275 Private Import Rice 797 119 7 498 695 143 1 187 36.6 Wheat Total 1684 1783 1767 1514 1138 2030 2604 2481 2980 2265 2209 2569 2217 2641 Rice 801 1296 532 720 204 7 603 46.9 Total Import Wheat 1998 2076 2030 1700 1410 2410 2928 Total 2799 3372 2562 2420 3457 3013 2975

Source: MIS, Department of Food

Trade Balance From the tables below we can see that gradually the trade balance regarding food grains is almost stable within 8 to 9 percent of total supply.
Share in Total Supply

120% 100% 80% 60% 40% 20% 0% 2005-06 2006-07

Import as % of total supply Local Production as % of total supply

2007-08 Year

2008-09

2009-10

Self Sufficiency Ratio (SSR) The self-sufficiency ratio4 expresses magnitudes of production in relation to domestic utilization. It is another way of expressing the food deficiency in the country. SSR is defined as: SSR = Production/(production + imports - exports) * 100

It is calculated for year 2010 on gross production basis (with estimated figure) 327.64/(327.64+29.75-0)*100 = (327.64/357.39)*100 = 91.68% Market Price Dynamics The market price scenario shows that price hike during the 2008 has already decreasing though with a slight increase again during the 2010 than 2009. Yet the increase in 2010 is below the previous high rate during the year 2006. National Average Retail Price per Kg. of produces Produce/Year 2006 2007 2008 Rice-Coarse Rice-Medium Rice-Fine Wheat-Red Wheat-White Source: DAM 17.09 19.04 23.20 15.34 15.91 21.00 23.35 27.35 22.68 23.09 30.74 34.39 40.24 30.21 30.37 2009 22.21 25.40 33.78 16.96 15.08 2010 (17/3/2010 Upto) 26.85 31.04 37.10 18.70 20.40

National Average Wholesale Price per 100 Kg. of produces Produce/Year 2006 2007 2008 2009 Paddy-Coarse Paddy-Medium Paddy-Fine Rice-Coarse Rice-Medium Rice-Fine Wheat-Red Wheat-White Source: DAM 998 1022 1134 1600 1825 2258 1465 1510 1194 1271 1325 1947 2211 2612 2108 2169 1778 1874 1984 2941 3242 3725 2807 2880 1191 1353 1552 1971 2418 3085 1565 1703

2010 (17/3/2010 Upto) 1661 1781 1939 2501 1898 3480 1730 1935

National average growers wholesale price of rice from 2005-2006 to 2009-2010 (Quintal/ Taka)

Commodity
Paddy-Aman-Coarse Paddy- Aman-Medium Paddy-Boro-Coarse Paddy- Boro-Medium Boro-Rice-Medium

Boro-Rice- Coarse Boro-Rice- Fine

2005-2006 958 993 913 949 1679 1644 1902

2006-2007 1044 1072 1025 1087 1793 1656 2028

2007-2008 1710 1796 1481 1338 2584 2335 3425

2008-2009 1426 1441 1460 1301 2501 2212 2463

2009-2010 1579 1691 2298 2596 2595 2298 2566

Source: Department of Agricultural Marketing (DAM), Ministry of Agriculture

However, the gap between the prices of retail and farm level continued to rise throughout November 2009 to November 2010. The difference between farm gate and retail prices of paddy was 45.6 per cent of the retail price in November 2009 which rose to 64.4 per cent in 2010. This does not indicate enhanced farmers share in the retail price, rather is suggestive of increased role of the market intermediaries. On the other hand, the coefficient of variation between the gap of farm level and retail level prices was 14.0 during November 2009 to November 2010, which was 11.4 during the comparable periods of 2008 and 2009. This is indicative of increased variability in the price of rice in the local markets. To reduce the market power of rice millers, in late December 2010, Bangladesh Bank issued a circular to the commercial banks to adjust the loans given to rice mill owners and traders every 30 days; previously this was 45 days. It is to be seen whether this measure will be adequate enough to reduce the monopoly power of millers. Monthly Trend in Retail price of Rice, Wheat, Atta (Flour)
Name of Rice Aman HYV Rice Boro HYV Wheat Atta

