Traders say price offered under e-auction higher than market rates

The government may reduce the prices of rice offered under the open market sale scheme (OMSS) by the Food Corporation of India (FCI) being sold through e-auction to bulk buyers due to lukewarm response.

Official sources told FE  that ‘whenever there are some requirements for tweaking the policy for reducing prices for OMSS rice, we will consider it,”.

In the first two weekly e-auction for rice held in the last fortnight, FCI could sell only 460 tonne of rice against around 0.4 million tonne (MT) offered under the OMSS. The next e-auction is slated for Wednesday.

Many rice traders FE spoke to said the benchmark price of Rs 31/kg for e-auction fixed by FCI is higher than similar variety of grain available in the market.

“At the same cost, white raw rice is currently being available at the Mundra port, Gujarat for exports besides the FCI’s rice has about 25% broken grain which makes it unattractive for the traders,” a rice trader based in Karnal, Haryana, said.

Average bid price for rice under OMSS last week was Rs 3,110.07/quintal against the reserve price of Rs 3,110.07/quintal.

The official said current grain stocks are above the buffer and sufficient to carry out open market sales.

FCI currently has 25.23 MT of rice,which excludes 14.7 MT of rice yet to be receivable from millers. The rice stock is against the buffer of 13.54 MT for July 1.

The corporation needs 36 MT of rice annually for allocation under NFSA. The new procurement season (2023-24) for paddy begins on October 1.

A food ministry official said that the FCI would continue to sell foodgrains from its surplus stocks till inflationary trend in cereals prices are curbed. The retail inflation in cereal and products category was reported at 12.71% in June, a declined from 16.12% in January.

In the last many years, the rice sold through e-auction have not received encouraging responses while the grain sold states on specific demand without e-auction have received responses from the states.

Due to implementation of Pradhan Mantri Garib Kalyan Anna Yojana, where additional 5 kg of rice for each of the 800 million beneficiaries under the National Food Security Act were distributed during April, 2020 and December 31, 2022, the corporation did not conduct OMSS for rice.

The government last month decided against participation of states in e-auction of wheat and rice which according to food ministry officials to ensure that more traders, processors and retailers participate in the sale.

However the new Karnataka government said that the move was to stall the state’s government Anna Bhagya Yojana where 5 kg rice was proposed to be provided to BPL families. FCI earlier had agreed to supply rice at Rs 34/kg.

Jharkhand has also criticised the government’s decision against providing additional quantities of rice and wheat to states from the central pool which has forced the state government to buy rice from the market at higher price.

Food secretary Sanjeev Chopra last week had stated that 15 states and union territories including Tamil Nadu and Odisha were of the view that the central pool surplus food stock should be used in ‘larger interest of 1400 million population’ and ‘not for a particular section and particular class of people’.

The development comes amid demand from African countries that look to India for supply of fully broken white rice, other than parboiled rice.

New Delhi: India is likely to export 290,000 tonnes of fully broken white rice under government-to-government (G2G) route to Mali, a country in West Africa.

The move follows the Indian government’s decision in May to permit exports of fully broken white rice, which was banned from 8 September last year, to other countries to meet their food security needs.

“MEA (the ministry of external affairs) has forwarded a request from the minister of industry and commerce to export 290,000 tonnes of fully broken rice," a senior government official said. 

“The quantity will be exported in two separate lots of 240,000 tonnes and 50,000 tonnes once the Directorate ­General of Foreign Trade (DGFT) examines the issue and announce the policy."

The development comes amid demand from African countries that look to India for supply of fully broken white rice, other than parboiled rice.

This will be an addition to the government permitted broken rice exports of 500,000 tonnes to Senegal and 50,000 tonnes to Gambia in April. The government also allowed to export 200,000 tonnes of the rice variety to Indonesia in April.

African countries rely on India for rice supply as they get it at a cheaper rate as compared to the price offerings by Vietnam, Thailand or Pakistan.

While Thailand is offering 100% broken rice at $523 a tonne, the same variety of rice is being offered by India at $425 per tonne, the benchmark price in the global market. The Indian price includes a 20% export duty. A 5% broken rice is being offered at $468-$472 a tonne by India, whereas Pakistan, Vietnam and Thailand are offering it at $488-492, $508-512 and $518 per tonne, respectively. These three countries are offering the 25% broken rice in the range of $458-498. In contrast, India is quoting this variety at $448-452 a tonne, spot trade sources said. These prices are free-­on-­board (FOB).

