Big corporate groups or organisations can legally store rice for many days. Capitalising on the privilege, they might control the rice market by stocking rice exceeding the time limit
Since 50 big millers in the country have the capacity to store 20 percent of rice produced in the country, they can control the rice market if they want. It is still not clear if they are now controlling the price of rice through a syndicate.
The disclosure came at a programme on the unveiling of a study report titled "Rice Market in Bangladesh: Role of key intermediaries" at a city hotel in the capital on Sunday, organised by the Bangladesh Institute of Development Studies (BIDS).
The organisation's Senior Research Fellow Najnin Ahmed and Researcher Nahian Azad Shashi jointly presented the research paper.
There are many auto rice mills in Bangladesh that required an investment of Tk50 crore to Tk250 crore to set up. And their storage capacities are high.
Some mills even have a production capacity of 200 tonnes or more per day. As per the law, a 200-tonne capacity mill can normally store 400 tonnes for 15 days.
On the other hand, small and medium sized mills have a small working capital, and they cannot store rice for too long.
Big corporate groups or organisations can legally store rice for many days. Capitalising on the privilege, they might control the rice market by stocking rice for longer than the time limit.
So the government has to closely monitor the number of days that mills stockpile rice, the report mentioned.
Of the total supply chain, four big millers have the capacity to store three percent, eight millers four percent, 16 millers eight percent, 32 millers 13 percent and 50 millers can store up to 20 percent of the rice in the country. There are around 20,000 different kinds of rice mills in the country. Big millers have invested big amounts, and many of them have also taken bank loans.
While presenting the report, Najnin Ahmed said millers are producing rice and keeping it in stock as per the law. Millers, Aratdar, middlemen and commission agents can put an impact on the market from their respective positions. And all of them are strong market players.
The millers have a very good connection with wholesalers or commission agents. Because, on many occasions, the millers keep their rice stocks with them.
In the research paper, the present hike in rice prices has been mentioned as normal. Every year the price of paddy goes up before the Aman harvest. During that time, paddy stocks remain only with big farmers.
They know that there will be a paddy crisis at this time of the year, and they will increase prices accordingly. Small farmers cannot stock their produce for long. They sell as much of their paddy as they can in a season.
The study found no problem at any stage – from rice production to its sale.
Rice prices were unstable twice in 2017 because of flooding. After that, the rice market did not face any problem because the supply was normal.
If the price gap between wholesale and retail markets can be minimised, buyers will get rice at lower prices.
The price of rice increases a little at every stage where a specific commission is charged. The price rises a lot eventually in this way.
The information that the government has a big stock of rice might have a positive impact on rice prices, the report said.
Although, it is always said that millers influence the rice market, there is no clear evidence to support this.