BANGLADESH: Middle classes scramble for subsidised rice

Photo: Shamsuddin Ahmed/IRIN

People have to wait for hours to buy 5kg of rice at open market sale (OMS) centres. The OMS will continue until the end of April

DHAKA, 4 April 2008 (IRIN) - Government-run outlets selling subsidised rice and other basic commodities are now being besieged by members of the middle class as food prices continue to rise.

In Dhaka people are queing up for hours a day in the midday sun to buy 5kg of rice per head under the government’s Open Market Sale (OMS) scheme - established whenever a potential food crisis is perceived. The authorities have opened over 2,500 such outlets nationwide, with an additional 3,800 set to open in the coming days.

Rice and other commodities in these outlets are almost 30 percent cheaper than the market rate. One kilo of coarse rise now sells at 0.37 US cents a kilo through the OMS, while the same rice elsewhere sells for 0.51 cents a kilo.

According to the Bangladesh Institute of Development Studies (BIDS), the price of coarse rice has gone up by close to 70 percent over the past 12 months.

Other food essentials, including pulses, flour, oil, onions and sugar are also rising after remaining relatively stable for the last two weeks, increasing by nearly 50 percent in the last six months, with the prices of chickens, eggs and fish also going up.

“Middle class people can neither stand in the long queues to buy cheap rice and pulses, nor have the money to buy those from the market. We are the sufferers of the present price hikes,” Mansur Ali, a senior clerk in a government office, told IRIN, in Dhaka.

Rice prices have more than doubled in the last six months, and the price of cooking oil, flour and pulses had increased in tandem, he said.

“I am the lone earner in my family. My two children are very young and my wife is pregnant with the third. She needs extra nutrition, but I can’t even buy food for the family,” he said.

Earning just under US$100 a month, Ali now supplements his income by providing private tutoring in the evenings, earning another $7.5 a month to cope. However, that too may not be enough.

"No one in my family has ever stood in an OMS queue. These are meant for the poor,” said Ali, whose 10-year-old son waited for four hours in such a queue to buy rice.

Reduced purchasing power

According to the BIDS, purchasing power declined by around four percent due to higher inflation in 2007, propelled by 16 percent food inflation in December alone - and this in a country where about 40 percent of families at or just below the poverty line of $1 a day are already spending around 70 percent of their income on food, notes Wahiduddin Mahmud, a former adviser to the government and prominent social economist at Dhaka University.

The government has attempted to downplay the crisis. Earlier this week it announced it would import 400,000 metric tonnes (mt) of rice from India by the end of May to lessen the blow. Bangladesh is currently importing rice from its immediate neighbours, India and Myanmar, to meet the shortage, the World Bank reports.

Photo: David Swanson/IRIN

Spiralling food prices are increasingly making it difficult for families to cope

Monthly economic indicators of the Bangladesh Bank (BB), the country’s central bank, reveal food stocks stood at 715,000 mt in January 2008, while currently the country had around 550,000 mt, (including 350,000 mt of rice and 200,000 mt of wheat).

It would be better for the country to have a safe food reserve rather than a high foreign exchange reserve, estimated at $6 billion, noted the bank’s governor Salehuddin Ahmed, optimistically awaiting the outcome this month’s `Boro’ rice harvest.

‘Boro’ is one of the three rice crops in Bangladesh, producing around 60 percent of the annual yield, the other two crops being ‘Aus’ and ‘Aman’. `Boro’ will be harvested in the third and fourth weeks of April.

The Bangladesh Bureau of Statistics reports that the food grain yield from July 2006 to June 2007 was 28.44 million mt, including 26.85 million mt of rice, 737,000 mt of wheat and 850,000 mt of maize.

Global rice production

According the UN Food and Agriculture Organization (FAO) on 2 April, global rice production is expected to increase by 1.8 per cent - or 12 million mt - this year, easing a tight supply situation in key cultivating countries.

Assuming normal weather conditions, sizeable production increases were expected in all the major Asian rice-producing countries, including Bangladesh, where supply and demand were currently under pressure.

“The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases,” said Concepcion Calpe, a senior FAO economist.

sa/ds/cb