Rice price puzzle: How far farmers from millers, retailers and consumers?
Published : Thursday, 24 January, 2019 at 12:00 AM Count : 282
Our new food minister Mr Shadhan Chandra Majumder is thinking to bring a change in food procurement policy where interests of real producers, millers and traders are to be kept high and balanced. For ensuring competitive price at producer level and sound competition among other players in food markets, the minister wants to invigorate the already ruined husking mills from being swallowed by big automatic rice mill owners. He said it in a reception to him by rice mill owners in Naogaon on 19th January.
En passant we believe, minister's realization came in the backdrop of recent unsteadiness being seen in staple food markets and foreseeing its synergy effects on society. According to Department of Agricultural marketing (DAM), Dhaka city showed the prices of fine rice rose 2.67 per cent to TK 52-63 per kilogram since January 10, when the food ministry sat down with millers and traders in the face of price spiral despite good production in the last three seasons and 11.79 lakh tonnes of rice stocks in the public warehouse. Rice traders have raised the prices in the last couple of days, cashing in on the hikes by millers after the national election, even though many of them have not bought the grains at new prices.
The prices of medium grain rice also went up 3 per cent to Tk 42-46 each kg and coarse rise 4 per cent to Tk 36-40 per kilo since food minister's assurance that the prices would not increase further. Then we saw the caption of print media that wholesale rice prices fall, retail unchanged etc in couple of days and blame games of each other by wholesale traders, millers and retailers. Prices of rice fell at the wholesale level in the capital after millers slashed their prices, however accusing retailers of not cutting prices. Probably we might see the prices of rice are likely to begin declining owing to patch up strategy among stakeholders at different stages of food marketing.
If so happens, this is not the answer to unsteadiness of rice prices. One thing is clear that this upward trend in food prices is not benefiting the real producers. The entire rice marketing--from production to reaching it to consumers--have been suffering from structural imperfectness where policy and decision matter hugely. Lack of coordination and monitoring also responsible for this condition. Lack of market study and pattern of demand changes is visible. And last but not least, looming dishonesty among millers, wholesalers and at retails are sometimes getting facilitated for creating political support base.
Food price hike is a sensitive issue. It is learnt from a BBS study that 58.81 per cent of total expenditures of a family go for food. Out of this 39.95 per cent of monthly expenditures go for rice purchase. So price hike of rice makes poor poorer and makes lower middle class poor. In addition, price hike of rice accentuates nutritional crisis also. Consumption of meats, eggs, milk, fruits etc are curtailed because of lion share of poor and lower middle class family expenditure goes on purchasing rice due to its price shot up. We know it all well without any statistical evidence.
Related stakeholders must come here to do business in a healthy competition. A subsidized food sector is only desirable in safety net programme which are duly followed up in our policy. But sound marketing does not mean to go against the interests of farmers and end consumers. But unfortunately it is happening here. Farmers are losing ground from non-competitive pricing due to market distortion. Even they are compelled to sell their marketable surplus far below of cost of production. Due to insolvency and pressure from money lenders, be it in the form of NGOs to repay loans, they cannot hold up paddy to be sold later at competitive prices.
Millers take this opportunity of pressurized selling from farmers by giving them lower prices. Even price support by government purchase of both rice and paddy does not serve the purpose. In the real sense farmers are not getting benefit from it. Because we know farmers produce paddy and barring their own families' consumption needs, they sell paddy which are their marketable surplus if any. Only millers produce rice from paddy. When time government sets out to purchase, farmers' stores are empty then. All surplus paddy if any they were compelled to sell to millers at non-competitive price earlier than government purchase. So price support from government side is ultimately benefiting millers not real farmers.
This is one reality of our food market economy. Millers' manoeuvring for windfall profiteering are attributing to price fluctuation of our staple food and thus distorting the markets. So not delaying food ministry should start purchase paddy at a time proper for farmers to reap the benefit.
But this is not the overall scenario. Two perennial constraints are inflicting the supply side of food marketing. One is known recently in a study where agriculture particularly the rice subsector is giving a dismay growth picture. That is rice production is showing a declining trend. In analyzing economic trends published, in last few years, we see the negative rice growth to 0.1 or up to 1 per cent. In 2012-13 and 2015-16 it had negative growth.
In 2016-17, the target of Boro production was 1 crore 91 lakh tonnes. Not only flash flood has reduced 20 lakh tonnes, experts view, Boro production was far behind the target due to negative growth trend of rice production. Farmers' enthusiasm towards rice production go negative and causing deficit that add water to fire in soaring up price.
Another study conducted by BBS named "Analytical Report on Methodologies of the Crop Estimation and Forecast Survey and Private Stock of Food Grain Survey 2016-17". How much farmers' needs of rice produced for their families, how much they have marketable and how much they could store--all are studied here. Where we find, self-sufficient and share cropping in both the cases farmers have only 39 per cent marketable surplus of paddy. At this whether they are self- sufficient in food or not that is not ascertained in the study.
It is transpired, both surplus and deficit farmers are included in the study. But truth is that marketable surplus is declining paving the way for growing more dependency on import at times. Government has to buttress food markets from distortion, since it is a very sensitive matter. So it demands a constant monitoring to prevent windfall profiteering.
The writer is a freelance contributor