DUTY ON RICE IMPORT: Good move comes late

The government decision to reimpose 25 percent customs duty on rice import in a bid to protect growers is likely to fall short of expectation as most of the small farmers have already sold their produce to middlemen.

The decision that was made following a bumper yield in this boro season appears to have come too late also as around 40 lakh tonnes of rice have already been imported this year. Besides, the country has a huge quantity of imported rice in the pipeline.

Commerce Minister Tofail Ahmed disclosed the decision on Monday. While placing the national budget yesterday, Finance Minister AMA Muhith also proposed to reimpose 25 percent customs duty and three percent regulatory duty on rice import so that farmers get good prices.

Experts termed the initiative a good move but said it would be useless for most of the small farmers, who have already sold their produce to middlemen below the production cost, amid surging rice imports and increased domestic production.

"I think the small growers would not benefit from the move. It's the middlemen who would be the gainer. The government should have made the move immediately after the bumper yield," Quazi Shahabuddin, a former director general of Bangladesh Institute of Development Studies (BIDS), told The Daily Star yesterday.

Asked, he said the chance of hike in rice prices appeared to be slim due to the huge supply.

He also said the government should monitor the rice market closely and if needed, it will intervene the market through open market sale (OMS).

Last year, the government reduced the duty on rice imports in two phases to increase supply and curb price spike owing to crop losses in the north where floods had a devastating impact. The north accounts for more than half the boro production.

The government first reduced duty on import of rice to 10 percent in June last year and later in August, the duty was further reduced to 2 percent to raise the stock of rice.

As a result, rice import soared to 39 lakh tonnes in July-May, up from only 1.33 lakh tonnes the previous year.

Muhith in his budget speech in parliament yesterday said, "This year, we have a bumper production of rice. Thus, to protect local farmers, 25 percent customs duty and 3 percent regulatory duty have been reimposed on rice import."

He also said to protect farmers and agro-based industry, duty on locally produced starch, wheat, maize, potato and cassava has been rationalised to 15 percent customs duty and 10 percent regulatory duty.

He added the farmers would continue to enjoy incentives in the forms of subsidised fertilisers and other farm-input support as they did for the past several years.

The government has allocated Tk 9,000 crore as subsidy in the agricultural sector in the next fiscal year.

It was Tk 6,000 crore in the revised budget for 2017-18. In the proposed budget for the fiscal 2018-19, Muhith proposed an allocation of Tk 58,928 crore for the agriculture and rural development sector.

"This is the highest allocation for any sector in the next financial year," he said.

The minister also said arable land is decreasing because of density of population, expansion of economic activities and increased demands for improved standard of living.

"In spite of all the odds, the average growth of agriculture sector over last 10 years stood at 3.8 percent."  He said crop yield per hectare increased from 3,761kgs to 4,629kgs in the last nine years.

The government has fixed a target to innovate 22 new varieties of crops and 21 new technologies in the upcoming fiscal year, he said, adding it has also taken initiatives to establish and renovate fertilizer laboratories and research centres to ensure quality fertilizers.

M Asaduzzaman, a professorial fellow at the BIDS, one of the largest think-tanks, said the government should give more focus on ensuring the efficient use of water and fertilizer for getting enhanced production with less expenditure.