Bangladesh urges India to reduce export cost of rice

A labourer carries a rice bag at a wholesale shop in Siliguri in this February 28, 2008 file photo. The army-backed interim government of Bangladesh has asked India for cut-price rice under a state-to-state deal as it seeks to reduce import costs for its main food staple.

DHAKA (Reuters) - The army-backed interim government of Bangladesh has asked India for cut-price rice under a state-to-state deal as it seeks to reduce import costs for its main food staple.

On March 5 the Indian government raised the export price of rice to $650 per tonne to keep stocks at home, but Bangladesh is asking for imports at $400 a tonne.

"Formally we will request the Indian government to lower the export price as a gesture of good will to its next door neighbour," said AMM Shawkat Ali, adviser for food and disaster management.

"Really we are feeling the brunt of soaring prices of rice," Shawkat told reporters on Tuesday.

The price of coarse rice is between 30 and 34 taka a kg, up by 52 percent from a year ago.

He said that the government was trying to increase production of boro, a major rice variety, by 21 percent to 17.5 million tonnes this year, but is still facing a shortfall of up to 2.5 million tonnes.

"We have taken various measures to augment the availability of rice, the main staple of the country, by increasing imports from our neighbouring countries including India, Vietnam, Thailand and Myanmar," the adviser said.

He said Bangladesh had imported 2.9 million tonnes of rice including 2.3 million tonnes by the private sector, but was still aiming to build up stockpiles in case of unforeseen events.

"The import price by state-to-state deal is far less than the private one for which the market price is beyond a tolerable level," he added.

Government rice stocks stand at half of a million tonnes, which will be doubled. Negotiations are ongoing with India to import another 500,000 tonnes of rice through state-run corporations with a price of $399 per tonne.

Shawkat said that total rice imports by the end of the current fiscal year to next June would be at 4 million tonnes, more than sufficient to cover shortages caused by cyclone and floods.