Published in The Daily Star on Friday, 21 March 2014.
Govt hikes purchase prices of boro, wheat
Star Business Report
The government yesterday hiked the prices of boro rice and wheat that it will buy from farmers and millers this year.
The government also plans to start domestic procurement a bit early this season in a bid to give small and marginal farmers some relief.
The purchase price for boro rice was set at Tk 31 a kilogram, up 6.89 percent year-on-year, while paddy will be bought at Tk 20 a kg, a hike by 8 percent. The government has also increased its purchase prices for wheat by 8 percent to Tk 27 this year.
The prices were set considering the domestic and international prices, production costs and public stocks, government officials said. The target for purchasing boro rice has been fixed at 10 lakh tonnes, which was 9 lakh tonnes last season.
The government, however, has kept the targets for buying paddy and wheat unchanged at 1.5 lakh tonnes each.
An economist said the government move would yield little benefit for farmers.
“It appears that the government would achieve its procurement target. But it is millers who will reap the benefit of the price incentive as the government will buy rice from them,” said Quazi Shahabuddin, a professorial fellow at Bangladesh Institute of Development Studies (BIDS).
He also said the government should buy more from the domestic market. “It will boost public stocks and benefit farmers more,” said Shahabuddin, also a former director general of BIDS.
However, food ministry officials said the government’s purchases from millers will put an impact on the market prices and partly benefit the farmers.
“Increased purchases by millers will raise demand in the market,” said Ahmed Hossain Khan, director general of the Directorate General of Food.
The government will start purchasing paddy from May 1 and continue the drive for four months. Wheat purchase will continue for three months starting from April 1.
“The early announcement of prices and purchase targets will increase the bargaining capacity of small and marginal farmers. We will start buying just after the beginning of the harvesting season,” Khan said.
The decision to hike the purchase prices of rice, paddy and wheat came at a meeting of the food planning and monitoring committee of the government chaired by Food Minister Qamrul Islam.
Officials said prices have been raised considering the increased production cost, which was Tk 17.50 a kg for paddy, Tk 26.50 for rice and Tk 24.5 for wheat.
Last year, the production cost of boro rice was Tk 26 a kg and wheat Tk 21.50.
“The hike in the purchase prices appears to be justified as the government could not attain its target last year due to fixing the rates below the market prices,” said Muhammad Al Amin, senior research associate at Centre for Policy Dialogue.
The government bought 8.3 lakh tonnes against its target of 10 lakh tonnes in the last boro season.
“The increased prices may help the government achieve the procurement target this season,” he said.