Eliminate import duty on rice: Tariff Commission

The Bangladesh Trade and Tariff Commission (BTTC) today recommended the government to waive import duty on rice for a certain period of time to increase its supply in the local market.

Data from the Agricultural Development Department showed that the two recent floods, which occurred between August 16 and October 15, disrupted the production of 8.39 lakh tonnes of rice, the commission report said.

In this situation, rice imports will be encouraged only if duties are waived as part of efforts to stabilize the purchasing power of ordinary consumers, it said.

Local producers are unlikely to suffer if rice is imported at international market prices, the commission said in a report sent to the Ministry of Commerce, Ministry of Food and National Board of Revenue (NBR).

To stimulate imports and increase supply in local markets, the NDB reduced the import duty on rice to 25 percent from 62.5 percent on October 20.

The NDB also said that the tariff reduction will help reduce the cost of imports by 14.4 tenge per kilogram.

However, after the tariff reduction, importers opened letters of credit for the import of only 26 tons of rice, the BTTC report said.

The commission said the tariff reduction would not increase the supply of rice to the Bangladesh market.

On October 24, a major rice importer, speaking on condition of anonymity, described the reason for the current situation.

It is very unlikely that anyone will consider buying grain from abroad given current market conditions, an importer told The Daily Star.

For example, even if the duty were reduced to zero, the price of imported high quality rice would reach Tk 80 per kg and coarse rice would reach Tk 76 per kg after taking into account all associated costs.

In contrast, fine rice grown here currently sells for around TKR 65 per kg and coarse rice for TKK 55 per kg.

The BTTC report noted that the price of high quality rice remained unchanged over the past month, while the medium and large varieties increased by 1.74 percent and 1.9 percent respectively.

Over the past year, sales growth for the three varieties was 1.09 percent, 9.35 percent and 7 percent, respectively.

It also said the price of coarse rice, the most commonly used variety in the country, rose at a faster rate than the fine and medium varieties.

Bangladesh needs 3.7 to 3.9 crore tonnes of rice annually, most of which is met through domestic production, the Tariff Commission report said.

The Bangladesh Bureau of Statistics (BBS) estimates that farmers produced 4.06 crore tonnes of rice in fiscal year 2023-24, up 4.1 percent from last year, the highest growth in the previous six years.

Moreover, for the first time in a fiscal year, Bangladesh harvested more than 4 million tons of rice.

Food inflation in Bangladesh has remained above 10 percent for six consecutive months since April this year, according to the BBS.