Presently, India commands 40% of the global rice trade. According to a top trader, India, which presently controls 40% of the world’s rice market, will have the final say in two years.
Bangladesh Rice Imports
Following criticism that it is paying more, Bangladesh is reluctant to sign contracts with Indian cooperative organizations NCCF (National Cooperative Consumers Federation of India Ltd) and Kendriya Bhandar to import two lakh tonnes of parboiled rice. Dhaka (Capital city) is taking it slow as it has been criticized for offering $35 per tonne more to the cooperative agencies than what the private vendors had offered in the 50,000 tonnes global tender. On 21st December’22, Bangladesh placed a letter of Intent (LOI) for the purchase of 1 lakh tonnes of parboiled rice each from both NCCF and Kendriya Bhandar at $433.60 and $433.50 a tonne. Additionally, the country floated 2 global tenders to procure 50,000 tonnes each in efforts to procure 3 lakh tonnes of parboiled rice for its public distribution system.
Utilizing Opportunity
As per anonymous (Anon) trade sources, the LOI which was placed after accepting the Indian cooperatives’ offer, was required by Indian agencies to furnish bank guarantees but got delayed by a span of 6 days and Bangladesh may use the opportunity to probably renegotiate the offer by not accepting them. A trader said, “It was a minor clerical error that delayed the bank guarantee. If it wanted, Bangladesh could have accepted the guarantee.”
As per media reports, the imports have been cleared by the Sheikh Hasina Wajed government’s Food Ministry and the Cabinet committee that decides on public procurement.
Reasons For Dhaka’s Needs
As per some trade sources, Bangladesh had to pay extra as it needed the rice from the current crop within a 2-month span, and as per an Anon
official, “Had it given more time and opted for an older crop, it could have got the rice at a cheaper rate.” Some traders said that the amount that Bangladesh is paying is justified as it is looking for guaranteed delivery, “You cannot be sure of delivery of such huge quantity from private traders, who are bidding aggressively by settling for a lower margin.” Until the report was published, no response was received to an email sent to Bangladesh’s Directorate General of Food.
Rice Exports to Bangladesh
It was pointed out by a trader that India’s Kharif rice output is still unclear though procurement for its central pool is higher than the previous year, “Officials in Dhaka have to remember how India banned wheat exports all of a sudden. Rice exports are also restricted.” “Bangladesh officials had gone to Vietnam, Thailand, and Cambodia scouting for supplies in November. They returned empty-handed. India stepped up to help despite being overlooked.” At present, India’s private traders have quoted 5% broken parboiled rice at $380 per tonne free-on-board (fob) while the main competitor, Thailand has quoted the rice at $517 fob. Pakistan, with unclear stock positions, has quoted $453-57 fob.
Rice Exporters said that Indian rice is the most competitive in the rice markets in view of the aggressive bidding and a south-based exporter said that some exporters settled for a margin as low as $1 a tonne in 2021. Under the circumstances, where traders wonder where Bangladesh could find parboiled rice more competitively, the country’s best bet would be to buy from the cooperative agencies under G2G deals as the supply would be guaranteed even if any sudden export curbs are placed.
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