Export of rice

By | January 26, 2015

Last Saturday’s shipment of the first export consignment of 12,500 tonnes of rice to Sri Lanka marks a notable feat of accomplishment by the agricultural sector of Bangladesh. A total of 50,000 tonnes of rice is to be exported by Bangladesh to Sri Lanka. Rice is a new addition to the otherwise skinny list of the country’s export basket. This also bears testimony to the strenuous efforts by millions of its farmers who toiled hard to produce exportable surplus of rice. The country is set to earn US$22.5 million from this particular rice export deal, notwithstanding the fact that the letters of credit worth $25.27 million were, according to the Bangladesh Bank figures, opened until July this year for its imports of rice from the international market. The export to Sri Lanka would create no problems immediately as Bangladesh has over 1.3 million tonnes of rice in its stocks, at least 3,00,000 tonnes more than that of the last year.

The export of rice has disproved sceptics who questioned the rationale behind exporting the cereal by Bangladesh, the fourth biggest rice producer. It is due to a bumper yield and good stocks at home that the government has taken the decision to export rice to the island nation. The country started exporting aromatic before but not the common variteies. It is set to produce more than 34 million tonnes of rice this year. On the other hand, its reserve has risen to more than 1.2 million tonnes from nearly 1.0 million tonnes a year earlier. Although export of rice to Sri Lanka follows the nature of ‘goodwill’, it is now imperative for the country’s policymakers to weigh interests of rice growers and consumers at home first. Its prices both at growers and consumers’ levels are politically sensitive. One has to consider the subsidies the government pays to enable farmers grow rice for domestic consumption. The country’s rice production cost is higher here than those of Thailand and Vietnam, both major rice exporters. India exports parboiled non-basmati rice for $400 per tonne, or less by $10-15 than the rice price of Thailand. In the white rice export category, India offers a competitive price of $360-370 per tonne that can be favourably compared to those of Pakistan and Vietnam.

The actual export price of rice per tonne would come down to $435 in case of Sri Lanka if the cost of shipment is considered. Each kg of rice export would fetch Bangladesh around Tk 33 that is lower than even the price of coarse rice at Tk 35 to Tk 37 in the domestic market. Here the country makes no worthy gains out of its rice export. This makes rice export not a viable proposition for Bangladesh at this stage, in view of its rising production cost and the large amount of subsidies that are involved in growing the staple. Rice exports could be profitable for Bangladesh only if it could sell to countries where the price is much higher. The government should also pay its attention to maintaining an adequate level of domestic rice stocks year-round, in order to meet exigencies in case of any occurrence of floods and other natural calamities.