Bangladesh food import bill likely to rise by 15 pct

Monday, 24 January 2011 00:01 - - {{hitsCtrl.values.hits}}

(Reuters) - Bangladesh’s food import bill is likely to rise 15 percent to 75 billion taka ($1 billion) in the year to June as the government buys more grain to secure supplies amid soaring prices in global markets.

The original allocation of funds in the national budget for food imports in the 2010/11 financial year (July-June) was 65 billion taka.

“But we need an additional 10 billion taka to import increased volume of grains,” Ahmed Hossain Khan, Director General of Food, told Reuters on Friday.

Bangladesh, which suffered badly during the 2008 spike in global food prices, says it wants to build reserves of basic commodities such as wheat, rice, oils and sugar to avoid future shortages and to minimise the impact of soaring prices.

The government, facing intense criticism for failing to control prices, is importing up to 2.2 million tonnes of grain — including 1.2 million tonnes of rice — in the year to June, against nearly 550,000 tonnes in 2009/10.

It also plans to upgrade and build new warehouses to store 2.2 million tonnes of foodgrains over the next three year from existing capacity of 1.5 million tonnes, Ahmed said.

“We are in talks to import 300,000 tonnes of rice from India, 200,000 tonnes of rice from Thailand and 200,000 tonnes of wheat from Pakistan under government-to-government deals,” he said.

The government paid a higher cost to import 250,000 tonnes of rice from Vietnam. The price for 200,000 tonnes of 15 percent broken white rice to be supplied by Vinafood 2 is $545 a tonne, including cost and freight, compared with $389 per tonne it paid in August.

Bangladesh, the world’s fourth biggest rice producing country with 34 million tonnes, has emerged as a major buyer of rice this year.

The United Nations’ food agency (FAO) said earlier this month that food prices had hit a record high last month above 2008 levels.

Bangladesh’s food inflation accelerated to near double digit in November and analysts expect food costs to rise further in the coming months in step with rising global commodity prices.

With rising prices, thousands of residents in the capital Dhaka, a city of 12 million people, stand in long queues every day for rice being supplied at cut rate by the government.