Govt to procure 4.5 lakh tonnes of wheat as global market cools down
Bangladesh imported 13.11 lakh tonnes of wheat from 1 July to 10 October
The government will procure 4.50 lakh tonnes of wheat from Russia, Romania, Bulgaria and an undecided source, as the global market of this vital food grain is showing signs of cooling down from prolonged volatility.
Although Romania is among the sources, its wheat is actually from Ukraine, Ministry of Food officials said, adding the ministry has completed all kinds of contracts for the imports.
Of the total amount, 3 lakh tonnes will be procured from Russia on government-to-government (G2G) terms, according to sources at the Ministry of Food.
Besides, 50,000 tonnes each will be purchased from Bulgaria and Romania through international tender processes.
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In addition, the process of importing another 50,000 tonnes of wheat through international tender is ongoing, said the sources. The sources for this import have not been decided yet.
Out of this total imports, 46,000 tonnes of wheat have already been imported, they said. At the same time, private imports are becoming more normal after months of stagnation.
This procurement decision comes at a time when global wheat prices have come down significantly. Currently, the price of wheat stands at $266 per tonne, a significant drop from $378 just a year ago, according to the commerce ministry. It had surged to $400 in the wake of the Russia-Ukraine war.
Food Minister Sadhan Chandra Majumdar told The Business Standard that some of the wheat has already arrived and the rest is under process.
"We had approval to import 5 lakh tonnes of rice, but we are not having to bring it. Only wheat will be procured," the minister mentioned.
Volatile wheat market
After the Russia-Ukraine war broke out on 24 February 2022, Bangladesh faced a massive wheat import crisis.
Due to the closure of two major sources of wheat import, neither public nor private parties could import any wheat for about six months.
Wheat prices in the international market also rose to a record high as the exports of the two major exporting countries stopped.
India, which was a place of hope at the time, also stopped exports on 14 May 2022 to maintain its local food grain stocks and stabilise prices. India is yet to resume exports.
Meanwhile, Ukraine's grain imports have once again stopped due to the expiration of the Russia-Ukraine grain deal brokered by the United Nations and Turkey.
In this situation, the government is importing wheat from Russia as well as Bulgaria and Romania as alternative sources.
While wheat prices have decreased in local markets, they have yet to fully mirror the global market's reduction.
Importers attribute the failure of local wheat prices to align with international markets to factors such as a high exchange rate, freight charges, and the complexity of LC (Letter of Credit) opening.
According to Trading Corporation of Bangladesh data, non-packaged four is being sold at local markets for Tk45 per kg, which was up to Tk58 this time last year. Before the war, the price of open flour was Tk34-35 per kg.
Besides, the price of packaged flour is Tk55 per kg, which was sold at Tk65 during the same period last year. According to TCB, the price of packaged flour has decreased by Tk5 per kg in one month.
At present, the government has about 1,56,000 tonnes of wheat in stock.
Private Imports
The price of wheat flour has fallen in the local market because of private importation. The private sector has imported a good amount of wheat in the three months of this fiscal.
According to the data of the Ministry of Food, 12.82 lakh tonnes of wheat was imported by the private sector from 1 July to 10 October. During this period the total import of wheat, including government imports, was 13.11 lakh tonnes.
Wheat imports fell last year due to the impact of the Russia-Ukraine war. A total of 38.75 lakh tonnes of wheat was imported in FY23. The government's import was 6.79 lakh tonnes and the private sector's 31.95 lakh tonnes.
Wheat is the second major food grain of Bangladesh. Against the annual demand of 70 lakh tonnes, the country produces only 10-12 lakh tonnes. The rest is imported to meet the demand.
However, due to the increase in the price of flour due to the impact of the war for two years, the demand for flour in the country has also decreased.
According to City Group Deputy General Manager Pradeep Karan, the price of flour is gradually decreasing, aligning with the declining cost of imported wheat in the country.