Months January Februray Mrch April May June July August September October November December National Average

Fine 35.9 5 38. 25 38. 34 37. 98 37. 66 38. 98 40. 34 40. 05 40. 89 41. 86 41. 47 42. 17 39.49

Medium 29.68 32.40 32.30 31.83 31.13 32.25 33.89 33.98 34.76 35.86 35.43 35.89 33.28

Course 25.84 27.83 27.14 26.70 26.74 27.79 29.85 29.01 30.18 30.82 30.39 32.72 28.75

Pajam 36.58 38.0 5 38.3 9 37.9 0 37.8 8 38.7 3 39.0 9 38.9 9 40.2 9 41.5 4 41.6 6 41.2 1 39.19

Fine 36.86 39.9 9 40.1 6 38.9 6 35.8 8 37.7 5 39.1 5 38.6 2 39.8 5 40.9 7 40.6 7 42.5 6 39.28

Medium 31.60 34.41 34.25 33.04 30.26 31.48 33.22 33.15 34.64 35.82 36.05 37.31 33.77

Course 25.96 27.98 27.17 26.82 26.66 27.81 29.57 29.52 31.30 32.22 32.02 32.66 29.14

Pajam 40.83 40.9 7 39.3 5 39.9 5 36.8 9 36.9 3 37.9 8 38.9 5 40.7 4 41.4 7 41.0 6 40.6 0 39.64

Red 18.68 18.7 1 18.0 9 17.8 5 17.3 5 18.0 6 17.7 9 20.0 1 23.0 2 24.4 6 25.0 8 25.5 0 20.38

White 20.84 20.9 1 19.46 18.83 19.1 2 18.7 3 18.60 19.88 22.9 7 24.6 7 24.6 5 25.7 3 21.20

Red 20.63 22.9 4 20.3 6 20.5 5 20.5 5 20.5 0 20.6 7 21.6 5 24.4 9 26.2 7 25.9 2 26.1 3 22.55

White 22.15 22.0 9 21.5 1 21.5 5 21.6 4 21.3 1 21.3 0 23.0 0 26.6 6 28.2 7 28.1 2 29.6 1 23.93

Source: DAM Monthly Trend in Wholesale price of Boro Paddy, Rice, Wheat, Atta (Flour)
Name of Months January Februray Mrch April May June July August September October November December National Ave Paddy Boro HYV Fine Medium Course 2155 1898 1624 2388 2046 1806 2350 2053 1847 2070 1741 1550 1637 1585 1497 1914 1966 1953 2076 2336 2256 2353 2121 1796 1894 1900 2052 2146 2195 2270 1965 1682 1796 1814 1953 2031 2060 2054 1809 Fine 3376 3584 3611 3574 3544 3678 3812 3762 3826 3934 3944 3989 3720 Rice Aman HYV Medium Course 2776 2386 3020 2615 3027 2588 2993 2535 2924 2533 2971 3144 3173 3270 3347 3376 3433 3121 2614 2763 2787 2896 3049 3032 3105 2742 Pajam 3444 3596 3635 3590 3629 3661 3711 3702 3827 3954 3966 3952 3722 Fine 3488 3781 3818 3693 3395 3583 3705 3661 3785 3882 3891 4075 3730 Rice Boro HYV Medium Course 2986 2435 3259 2630 3252 2553 3123 2529 2848 2499 2958 3145 3137 3298 3426 3449 3580 3205 2615 2785 2800 2964 3060 3045 3091 2751 Pajam 3833 3844 3715 3843 3488 3444 3596 3668 3870 3941 3921 3900 3755 Wheat Red White 1743 1916 1717 1955 1651 1781 1611 1722 1643 1764 1680 1678 1828 2070 2184 2224 2343 1864 1712 1711 1876 2164 2303 2296 2382 1965 Red 1880 1912 1872 1881 1899 1873 1888 1998 2273 2440 2409 2452 2065 Atta White 2017 2017 1959 1966 1961 1943 1936 2116 2463 2625 2606 2751 2197

