In a series of reports, we are examining the reasons and consequences of the current rice crisis in different parts of Asia. In few countries have the rising rice prices had such dramatic consequences as in Bangladesh, where large parts of the population are under- or malnourished even without the latest price shocks.
Due to floods and a cyclone, Bangladesh does not have enough rice this year
In Bangladesh, the price of rice has almost doubled over the last year. When the paramilitary ‘Bangladesh Rifles’ suspended their special programme of selling rice at subsidized rates last week, the price went up once more. The poor and the middle class are suffering. One woman in Dhaka said that prices had risen dramatically and she was spending three times what she used to spend on food.
The rice vendors in Dhaka, too, admit that the price is going up almost daily. One of them said: "This week the price is 4 or 5 taka more than last week. We are selling rice now at 38 taka per kg, six months ago it was only 26 taka!"
Economist Wahiduddin Mahmood knows what this means for the people of Bangladesh: "It is quite a pressure on the living standards of the poor people, because around forty percent of the Bangladeshi population suffer from calory intake deficiency!"
The role of the state
Bangladesh is a net importer of rice – especially this year, because it is still suffering from the aftermath of a cyclone and floods. But on the international market rice has become expensive, as main exporters such as neighbouring India have closed their borders for rice. Wahiduddin Mahmood criticizes the Bangladesh government for not having bought enough rice abroad in time.
His colleague, Atiur Rahman, also says the government has to act: "Last year we had a bitter experience when we couldn’t ensure food security. The prices of commodities have kept going up. We have to buy rice and sell it at subsidized rates to the poor."
But the Director General of the ‘Bangladesh Rifles’, assigned the job of selling subsidized rice by the military-backed government, says this will take time.
"The government has decided to suspend the selling of rice at lower rates. There is a regulation that we cannot simultaneously procure rice and sell it in the open market."
Relief only in September
The reason is simple: One could cheat the system by buying up subsidized rice and sell it back to the government at the higher rate. The finance and planning adviser, or acting finance minister, Mirza Azizul Islam says it will take until September till sales of subsidized rice resume after being purchased on the domestic market. Until then Bangladeshis will have to live with higher rice prices.
Unless, that is, the international community helps out, says the economist Wahiduddin Mahmood: "The international community can obviously help by giving, if not food aid, by giving budgetary support. Because the existing food subsidies, coupled with subsidies on agriculture and goods like fertilizers, and subsidies on petroleum, all this together is now eating up almost the entire development budget of Bangladesh!"
Bangladesh received substantial amounts of food aid in previous years, but these have gradually been cut back.