Govt steps in to prevent Ramadan shortages as import of some commodities decline

The government has stepped in to boost imports of essential commodities, anticipating increased demand during Ramadan, as import levels for some items have declined over the first four months of the fiscal year.

Finance and Commerce Adviser Salehuddin Ahmed announced that the government has approved imports of key staples, including rice, sugar, and wheat, with sufficient funds allocated to ensure their availability during Ramadan.

"We expect these essential items to arrive very soon," he said during a meeting of the Food Planning and Procurement Committee at the Secretariat torday.

Salehuddin reassured that there would be no shortages of rice, wheat, and other daily necessities, such as pulses and dates, during Ramadan. "Monitoring food supplies is critical," he added, emphasising the need to assess stock levels and determine import requirements. He also noted that private-sector imports have been encouraged to expedite the arrival of these commodities.

Alternative banking facilities, especially from state-owned banks, should be considered to maintain a smooth supply.

Biswajit Saha, executive director (Corporate and Regulatory Affairs), City Group

According to the National Board of Revenue (NBR), refined palm oil imports dropped to 434,168 tonnes from 523,693 tonnes between July and October year-on-year. Imports of chickpeas and sugar have also seen significant declines, with chickpeas falling from 11,366 tonnes to 2,682 tonnes and sugar from 101,143 tonnes to 81,688 tonnes.

Bangladesh Bank data also reflects a decrease in imports, with LC openings down by around 7% in the first quarter (July-September) compared to last year, and LC settlements decreasing by 2.5%.

However, certain commodities have seen an increase in imports. Soybean oil imports rose to 228,165 tonnes from 164,989 tonnes, and lentil imports surged from 65,996 tonnes to 189,560 tonnes, according to NBR data.

What businesses say

Private sector importers have initiated opening letters of credit (LCs) to prepare for staple imports with the seasonal surge in demand in mind.

While Ramadan typically leads to a peak in grocery imports about a month before it begins, goods often take over two months to reach domestic markets after LCs are initiated.

This year, however, importers are concerned over the stability of supply due to rising international commodity prices, limited credit lines at several banks and ongoing economic pressures.

Biswajit Saha, executive director of corporate and regulatory affairs at City Group, one of the country's major grocery importers, noted the challenges.

"We have already started the import process to ensure a smooth supply of essentials during Ramadan. However, due to deteriorating credit lines in 8-10 banks, we cannot open LCs at those institutions. Alternative banking facilities, especially from state-owned banks, should be considered to maintain a smooth supply.

"Additionally, the single borrower exposure limit should be raised from 15% to 25%." Biswajit noted a 25% increase in edible oil prices in recent months, suggesting that government intervention via subsidies or price adjustments may be necessary," he said.

Bank officials in Chattogram confirmed that LCs for grocery imports are lower this year compared to previous years from importers of Khatunganj, one of the largest wholesale markets for essential commodities in the country.

Sabbir Ahmed Chowdhury, vice president and head of Standard Bank's Khatunganj branch, said, "Since the change of government, the number of LCs opened for grocery imports has halved. Large industrial groups previously controlling the grocery import market now face restricted banking access, limiting their import capacity."

Sabbir further added that many medium and small importers, who were previously excluded from bank facilities, have been forced out of business in recent years.

In light of current economic difficulties, industry insiders recommend renewed banking support for these smaller importers to stabilise supply during Ramadan.

Nurul Alam, proprietor of Messrs Zaman and Brothers, a prominent importing firm in Khatunganj, said recent economic conditions have affected consumer behaviour.

"People's purchasing power has decreased, and they are more cautious about spending. If excess goods are imported for Ramadan, businesses could face losses," he said, explaining that these risks have led importers to exercise caution in opening LCs.

Alam, who has been importing groceries for four decades, expressed frustration over banks' limited support for genuine importers, which he attributes to ongoing liquidity issues.

"Since the pandemic and especially after the dollar crisis, banks have discouraged small and medium-sized importers from business. Meanwhile, some individuals have misused import facilities, syphoning off money from banks in the name of imports," he added.

Escalating edible oil prices raise concerns

Price increases on the international edible oil market have also impacted importers' plans for Ramadan.

Taslim Shahriar, deputy general manager of Meghna Group, noted that while the goods already booked should cover Ramadan demand, there is growing concern over edible oil prices.

"In the past two months, the cost of edible oil has risen by up to $200 per tonne. Based on current prices, importers see no option but to adjust prices in the domestic market," said Shahriar.

He noted that soybean oil, which sold for $980 per tonne two months ago, now trades at $1,240, and unrefined palm oil has risen from $970 to $1,180-1,190 per tonne.

As the higher prices continue to pressure the industry, some importers believe government intervention might be needed to alleviate the cost burden for consumers.