Source: DAM Price Comparison- International Scenario

Comparison Local Vs International Price of Coarse Rice

4500 4000 3500 3000 2500

Taka

2000 1500 1000 500 0 -500 -1000 2006 2007 2008 2009 2010

International Price Local Price Difference Local Vs International

Years

What can be seen from the above table is that the difference between international and local wholesale price is getting to unfavorable level. Surprisingly, local price was below the international price of coarse rice during the critical 2008 and 2009 showing efficiency in govt. interventions for stabilizing local market of the main staple rice. But in 2010 the local price climbed above the international price that shows somehow inefficient market management and policy support. It somehow reflects local problems of market management and price stabilization in the face of total production and supply of rice this year. Public Food Distribution in 2010-2011 Total distribution planned for 2010/11 is 2.65 million MT against 2.68 last year, of which 1.89 million was effectively distributed. As of December 30th, 2010, 622.5 thousand MT of food grain had been distributed which amounts to 23.3% of the annual target: 27.9% for rice and 13.7% for wheat. At the same time last year, 565.5 thousand MT or 24.8% of the annual target had been met. As of December 30th, the distribution channels that have most been used this marketing year are OMS with 166.8 thousand MT distributed (30% of its annual target), VGD with 132.3 thousand MT (33% of its annual target), EP with 126.6 thousand MT distributed (39% of its annual target), and VGF with 90.5 thousand MT distributed (16% of its annual target). Over the fortnight ending December 30th, distribution mainly took place through the VGD channel with 18.1 thousand MT of grain distributed and 10.4 thousand MT distributed through EP. A total of 33.7 thousand MT were distributed against 19.7 thousand MT in the previous fortnight. The OMS drive which was halted on November 26, 2010 outside Dhaka and on December 7, 2010 in Dhaka City resumed on December 25th in Dhaka city, Gazipur, Narsingdi, Narayanganj and Savar, and in the rest of the country on the January 1st 2011. Rice is currently being sold at 24Tk/kg. The government restarted distributing food grain to Fair Price cards holders across the country. Each beneficiary is able to purchase a maximum of 20 kilograms of food grain (24 Tk/kg for rice and 20 Tk/kg for wheat).

FPC & OMS

The government plans to introduce Fair Price Card (FPC) once again in January to help lowincome people buy rice and atta at affordable prices according to the head of the Directorate of Food. The FPC programme was introduced in August nationwide with a provision of providing 20 kilogram (kg's) of rice to a person at Tk 24 per kg. A person was eligible for 20 kg's of rice at a time or in two phases in a month. Under the revised programme, around 1.12 million people would now be able to purchase 10 kg's of rice and 10 kg's of atta at the same price. The FPC programme will be distributed in the capital by about 320 dealers in the city while 494 for the rest of the country, according to the Food and Disaster Management Ministry. To reduce the poor people's misery, the government has also reintroduced OMS programme Saturday, which has drawn good response from lower segment of the society, prompting the authority to scale up the programme, officials said. The authority deployed Sunday about 38 trucks at different spots of the capital for selling rice, which increased to 56 Monday. Under the OMS programme a person could purchase five kilogrammes (KG's) of rice at Tk 24 per kg. But in the city markets per kg of coarse variety of rice was sold between Tk 34 and Tk 35, traders say.

A Look forward
Domestic Production Outlook: The production target of food grain for FY 2010-11 is 36.53 million Metric Tons (mmt) -10% higher than the previous years actual production of 33.158 mmt. Achievement of this target would require significant improvement of yield and the expansion of cultivation area of major rice and wheat varieties. Import of food grains: In the current FY 2010-11, like previous years, import is dominated by the private sector: in the first quarter (July-September 2010) total food grain import was 0.88 mmt, consisting of 0.21 mmt in the public sector and 0.67 mmt in the private sector. In this quarter, imported quantity of food grain composed of rice is 0.25 mmt and wheat is 0.63 mmt Domestic procurement: The public procurement target for FY 2010-11 has been set at 1.65 mmt, which represents a 35% increment from the previous years target. The total procurement target is split between rice -1.55 mmtand wheat -0.1 mmt- that represent a 35% increment from the previous year target. Later on, target for wheat procurement was lowered to 50 thousand