Queries sent to MEA, commerce and food ministries on Sunday remained unanswered till press time.

Due to an export ban on fully broken rice, Indian exporters cannot sell it to the international market. However, the Indian government on 24 May allowed the exports of broken rice based on permission given by it for shipments to other countries for meeting their food security needs, though the export of broken rice is banned in general. The step was taken by the government after it started receiving requests for the same from foreign ministries.

As the export ban on fully broken rice is on place since September 2022, African nations, which rely on India to meet its 70% rice consumption have switched to non-basmati rice. In the first two months of the ongoing financial year, import of non-basmati rice by African countries have been 35% higher than the corresponding period last year at nearly 2.1 million tonnes (mt), said executive director of All India Rice Exporters’ Association Vinod Kaul.

In April-May of FY24, India’s basmati rice exports were 21% more than the previous year during the same period at 830,858 tonnes, and a 6.1% hike year-on-year at 2.8 mt has been recorded in non-basmati rice exports.

In FY23, India exported a total of 17.79 mt of non-basmati rice, while broken rice exports were 23% lower on year at 3 mt because of a ban on shipments imposed to keep domestic prices down.

More than 60 million people benefit from a ration card that each household receives in Egypt

Egypt is planning on gradually increasing the price of basic commodities distributed through ration cards which are used by more than half of the North African country's population, according to the country's supply minister.

The hikes include a bottle of vegetable oil increasing to EGP 30 ($0.97) from EGP 25 ($0.81), while one-kilogram sacks of sugar and rice will go up to EGP 12.60 ($0.41) from EGP 10.50 ($0.34).

Egypt's population is just under 110 million people and more than 60 million people benefit from a ration card that each household receives. For each household with a ration card, there is EGP 50 ($1.62) per month per person to buy around 32 types of goods at subsidised prices, which include pasta, flour, and fava beans, Reuters reported.

“The hike of subsidised commodities prices distributed through ration cards now force us to review the prices or otherwise the government will not be able to fund or provide these commodities,” Supply Minister Ali El-Mosilhy said at a press conference in Cairo. He added that the review process would start in the coming days.

According to Mosilhy, due to high inflation and a dollar shortage, the Egyptian government deliberately reduced the supplies of some items imported from abroad, such as wheat and vegetable oils. 

Mosilhy also added that the government is considering adopting local currencies between Egypt and other countries with which it trades. Though nothing has been decided yet, there are ongoing negotiations with Russia, China, and India, Bloomberg reported.

The announcement comes as Egypt is facing a foreign currency crunch that has led to a shortage of basic goods and record inflation. Cairo was forced to turn to the International Monetary Fund last year for its fourth loan from the lender in six years.

And with the sharp rise in food prices, Egyptians are having to pay substantially more to cover their daily needs

Last month, the IMF wanted to see Egypt accelerate reforms before it carried out its first review of a $3bn rescue programme intended to shore up the North African country's crippled economy.

Ferid Belhaj, the World Bank’s vice president for the Middle East and North Africa, said Egypt was not moving fast enough to address an economic crisis that has sent the cost of basic goods skyrocketing and pushed millions into poverty. 

Egypt's reluctance to move away from a de facto peg of its currency to the US dollar is one of the main holdups. Although the Egyptian pound has lost about half its official value over the past year, analysts say it is still overvalued.

Cairo has tried to implement a series of government initiatives to bring in enough US dollars for import operations and the repayment of accumulating debts.

In March, the country eased its citizenship restrictions for foreigners, declaring that foreigners could obtain citizenship by investing $300,000, rather than $500,000, in the purchase of real estate - including plots of land and buildings owned by the government.

Commodity prices surged due to supply constraints, rupee devaluation

The price of essential goods, particularly that of onions, rice, pulses and petroleum products, spiked to 42.27% in the week ended March 9, 2023, ahead of the holy month of Ramzan, reported the Pakistan Bureau of Statistics (PBS).

The Sensitive Price Index (SPI), comprising of 51 essential commodities, rose by 1.37% in the week under review, compared to the week-ending on March 2.

According to the PBS data, the price of onions increased 305.23% in the week, compared to the same week of the last year. Cigarettes became expensive by 165.86%, gas charges for Q1 jumped 108.38%, the price of diesel rose by 93.82%, eggs by 78.63%, rice Irri-6/9 by 78.14%, petrol by 77.89% and basmati rice (broken) by 77.27%.

In the fruit category, the price of bananas increased by 74.01% in the week. Among pulses, the price of moong rose by 72.54%, mash by 56.02% and gram by 55.97%.

