Bangladesh cuts import duty on rice to stabilize market

Bangladesh has decided to cut import duty on rice further to 2 percent in a bid to rein the instability in prices of the staple food item amid flash floods.

Bangladeshi Food Minister Qamrul Islam made the announcement at a press briefing Wednesday in the capital of Dhaka. “We’ve decided to slash the duty to 2 percent from the existing 10,” said the minister.

He said the government decided to import 1.5 million tons of rice in the current 2017- 18 fiscal year in an effort to replenish reserves and rein in prices of the staple in the wake of the flooding.

Apart from this, he said Bangladesh will import 500,000 tons of wheat in the current fiscal year. He said a state agency has started to import rice through government- to- government deals from producers in Cambodia, India, Thailand and Vietnam, as importing via tenders is a lengthy process.

After the second round of flooding in June, the Bangladeshi government eased import duty on rice to 10 percent from 28 percent in a bid to stabilize the domestic market.

Owing to higher import duty placed back in 2015 and 2016 to safeguard local farmers amid cheap prices from neighboring countries, rice imports have dropped to a four- year low this year. Local importers blamed a 28- percent tariff on rice imports for the decline.

As the domestic rice market has again become volatile in the wake of reports that paddy production is likely to fall this year due to flash floods and rice blast disease, prices of rice have continued soaring since April.

In recent months local rice prices have hit a record high and the state reserves are reportedly at a six- year low.

The state- run Trading Corporation of Bangladesh report- edly recorded an about 50- percent hike in the prices of coarse rice this month compared to the same period last year.

Price hikes of food items, particularly staple rice, is a key concern for the Bangladeshi government, as nearly 31.5 percent of its around 160 million people still live below the national poverty line and spend a large part of their incomes on food purchases.

A man rests on a bench in the middle of a flooded market in Sariakandhi, Bangladesh on Tuesday. Recent heavy monsoon flooding has put a third of the country under water. Thirty people have died, and 1.5 million are marooned, authorities said.