metric tons so that the revised target for domestic foodgrain procurement was 1.55 mmt.
Crop wise target of procurement is 0.2 mmt of aman, 0.1 mmt of wheat and 1.35 mmt of boro. In case of boro rice procurement which started in May 2010, the Government announced a Tk 3 (per kg) incentive bonus for the millers on 1st July 2010: these efforts translated in the procurement of 0.289 mmt of rice during July- September 2010 (July-0.1384 mmt, August-0.1247 mmt, September-0.0257 mmt), in addition to 0.27 mmt procured during May and June 2010. The

government has also announced the boro procurement price at Tk. 17.0 per kg of paddy and Tk. 25.0 per kg of rice. It is expected that the announced price will provide adequate incentive to the farmers and millers so that the procurement target will be fulfilled. The target for aman procurement of 300 thousand metric tons was not achieved because of the prevailing higher market price than the procurement price set by the government.
Public Food Distribution Operations: In the current FY 2010-2011, the Government has planned to distribute 2.73 mmt of food grains: the actual distribution was 0.24 mmt in the first quarter ending in September 2010 compared to 0.27 mmt distributed in the first quarter of last fiscal year (Table 3).

Public Stock of Food grains: The opening public stock for FY 2010-11 (July 2010) of food grains was 0.53mmt, of which 0.42 mmt was rice and 0.11 mmt wheat. Domestic boro procurement and import arrival contributed to 50% increase of the total public stock at the end of September 2010 to 0.79 mmt (Figure 2).

Summary Outlook
Domestic Production Outlook
Aus Aman Boro Wheat Total Actual Food Grain production 2009-10 17.09 122.07 183.41 9.01 331.58 Target Food Grain Production 201-11 27.03 135 191.69 11.62 365.34 %change 58.2 10.6 4.5 29 102.3

Import of Food Grain

Target Food Grain Import 2010-11 Rice Wheat Total 8.2 38.3 46.5 Food Grain Imports 01 201011 Upto sept 2010) 2.49 6.31 8.8 Food grain imports 01 2009-10 (upto sept. 2009) 0.04 3.35 3.39

Domestic Procurement
Target Food Grain domestic Procurement Rice Wheat Total 15.5 1 16.5 Actual Food Grain domestic procurement 2010-11 (upto sept. 2009) 2.89 0 2.89 Actual Food Grain domestic Procurement Q1 2009-10 (upto sept. 2009) 4.74 0 4.74

Public Food Distribution

Target Public Food distribution 2010-11 Rice Wheat Total 17.98 9.31 27.29 Actual public food distribution Q1- 2010-11 (upto sept. 2010 0.184 0.054 0.238 Actual Public Food distribution Q1 200-10 (upto sept 2009) 1.96 0.77 2.73

Source: FPMU

Role of Department of Agricultural Marketing in Rice (Food Grain) Marketing:

With limited HR and up to district level presence DAM is being playing some important role regarding rice and food grain marketing in Bangladesh. One of the important roles is

market infrastructure development and management that helps in creating the market linking for the farmers. Market Management So far, out of around 15000 agricultural market places, DAM has notified a total 800 markets all over Bangladesh and engaged in support services and dispute resolution in those markets besides providing marketing license to the market operators. Other than this, a total of 82 markets were developed so far of which, 60 are growers market, 21are wholesale markets and 1 is central market. Shoshshogudam Rin (Crop Storage Credit) Another important role of DAM is to ensure fair return to the farmers for their produces and in this respect a successful intervention of DAM is to providing the crop storage facility coupled with bank loan for helping the farmers to continue their regular production cycles and maintaining livelihood. This successful model has originated from Bangladesh Switzerland Agricultural Project (BASWAP) in 1978 and continued its operation in different capacity until the whole operation and the manpower brought under direct purview of the department in 2010. Following natural and general market practice, particularly food grains show a lower price regime during the harvest time when the farmers require the money most. So, in general they have to sell their produces at lo price during the harvest period but now, with the help from DAM they can store their produces in the designated storage facility and can secure bank loan based on their volume of storage. Farmers pay 10 Taka only per quintal of their stored produces that help in maintaining the godowns sustainably and forming a fund that presently stand at around 1.2 crores of BDT. Farmers can draw loan up to 80% on their stored crops and 90% on their stored seeds for which the government has fixed procurement price. The godwons are managed by a 7 member committee comprised of the member farmers of the respective godown. There is also 6 member advisory committee that assists the Godwon committee. So far, there are 126 godowns in 87 upazilla under 35 districts in all the divisions except Sylhet and through this support activity DAM has distributed 45.587 million BDT against a total storage of 35067 quintal of crops in 20102011 (Up to March 2011). The following table gives a brief picture Shoshhso Gudam OperationSl.No. Division District Upazila Number of Storage Stored Godowns Capacity (MT) Volume (MT) 01 Dhaka 13 33 35 8750 1089 02 Rajshahi 13 36 67 15995 1401 03 Khulna 4 11 16 4000 1016 04 Barisal 5 8 8 2000 1.5 35 88 126 30745 3507 Policy Measures Relevant to Food Grain (Rice) Marketing Bangladesh has also evolved in respect of public marketing system in terms of liberalization as can be seen from the following summary table depicting major policy changes of agricultural sectors in general and more specifically to food grain marketing.

