May 23, 2019 / 9:15 AM / 4 months ago

UPDATE 1-Bangladesh nearly doubles rice import duty to boost local farmers

* Import duty hiked to 55%, second hike in a year

* Domestic prices fall to lowest in 3 years amid ample supply

* Plans to export surplus rice to protect farmers’ interests

* Lower imports by Bangladesh to cut India rice exports (Adds details)

DHAKA, May 23 (Reuters) - Bangladesh has raised import duty on rice to 55% from 28% to support its farmers, officials said on Thursday, amid widespread protests over a drastic fall in domestic prices.

The new tax rates, that came into effect on Wednesday, would further curb rice imports, especially from neighbouring India, which emerged as the biggest supplier to the South Asian country in 2017 after floods destroyed its crop.

The move would help protect farmers’ interests as growers are being compelled to sell their rice at lower rates than the production costs, a food ministry official said.

Local rice prices have fallen to their lowest in three years due to ample supply from last year’s crop and forecasts of record output. Farmers have vented their anger over the falling prices of rice by burning paddy sheaf.

The duty hike will make neighbouring India to export rice to Bangladesh nearly impossible, Indian traders said.

“Exports to Bangladesh is not possible after the duty hike,” said a New Delhi-based dealer with a global trading firm.

Bangladesh re-imposed a previous import duty of 28% in June after reducing it in two phases in 2017 to 2%, as local rice prices climbed to a record high.

Domestic stocks have since greatly improved on the back of massive imports and good crops.

Despite a hefty import duty, private traders imported more than 330,000 tonnes of rice in the July-April period, the government data showed.

The government is also planning to export the surplus rice in an effort to ensure a fair price for local farmers.

Bangladesh, traditionally the world’s fourth biggest rice producer, banned overseas shipments of some common rice varieties in May 2008 following a spike in domestic prices. It banned all rice exports a year later.

The country has a surplus of 2 million tonnes to 2.50 million tonnes of rice, another food ministry official said.

“The duty hike will support (domestic) prices only in the short term. Bangladesh needs to export surplus to ease pressure on prices in medium term,” said a Mumbai-based exporter. (Reporting by Ruma Paul in DHAKA, additional reporting by Rajendra Jadhav in MUMBAI; editing by Rashmi Aich)

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