Bangladesh raises local rice purchasing price

DHAKA (Reuters): Bangladesh has raised the price the government will pay to farmers for the upcoming season’s rice crop to 34 taka ($0.42) a kilogram, up from 32 taka a year ago, a food ministry official said on Monday.

The government will buy 1.5 million tons of rice and paddy from local farmers starting from May 2, up from 1.3 million tons in the previous season, the official said.

Such procurement is crucial for the South Asian nation to feed its poor and keep domestic prices stable.

The government buys rice and wheat from local farmers to ensure a support price, build stocks for state welfare programs and to meet emergency needs.

Bangladesh aims to produce more than 34 million tons of rice in the current year, up from nearly 33.5 million tons in the previous year.

The world’s fourth-biggest producer of rice, Bangladesh consumes almost all of its production to feed its population, but often needs imports to cope with shortages caused by natural disasters such as floods or drought.

A spike in rice prices in the domestic market caused Bangladesh’s annual inflation rate to accelerate in February for the second consecutive month.

Rice is the main staple for the country’s 160 million people, but wheat consumption is also rising due to lifestyle changes.

The government will also procure 100,000 tons of wheat locally at 28 taka a kg, said the ministry official, who asked not to be named as he is not authorised to talk to media.

Bangladesh’s state grains buyer expects to import around 250,000 tons wheat in the 2016/17 financial year ending June, with 200,000 tons imported from Russia in its first government-to-government deal.

Rice and wheat reserves at government warehouses have fallen to nearly 1 million tons, from nearly 1.5 million tons in the same period a year ago, partly due to falling wheat imports.

Apart from government purchases, private traders import around 4.5 million tons of wheat annually to meet growing demand, while output has stagnated at about 1 million tons.