Date Septemb er, 1979

1981 1982 1986 1988

1989

March, 1989.

1989/90.

1991 1992

Important milestones The World Bank produced an important document, Food Policy Issues (World Bank 1979) that framed all the major policy and analytical issues in managing Bangladeshs food sector. The report cited optimal national stocks as equal to 1.5 million metric tons (MMT) as on July 1 of every year and 1.2 MMT as on Nov. 15 of every year. Security stocks the size of 600,000 MT were cited as appropriate. With the launch of the countrys Second Five Year Plan, government adopted an ambitious long-term plan for accelerating the growth rate of rice production. Food Policy Monitoring Unit (FPMU) is established based on the recommendation in the Food Policy Issues A study led by Beacon Consultants that carried out the first-ever evaluation of the welfare effects of both Statutory Rationing and Modified Rationing demonstrated the inequities of the operation of both channels. Pursuant to PL-TITLE III signed in 1988, Open Market Sales (OMS) came into vogue in Bangladesh. In July 1988The government waived the standardization requirement on imported irrigation equipment, thus allowing cheap imports from China and South Korea. The Modified Rationing (MR) was replaced by Palli Rationing under which rice was no longer to be distributed in rural areas but wheat would be distributed to small milling units. Each licensee mill would receive about 500 kgs of wheat per month: they would then sell the atta to villagers at a pre-set price; The government instituted Palli Rationing to distribute subsidized food grain (at 25%) to eligible households in rural areas. PR soon became the single most important public distribution channel for rice. Significantly, the PR was poorly targeted (Ahmed, 1992). It distributed rice during all months, including harvest ones. Direct sales of urea by parastatal fertilizer factories to private traders was allowed for the first time, enabling a rapidly increasing number of private traders to move large quantities of area across the country (Samad et al. 1989). Previously, wholesale urea trade was a parastatal monopoly. The government started a new procurement program called mill gate Purchase (MP). The idea was to procure milled rice from pre-qualified contractor-mills at a cost-plus basis that pivots around the procurement price (PP). For a marketing agent, access to a MP contract readily implied secured access to implicit credit subsidies (Chowdhury, 1994). Also, the PP easily exceeded the going price during procurement season, due to the generous provisions of the scheme (such as highly favorable milling ratio). The MP was a lucrative for mill-owners who received qualification. Rice procurement rose during 1989/90 to 1991/92 to record levels. The government procures record quantities of rice during both aman and boro seasons. Millgate Purchase (MP), highly profitable to the contractors distorted incentives in milling and trade. Previously all millers and traders competed in one national rice market, the MP created incentives for local rent seeking. The government suspends PR. This aggravated the public rice stocks to swell as well. PP was raised to Tk. 240, even though the single most important distribution channel had been terminated. Statutory Rationing (SR), which entitled each card-holder to weekly grains from licensed dealers within the limits of six SR cities, was abolished. The

