Import dearth may cause food crisis

The outgoing year has been an exceptional one for global commodity markets due to the surge in prices triggered by the Russia-Ukraine war and spike in demand following the recovery of economies from the Covid-19 pandemic.

The war has affected the commodity market severely. Commodity prices were high in the international market. Locally, imports became expensive because of the depreciation of taka against the US dollar. Taka lost around 23 per cent in value against the greenback.

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As Bangladesh imports a number of key commodities -- wheat, edible oil, and sugar -- the country was also affected.

Wheat prices shot up to a record high after India banned exports of the grain, leading to a wheat flour crisis for us.

Looking forward, wheat prices are unlikely to cool off unless the Russia-Ukraine war and production in India improves. Meanwhile, geopolitical tension remains a risk for wheat prices.

However, the soybean production forecast is good even though drought has affected the crop in Argentina, another growing country.

Edible oil, another major imported essential, saw a price spiral for multiple factors, including the ban on palm oil exports by Indonesia. Indonesia is now making bio-diesel using palm oil as petroleum prices remain high.

The global prices of sugar remain high too as countries such as India are producing ethanol by transferring a portion of sugarcane. The good thing is though that production in Brazil is good even though we have not seen reflections of this in the market.

Raw sugar prices rose to near a six-year high due to delays in sugarcane harvests in Thailand, Australia and Central America that tightened supply. Also, rain in Brazil means that some of the country's sugarcane will not be cut until next season.

But what is essential is fast tracking the opening of letters of credit (LC) by our banks. Their reluctance in opening LCs is now the biggest problem. Ships are not sailing off toward our ports as we cannot issue LCs for importing commodities. This is hurting Bangladesh's image internationally. Unless we can import, there is a risk of a food crisis in the country.