ET Report
The impact of increased procurement price on coarse rice appears to have reached the city market as cost of the rice went up by Tk 2 to Tk 4 a kilogram in three to four days.
Wholesalers across the country said they feared further decline in the supply of coarse rice to the market with the possibility of further increase in rice prices.
The commerce secretary, Ghulam Hossain, said the commerce ministry found that rice prices had increased by Tk 1 to Tk 2 a kilogram in a week.
Up by Tk 2 a kilogram in the week, the ordinary grade lali mota rice was retailed between Tk 30 and Tk 31 on Friday at Nakhalpara in Dhaka. Coarse variety guti rice was retailed between Tk 34 and Tk 36, up by Tk 3 in four days.
'When prices increase on the wholesales market, it also creates impact on the retail market,' Kamal Hossain, a retailer at Nakhalpara, said.
Jahangir Hossain, a wholesaler at Badamtali, said price of all verities of rice had increased by Tk 50 to Tk 100 a maund (37.3km) in a week.
'Rice prices have already started increase because of persistent shortage of paddy supply on the farmers' market,' Jahangir said. 'The latest round of increase in rice prices has taken place after the government increased procurement price.'
Jahangir's wholesale shop on Wednesday sold coarse lali mota rice for Tk 28.14 and guti rice for Tk 32.70 a kilogram. The price was up by more than Tk 2 in three to four days, he said.
The Badamtali wholesaler said after the government had increased procurement price, they noticed a decline in the supply of coarse rice.
Pradyut Sarker, a rice trader from Pulhat in Dinajpur, said rice prices, after registering an increase in the past week, however, remained somewhat stable in the place on Wednesday.
Ordinary grade hybrid coarse rice sold for Tk 27.7 a kilogram in bulk trading at Pulhat on Wednesday. It sold for Tk 26.2 a week ago.
'The millers are confused whether the new procurement price would apply to August deliveries and they are keeping watch on the market,' Pradyut said. 'Such confusion has at least prevented further increase in coarse rice prices for the time being.'
The food ministry on July 1 decided to offer Tk 3 in cash incentive on the purchase of a kilogram of rice as it was failing to procure rice because of the prevailing high market price.
By the end of June, the government could procure only 2.6 lakh tonnes of rice against the target of 12 lakh tonnes. The dealers made more profit from the market by not selling the rice to the government for Tk 25 a kilogram.
The food minister also said the government would monitor whether the incentive would result in an increase in rice prices.
The commerce secretary, Ghulam Hossain, said the ministry found that prices of rice had increased by Tk 1 to Tk 2 a kilogram in a week.
Ghulam said, 'Rice procurement price has been increased to secure enough stock and to pay enough price to growers but consumers suffer because of the impact of the price increase.'
'Rice procurement and price fixation is coordinated by the food ministry,' he said, adding that he had informed higher authorities of the latest round of rice price increase.
Meanwhile, the price of rice started rising at the wholesale market since Thursday after the government raised the procurement price.
By Friday evening, at primary wholesale markets coarse rice increased by around Tk 2 per kilogram.
In two days the millers, inspired by the official procurement rate, pushed the prices up.
At Poolhat Bazaar in Dinajpur an 84-kg sack of ordinary grade coarse rice sold for between Tk 2,300 to Tk 2,340, up by Tk 80 in two days.
It was no different for the non-coarse rice varieties, market sources said. At the wholesale market a sack of medium grade pari variety sold for Tk 2,450, up nearly Tk 90 a maund.
'The market seems to have responded to the official procurement price,' said Praddyut Sarker, a Dinajpur wholesaler.
It is usual for the official procurement price to influences the wholesale market during and in the immediate aftermath of the harvests, he said.
The government announced Thursday that the millers would get Tk 3 more per kilogram as incentive for supplying to its procurement centres.
Market watchers think that the government had to raise the price to meet the procurement target.
The price of ordinary grade coarse rice, which sold for between Tk 28 and 30 two months back, increased by Tk 4.
Dealers described the price as 'unusual' in the immediate aftermath of the boro harvest.
Cooking oil prices were pushed up further in the city markets due to shortage of supply from ready stocks.