1993 1993 1994 1996

1998

20002008

abolition was received without any public outcry, indicating that there was a realization of mis-targeting among the masses. Private imports of fertilizer of all types were legalized for the first time. Import of wheat by private mills was legalized. Imports of foundation seeds and power-tillers were liberalized. Private wheat imports by licensed large mills and private rice imports were legalized. The 50 year old anti-hoarding act barring merchants from keeping inventories exceeding 1 week working stocks without statutory licenses from the Food Department was put into abeyance. Bangladesh implements the Uruguay Round Agreement on Agriculture. Tariff rates were bound at a much higher level relative to where they were applied. Bangladeshs aggregate measure of support was way below the de minimis level as per WTO rules. To the credit of the Government and the Food Minister, and of the lasting changes in the mindset, those pressures were resisted, and private traders tidily delivered a stunning 2.4 million metric tons of imported rice over a ninemonth period. That is how far the mindset and the private markets had matured. Private importation of hybrid seeds for rice, maize and vegetables is legalized, prodded by growing demand, including widespread realization of the importance of the case for raising productivity. Within five years, the major proportion of maize now raised in Bangladesh is sourced from hybrid seeds. For several commercially important crops, the proportion of hybrid seeds in use has been enhanced to 15 20% range. Even for rice, the proportion of hybrid seeds has been on the rise. Secondly, the Government has promoted greater use on farm of sulphur, zinc, boron as a way to tamp down the rate of erosion of the levels of micro-nutrients in the soil. As well, the use of organic fertilizer has also been promoted by the Government. the National Food Policy (2006) has been formulated by the Ministry of Food and Disaster Management (MoFDM) to ensure, in coordination with partner ministries, development partners and NGOs a dependable and sustained food security for all people of Bangladesh at all times.

Latest Policy Measures Summary 1 Nov 2010 Fair price cardholders program resumed. Each of the 1.12 million targeted low income card holders is permitted to buy a maximum of 20 kilograms of rice per month at BDT 24 (USD 0.34) per kilogram. 3 Oct 2010 The Open Market Sale (OMS) of rice at BDT 24 (USD 0.34) per kilogram, which started in August in Dhaka and in some divisional cities, has been extended to the upazila (sub district) level. Rice prices in the open market ranged from BDT 28 to 47, depending on the quality of the commodity. 9 Sep 2010 The Government imported 100 000 tonnes of 15 percent broken rice from Vietnam and it is negotiating to import additional 100 000 tonnes. In addition, it is importing 300 000 tonnes of non-basmati rice and 200 000 tonnes of wheat from India. 15 Jul 2010 The Government will import 0.4 million tonnes of wheat within two months in a view to stabilising market prices.

30 Jun 2010 1 Apr 2010 11 Feb 2010

3 Feb 2010

Rice export ban extended until December 2010. 25 000 tonnes of rice to be imported from Myanmar by the end of April to meet the domestic demand. an input subsidy programme of USD 107 million was launched. The programme introduces the Agriculture Input Assistance Card. With this card, the farmers can open a bank account and receive cash subsidy on diesel used for irrigation of rice land. Out of the total 18.2 million farmers of Bangladesh, exactly half are targeted for the cash subsidies. Marginal farmers (land size less than 0.2 hectares) and small farmers (under 1 hectare) will receive BTD 800 (USD 11.4) while medium size farms (with a land from 1 to 3 hectares) will get BTD 1000 (USD 14.3). The Open Market Sale of rice has been extended after its launch in January 2010 to all Divisional (bibhag) capitals and the three labour intensive districts of Narayanganj, Narsingdi and Gazipur. Rice is sold at BDT 22/kg (USD 0.32/kg), slightly below the national average market price.

Source: 1. Department of Agricultural Marketing 2. Bangladesh Bureau of Statistics 3. Department of Agricultural Extension 4. Ministry of Food and Disaster Management 5. Food Policy Monitoring Unit, FPMU 6. Bangladesh Bank 7. Export Promotion Bureau 8. Price Stabilization, Market Integration and Consumer Welfare in Bangladesh, Final Report PR # 6/07, Dr. Naeem Chowdhury, Principal Investigator, Bangladesh Rice Foundation. (With support from NFPCSP) 9. Structural determinants of market integration: The case of rice markets in Bangladesh, Francesco goletti, Raisuddin ahmed, and Naser farid, The Developing Economies, XXXIII-2 (June 1995)