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Food inflation, especially the shortage of rice, has been a concern since the beginning of 2017 as the harvest was destroyed by repeated flooding. The flash floods and the fungi attack have damaged almost 10 lakh tonnes of boro crop in the north-east.
Moreover, some vested millers and middlemen are hoarding rice to make more money. Besides, rice stocks at public warehouses have fallen owing to less than targeted procurement in the past few seasons. Prices of rice witnessed about 30 per cent increase in the past one year and it is unlikely that the price would decrease in the near future. According to Trading Corporation of Bangladesh (TCB), prices of standard varieties of Najirshail and Miniket rice increased by 27.08 per cent to Tk 60–62 a kilogram in the past one year while prices of the varieties increased by 1.67 per cent in one month.
The government has taken several steps including open market sales of rice to help people in poverty to survive the soaring prices. But these are rather humanitarian responses than a remedial action to control the market of rice and sustained food inflation.
Economist and food security experts have repeatedly warned the government that food inflation is on the increase, yet the government remained totally unprepared to tackle the situation.
Earlier in December 2017, Dhaka-based South Asian Network on Economic Modelling, using a computable general equilibrium model, found a 35 per cent increase in the price of rice. The study also indicated that there was likely an increase in headcount poverty rate by 0.32 per owing to increased prices of rice.
According to a study, 5,20,000 people have fallen into poverty because of increased rice prices. In October 2017, even the parliamentary standing committee on the food ministry expressed concern about the performance of the ministry that it had failed to take proper measures to control the price of rice and suggested that the ministry should formulate a ‘food stock policy’ on an emergency basis. In the end, the government’s lack of market intervention and delayed move to restock rice at silos allowed more room for the unscrupulous traders to illegally hoard rice stock and destablise the market.
While the government should take immediate steps to tackle the situation at hand and control rice prices, it should take lasting initiatives to prevent further price increase. In order to better prepare itself, the government should invest in developing a market information system that monitors accurate and timely data of crop production, trade and prices, and information related to environmental factors affecting crop yields. In addition to the amendment of anti-hoarding law to resolve the problem of undue influence of syndicated traders, a food stock policy is urgently needed to ensure a timely import and stocking of food supplies. The government must realise that food inflation eventually hurts the national economy.