Similarly, the price of tea (Lipton) surged by 66.31% and the price of bread went up by 55.36% in the week compared to the same week of the previous year.

In an opposing trend, the price of tomatoes dropped by 41.79% in the week compared to the same week of last year, and chilli powder became cheaper by 7.42%. Among utilities, electricity charges for Q1 came down by 6.64%. The price of commodities is on the rise partially due to supply constraints and a massive devaluation of the rupee in recent times.

The rupee has deprecated by 18%, or Rs50, in the past six weeks to Rs281 against the US dollar in the interbank market on Friday.

The SPI inflation has also made imports exorbitantly expensive – a worrying fact as the country meets most of its local demand for energy and partial demand for food through imports. To control the high inflation reading, the central bank has increased its key policy rate by a massive 300 basis points in March to a record high of 20%. The move, however, has hit economic activities adversely and has rendered millions of people jobless.

Food Minister Sadhan Chandra Majumder said his ministry will start selling rice at a cheaper rate for poor families through a food friendly programme from Sept 1.

DHAKA – People’s struggle to cope with the escalating cost of living continues as the price of rice increased yesterday for the second time in just four days.

On August 5, a day before the government hiked fuel prices by record levels, the price of coarse rice was Tk 48 per kilogramme, which shot up to Tk 50 on August 11. Yesterday saw a further Tk 2 rise to Tk 52 per kg, according to the Trading Corporation of Bangladesh (TCB) data.

Meanwhile, price of fine rice rose to Tk 78 per kg on August 11 from Tk 75 per kg on August 5, before surging further to Tk 80 per kg yesterday.

Food Minister Sadhan Chandra Majumder said his ministry will start selling rice at a cheaper rate for 50 lakh poor families through a food friendly programme (FFP) from September 1.

The ministry has also taken measures to expand its Open Market Sales (OMS) to the upazila level to provide rice at relatively low prices. The OMS programme will also begin from September 1, he said.

“I hope there will be stability in the rice market after the beginning of the programmes,” the minister said, adding that they have sufficient stock.

While businessmen are blaming the high price of paddy, transport cost and import taxes for the price hikes, the food minister blamed the manoeuvrings of unscrupulous businessmen.

“Transport cost has increased. But the price of rice has gone up disproportionately compared to the rise in transport cost. There is no scope to deny that there are some dishonest businessmen,” he said while talking to journalists at his office at the Secretariat.

“Besides, we are now between two seasons — Boro season is already over and Aman cultivation is beginning. People in many areas are fearful of poor Aman harvest due to drought,” said Sadhan.

Meanwhile, price of rice of various brands shot up by Tk 4 to Tk 6 per kg in Kushtia’s Khajanagar — the country’s second largest rice hub.

Every day, about 200-250 trucks laden with rice go to different districts including Dhaka and Chattogram from Khajanagar.

According to locals, the price of rice has increased by Tk 4 to Tk 6 after the government hiked fuel prices.

Umar Farooq, managing director of Fresh Agrofarm in Khajanagar, said the transport cost has shot up by Tk 2,000 per truck.

Rice mill owners have to use generators due to load shedding, which has also impacted rice prices.

On June 23, the government cut import duty to 25 percent from 62.5 percent in order to encourage imports, increase supply of the staple in the domestic market, and cool down its prices.

On July 7, the food ministry had also given approval to 380 private organisations to import 10 lakh tonnes of rice in July.

Until Thursday, 34,000 tonnes was imported since the approval, said Muhammad Mahbubur Rahman, senior assistant secretary (external procurement) of the ministry.

However, some importers are choosing not to import rice due to high prices in India.

Md Shahjalal, proprietor of Jalal Auto Rice Mill, said his brother Arshad Ali, who owns Dada Agro Food Products, is among those who received approval for importing rice.

“The quality of the Indian variety is not as good as the native one. After bearing all costs, the price becomes higher than the local ones. We’ve sent our people to India but seeing the high price we have refrained from importing rice,” he said.

Saying that the price of paddy has shot up, Shahjalal also claimed that farmers are selling paddy at Tk 1,800 per maund (37.32 kg). “After processing [the paddy into rice], the cost is Tk 3,700 [per maund],” he said.

50 LAKH FAMILIES

The food minister said the government was going to introduce an FFP for 50 lakh poor families.

The families will be able to get 30kg rice per month at Tk 15 per kg. “About 4 crore people will get the benefit, if we assume each family to have four members,” he said.

