USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed
01 March 2012
Bangladesh harvests three rice crops a year. The first MY 2011/12 rice crop, known locally as "Aus" (planted in March/April and harvested in June/July), is estimated at 2 million tons.
The second crop, "Aman" (planted in July/August and harvested in November/December), benefitted from an early monsoon. Despite some flooding, good rainfall nationwide during the Aman growing period and sunny weather during harvest contributed to record production of 13.6 million tons, 7 percent higher than the previous year's crop.
Rice consumption (food, seed, and feed use together) in MY 2012/13 is forecast at 35 million tons. MY 2011/12 consumption of rice is estimated at 34.5 million tons, up approximately 1.5 percent from the MY 2010/11 estimate due largely to population growth.
Bangladesh's MY 2012/13 rice imports are forecast at 600,000 tons and MY 2011/12 imports are estimated at 550,000 tons, based on the current production forecast and carryover stocks held by the GOB, farmers, and traders. MY 2010/11 imports are set at 1.56 million tons, which is due to strong government procurement and stock building in order to meet Bangladesh's public distribution system's demand.
In MY 2010/11, the GOB implemented a large public distribution program to stabilize the domestic market. The GOB's public distribution system distributed 1.57 million tons of rice in MY 2010/11, which consisted of 66 percent subsidized open market sales and 33 percent free distribution through the Food for Works (FFW) and Vulnerable Group Feeding (VGF) programs. Given that the GOB faced challenges in procuring domestically grown rice, (the GOB was only able to procure 392,000 tons of rice locally), it relied on imports for building stocks rather than domestic procurement. The GOB's target for rice procurement in MY 2011/12 was one million tons.
There are currently neither import taxes nor quantitative restrictions on rice imports. Since May 2008, Bangladesh has imposed a ban on rice exports. To expedite the international procurement process, the GOB has taken action to streamline the approval process for rice tenders, reducing the time frame from 25-30 days to an estimated 7-10 days. This inter-ministerial decision was taken on February 13, 2011.
Bangladesh typically purchases lower quality (25% or more broken) parboiled rice, although due to tight international supplies, some non-parboiled rice was imported in MY 2010/11. There is a small niche market for high quality (basmati or equivalent) rice imported from India or Pakistan. Due to its geographical proximity, India has been the principal supplier to Bangladesh. However, India's ban on rice exports, (which was lifted in fall 2011), had pushed Bangladeshi importers to seek alternative suppliers in countries such as Myanmar, Vietnam, Thailand, Pakistan, and China. Rice imports from the United States do not appear to be commercially feasible due to relatively high prices, freight costs, and long shipping period.
Given favorable weather conditions, Bangladesh's MY 2011/12 wheat crop (planted in November/December and harvested in March/April) is estimated at 1.1 million tons from 400,000 hectares of land. While wheat area increased in response to higher prices, limited land availability and significant competition from other remunerative crops like rice, corn, potato, and winter vegetables limits the expansion of wheat planting area. The absence of suitable high yielding varieties (HYVs) and strong competition from imports will further limit the growth of wheat production in Bangladesh.
Bangladesh wheat consumption for MY 2012/13 is forecast at 4.6 million tons, a 4.5 percent increase from the MY 2011/12 estimate. Wheat distribution under the GOB PFDS has been scaled down in recent years, limiting its consumption in rural areas. However, wheat consumption by the medium to higher income urban population is growing steadily due to changes in food habits prompted by health consciousness and changes in lifestyle. Therefore, wheat millers are seeing greater opportunity to replace coarse wheat flour "Atta", (widely sold in loose bulk form), with refined wheat flour packaged and marketed under their brand names.
Wheat imports for MY 2012/13 are forecast at 3 million tons. This includes 700,000 tons by the public sector and 2.3 million tons through private commercial sales. Due to large carryover stocks, MY 2011/12 wheat imports are estimated at 2.8 million tons, 26 percent lower than the MY 2010/11 estimates. The GOB's wheat import target for MY 2011/12 is 750,000 tons to meet demand for the public food distribution system. As of January 2012, the GOB imported 406,000 tons, or 37 percent of the total wheat imports during the July-January period in MY 2010/11. During the same period, the private sector imported 687,000 tons of wheat, or less than half the quantity imported in the Wheat corresponding period of the previous year.
Overall MY 2011/12 wheat beginning stocks grew to 1.907 million tons from 1.239 million tons the previous year. GOB-owned beginning stocks grew to 312,000 tons from 180,000 tons in 2010/11, mainly due to large imports in the previous year. As of December 31, 2011, GOB's wheat stocks were 371,000 tons, 32 percent higher than the previous year. Private sector wheat stocks, however, were over a million tons at the beginning of the MY 2011/12 but diminished by 50 percent by the middle of the year as private sector imports did not keep pace with stock off take.
Wheat imports are currently duty free and face no quantitative restrictions. However, the public wheat tendering process does not encourage wide participation. Many government tenders are never finalized as bidders often quote high prices to cover various risk factors. The GOB has recently taken some steps to bring specifications more in line with international practices. These include reducing of the performance guarantee from 10 to 5 percent, increasing the maximum shipment period from 30 to 60 days, and increasing the minimum quantity offered from 25,000 to 30,000 tons.
Bangladesh is a price sensitive market and typically imports lower cost wheat. While India's geographic proximity offers a clear competitive advantage, India's wheat export ban, (lifted in fall 2011), had compelled importers to seek alternative suppliers, particularly in Eastern Europe and Central Asia. Some higher quality wheat is imported from Canada, Australia, the E.U. and the United States. Bangladeshi buyers are usually willing to pay a premium of around $10-15 per metric ton for U.S. wheat. However, they are unable to import economically viable volumes to offset the high freight costs
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