Bangladesh offers rice cash subsidy to encourage exports

Friday, 7 February 2020 00:00 - - {{hitsCtrl.values.hits}}

DHAKA (Reuters): Bangladesh will offer traders a cash subsidy worth 15% of rice exports in a bid to compete with rivals and protect farmers struggling with low prices, Agriculture Minister Abdur Razzak said on Wednesday.

The offer, however, fell short of some expectations.

“We wanted at least a 20% cash subsidy. It’ll still be difficult to fight our competitors,” a trader told Reuters.

Bangladesh, the world’s fourth-biggest rice producer, produces around 35 million tons annually but uses almost all to feed its population of 160 million.

Dhaka has failed to clinch overseas deals for rice since a long-standing export ban on common rice was lifted in May, losing out to cheaper grain from India and Thailand.

In May, it also raised its rice import duty to 55% from 28% to support farmers amid widespread protests by growers over a drastic fall in domestic prices.

“This will encourage traders to find rice markets. At the same time, it’ll have a positive impact on farmers,” Razzak told Reuters of the new measure.

The traders who collect paddy locally and husk that from local mills will be entitled to a 15% cash subsidy over FoB rate against their shipments until 30 June, he added.

In 2017, Bangladesh was forced to increase imports to shore up reserves after floods destroyed crops and pushed local prices to records. Domestic stocks have greatly improved since then.