He also said the government will expand its OMS programme to upazila level through 2,013 dealers and double the daily sale limit to 2 tonnes.

Each person will be able to buy 5kg rice per day at Tk 30 per kg.

KARACHI: The dollar’s relentless surge against rupee is turning out to be a boon for rice merchants, but a bane for the consumer.

The prices for different rice varieties have seen an unusual jump of late as exporters and hoarders try to cash in on the rupee’s slide.

Retailers said that the prices of almost all varieties of rice have been continuously climbing up and in the last few days, the prices have gone up by Rs25 per kg as exports have been in full swing to various destinations in the last 10 months.

Premium basmati sells not less than Rs270-280 per kg while good quality basmati hovers between Rs200-250 per kg. High quality saila basmati is also tagged at Rs230 per kg, they said, adding “these are the highest prices in the local markets.”

Country’s total rice exports fetched $2 billion in just 10MFY22 with shipment of four million tonnes versus $1.75bn through export of 3.190m tonnes, up by 27 per cent in quantity and 17pc in value. In FY21, total rice exports were 3.69m tonnes that earned $2bn.

The share of basmati rice was 632,407 tonnes fetching $574m as compared to 508,869 tonnes valuing $470m, showing a rise of 24pc in quantity and 22pc in value.

With 27pc in quantities and 15pc in value, other varieties of rice exports surged to 3.41mn tonnes amounting to $1.47bn as against 2.681m tonnes earning $1.28bn.

Abdul Rahim Janoo, former chairman Rice Exporters Association of Pakistan (REAP), said foreign buyers were diverting towards Pakistani rice after high rates of Indian rice, thus keeping up demand of Pakistani rice, while massive rupee devaluation against the dollar is making exports more feasible.

He said that reports that one dollar value would hit Rs200 in near future have lured market players and hoarders to pile up stocks to get higher export earnings on losing strength of the rupee against the greenback.

The Food and Agriculture Organization of the United Nations (FAO) says rice prices among major producers in Far East Asia last month were stable compared to March last year.

“Prices of rice increased in the subregion’s main exporters while remaining below or close to their year-earlier levels,” the FAO said in its monthly Food Price Monitoring and Analysis Bulletin released in Rome on Thursday.

In Vietnam, the bulletin said prices rose “marginally” with the progress of the main winter-spring harvest which is estimated to be above average.

“Overall, prices in March remained more than 20 percent below their year-earlier levels, following strong declines throughout 2021,” it said.

“Similarly, moderate price increases were recorded in Thailand due to a pick-up in demand, although prices were well below their year-earlier levels due to good local availabilities and expectations for an above-average 2021/22 secondary crop, currently being harvested.”

But “significant price increases were recorded for the third consecutive month in Myanmar, where prices rose by 18 percent month on month to high levels, linked to seasonal trends and strong international demand.

“Seasonal price increases were also behind the rice price increases in Cambodia.” In China, the monthly report on food price trends said “adequate market availabilities kept prices stable and close to their year-earlier levels.”

Although world rice prices moved little, the FAO bulletin noted that “prices of wheat and coarse grains surged in March as the reduced exports from the Russian Federation and Ukraine worsened already tight global availabilities.”

Soaring wheat pieces reflected a “sharp reduction in exports from Ukraine and a slowdown in shipments from the Russian Federation,” the bulletin said.

“Similar to wheat, coarse grain export prices surged in March as port closures in Ukraine due to the ongoing war disrupted shipments from this major global exporter.” Given the tight markets for wheat and coarse grains — which include corn, sorghum and barley — the bulletin issued grain price warnings for 13 countries.

These included Sri Lanka where the warning for rice and wheat flour prices was “high” after a currency depreciation and below-average rice crop.

The 12 other countries assigned price warnings were in Africa (one “moderate” and seven “high” warnings) and Latin America (four “moderate” warnings).

In 2022, the approximate price range for Cambodia Rice is between $0.76 and $0.73 per kilogram or between $0.34 and $0.33 per pound(lb).

The price in Riel is KHR3158.86 per kg. The average price for a tonne is  758.13 in Siem Reap and Phnom Penh.

Buyers in Vietnam, China and Indonesia switch to the foodgrain, but its rates rising sharply 

The Commerce Ministry will help provide farmers with sufficient harvest machines at a reasonable cost in November-December to gather all rice crops in time. This year's rice prices are expected to set a record , said acting government spokesman Buddhipongse Punnakanta on Sunday.

Mr Buddhipongse said prices of other kinds of rice crops will also be high.