Despite surplus production, why is Bangladesh still importing rice?

Despite a significant surplus of over 30 lakh tonnes in rice production in fiscal year 2021-22, Bangladesh had to import nearly 10 lakh tonnes of this staple food through public and private enterprises that year, according to a food ministry report.

The ministry conducted a study titled "Assessment of non-human consumption of rice in Bangladesh" last year revealing that non-human consumption, including pre- and post-harvest losses of rice, amounted to around 98 lakh tonnes in FY22, constituting 26% of the total rice production.

According to the Bangladesh Bureau of Statistics (BBS), rice production reached over 3.89 crore tonnes in FY22 with human consumption accounting for 2.52 crore tonnes, leaving the country with nearly 1.3 crore tonne surplus. Even after factoring in non-human consumption — including livestock feed, seed, milling loss, warehouse damages, and pre- and post-harvest losses — the surplus decreased to 30 lakh tonnes.

BBS data revealed that rice production further increased to nearly 3.91 crore tonnes in the fiscal year 2022-23, contributing to an expanding surplus. Nevertheless, Bangladesh still had to import 10.56 lakh tonnes.

This curious discrepancy in data is not confined to rice but also extends to other crops such as potatoes, fish, and poultry. 

For instance, the Bangladesh Cold Storage Association asserted that potato production did not exceed 85 lakh tonnes in FY23. In contrast, the Department of Agricultural Extension (DAE) reported it as 1.12 crore tonnes and the Bangladesh Bureau of Statistics (BBS) indicated 1.04 crore tonnes.

Experts attribute the problem to the lack of dependable data, criticising the DAE for inconsistencies in data that frequently result in embarrassment for the government.

Highly exaggerated data

Dr Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD), said experience shows that the information provided by the DAE regarding cultivation and production is highly exaggerated.

The data fails to provide an accurate representation of the actual land area utilised for cultivation or the production yield per hectare, resulting in delayed transmission of information to the government and subsequent delays in making import decisions, he said, emphasising the need for independent data preparation.

Stressing that the lack of precise information poses a challenge to the rice market, Debapriya pointed out that imports are dominated by a handful of major importers, leading to an unnatural functioning of the market.

Dr Jahangir Alam Khan, an agricultural economist, told The Business Standard that the data provided by the DAE and the BBS regarding agricultural production over the years has been inconsistent. This discrepancy has created a gap between actual demand and supply, which is often exploited by those involved in the supply chain.

"Accurate data on demand and production is essential for effective planning; otherwise, resolving the crisis in the rice market will be challenging," he said.

What DAE DG and agri minister say

Speaking to TBS, DAE Director General (DG) Badal Chandra Biswas said, "While we cannot assure precise production figures, our estimates are the closest to accuracy. This is because the data is collected from 14,000 points nationwide. Hence, our figures should not be disregarded. However, the BBS still makes estimates using the outdated sampling process, which is not highly reliable."

"Implementing technology-based calculations incurs significant expenses, making it challenging to allocate funds. Nevertheless, we are doing our best to provide accurate estimations," he said.

"The widespread good rice production across the country can be attributed to the growing utilisation of our hybrid and Ufshi rice varieties. It seems that although the volume of arable land is not expanding each year, the production is on the rise," the DAE DG added.

In response to inquiries regarding the data inconsistency, the newly appointed Agriculture Minister Dr Md Abdus Shahid said he does not want to make comments before studying the estimates provided by various agencies first.

Asserting that there is ample production, though natural calamities affect desired yields, the minister said, "In case of need, the government considers importing rice. However, pressure on foreign exchange supply remains a concern. So, the ministries of agriculture, food, and commerce will convene weekly meetings to assess the import and market conditions of rice and other food products, ensuring timely decision-making when necessary."

Surging production amid shrinking land

According to BBS data, 3.76 crore tonnes of rice were produced on 117.18 lakh hectares of land in FY2020-21. Remarkably, despite a reduction in cultivated land by 80,000 hectares, production rose to nearly 3.91 crore tonnes after two years.

How DAE estimates cultivated land and production

Despite a nationwide decrease in cultivable agricultural land annually, Narsingdi district has managed to expand its boro cultivation area by 6,392 hectares over the past five years. Moreover, crop production has surged by 13,286 tonnes. This notable increase in both cultivable area and production is exclusive to the Boro season in one district. The overall production is assessed based on land area.

When questioned about the method for calculating land area, Azizur Rahman, the deputy director of Narsingdi District's Department of Agricultural Extension, said, "Each union is assigned three supervisors who visually inspect the cultivated lands and compare it with previous data to ascertain the new land area."

Each union is subdivided into three blocks for food grain calculation. During crop harvesting, the land in each block is categorised into three groups based on yield type. Block productivity is determined by averaging the yields from high, medium, and low productivity plots. This productivity figure, combined with land area, forms the basis for block production data. 

However, land measurement is visually estimated. Both the Department of Agricultural Extension and BBS are involved in this assessment process. By averaging the information from three blocks, the national production and the total cultivated land area are determined by aggregating data from the union, upazila, district, and division levels.

The BBS conducts a separate estimation process, coordinating with various entities, including the DAE, the Ministry of Agriculture, the Food Planning and Monitoring Unit of the Ministry of Food, and the Bangladesh Space Research and Remote Sensing Organisation. 

A senior DAE official said the BBS finalises its estimation by consolidating data from all relevant ministries and organisations. However, if discrepancies of over 5k arise in production data or land area among multiple organisations in a particular region, that area undergoes further examination.

Govt cuts import tax of rice to cool down prices

Following the rice price hike at the beginning of last year, then Food Minister Sadhan Chandra Majumder directed millers and traders to lower prices. The ministry conducted special drives nationwide to penalise hoarders.

This year, too, the government has initiated the process of importing rice after a sudden hike of Tk5-Tk6 per kg in market prices in early January amid the full Aman season. Consequently, on  8 February, the government slashed the duty and value-added tax on the import of rice and three other essential items — edible oil, sugar, and dates.

At present, about 63% of tax, including duty and VAT, has to be paid on the import of rice. The new order has brought down the total tax incidence to 15%.

Secretary of the Ministry of Food Md Ismail Hossain told TBS that there are plans for both public and private rice imports this year.

"We will not set any limit for private imports. We will give priority only to those who intend to import and have a history of proper previous imports with permission," he said.

Md Ismail Hossain said there is no shortage of rice in the country. There is plenty of rice at the miller and merchant levels. The government has about 14.5 lakh tonnes of reserves. However, traders are not increasing the supply in the market.

Md Shahjahan Kabir, director-general of the Bangladesh Rice Research Institute (BRRI), told TBS, "Research indicates that various stakeholders are profiting in the range of Tk8-Tk14 per kg of rice due to our prolonged and complex supply chain. At times, corporate firms are securing higher profit margins."

He also pointed to the aggressive stockpiling of paddy by corporations as a driving force behind the escalating rice prices.

As per the Trading Corporation of Bangladesh (TCB) data, fine rice prices have surged to Tk75 per kg, varying by quality. Medium fine rice is currently priced between Tk56 and Tk65 per kg, while coarse rice is available at Tk54-Tk55 per kg.