Govt to cut prices of OMS rice, wheat to clear stocks

Rejaul Karim Byron and Sohel Parvez

The government is likely to reduce the prices of rice and wheat for open market sales in a bid to clear stocks -- a move that will cost the state up to Tk 350 crore.
The cuts, which would be the second in four months, come after disappointing sales through OMS operations due to low prices of the staples in the market.
Between July last year and January 28 this year, 1,028 tonnes of rice and 1.14 lakh tonnes of wheat were sold through OMS, according to data from the food ministry.
A year earlier, 56,832 tonnes of rice and 1.54 lakh tonnes of wheat were sold.
The change in government policy for a couple of social safety net schemes like the Test Relief (TR) and the Food for Work (FFW) programmes also contributed to the mounting stocks.
Now, the government will provide a combination of cash and rice and wheat for the programmes.
“The quality of rice will deteriorate unless we sell the stock at reduced prices,” said a senior official of the food ministry.
The price of rice for OMS is likely to be fixed at Tk 15 a kg from Tk 20 now. For wheat, it will be Tk 14 from existing Tk 19 a kg, said officials of the Directorate General of Food.
To support the price cuts, an additional Tk 300-350 crore may be needed in subsidies.
The amount of subsidy would be much higher if the rice rots in warehouses, the food ministry official said.
The government has allocated Tk 1,863 crore for food subsidy in fiscal 2015-16, up from Tk 1,620 crore a year earlier, according to the finance ministry.
“We are afraid the market price will slump if the government sells rice at this rate,” said Layek Ali, general secretary of the Bangladesh Auto, Major and Husking Mills Association, which has around 17,000 members.
Millers who have stocks will incur losses, while farmers will have to sell their produce at low rates. “Many millers will become bank loan defaulters.”
The price of the Swarna variety of paddy has declined from Tk 650 per maund to Tk 610 because of the speculation of price cuts by the government.
“If the government wants to reduce the prices for everyone's benefit, it should extend support to millers in the form of subsidy,” Ali added.
However, officials of the Directorate General of Food said there would be no impact on the market as a result of the price cut as only coarse rice would be sold through OMS.
“The main consumer of coarse rice is poor people and we do not have medium and fine quality rice that is produced mostly in the country. So, there will be no impact on the market,” the food ministry official said.
The prices of coarse rice were between Tk 32 and Tk 34 a kg last week, down 8.33 percent on the same day a year ago, according to Trading Corporation of Bangladesh.
So far, the food office bought 1.31 lakh tonnes of rice from aman harvest against the contract of 1.99 lakh tonnes with millers.    
“So, we have no other option but to slash the price of rice and expand the OMS to clear stocks ahead of boro procurement,” he said, adding that the DG Food plans to run the OMS operation for two months.
The DG Food bought 10.69 lakh tonnes of boro rice last season and plans to buy about 10 lakh tonnes in the coming season. 
Officials said part of the stock could have been cleared had there been no option of cash payment under the TR and FFW programmes.
The government brought changes to the TR and FFW programmes in fiscal 2014-15: half of the payment for the programmes in exchange for work would be made in cash.
Previously, the sole mode of payment for the programmes was grains.
In December last year, the finance ministry approved cash payment of Tk 1,181 crore for the TR and FFW schemes, which is equivalent to the purchase price of a total of four lakh tonnes of grains.
Subsequently, DG Food revised down its wheat import target to 5.7 lakh tonnes from 9.5 lakh tonnes.
Contacted, Foiz Ahamed, director general of Directorate General of Food, acknowledged the plan to reduce prices.
“We are considering reducing prices. We want to expand OMS operation in district, upazila and municipality levels.”

Get ready for global halal food market: minister

Star Business Report

Planning Minister AHM Mustafa Kamal yesterday called upon local entrepreneurs to produce halal foods to meet the growing global demand in the segment.
"We are yet to focus on an area and that is halal food. The market size of halal foods globally is bigger than that of garments at nearly $500 billion," said Kamal at a roundtable at Bangabandhu International Conference Centre in Dhaka.
Bangla-language business daily Bonik Barta organised the discussion on the role of the livestock sector in poverty alleviation. Its Editor Dewan Hanif Mahmud moderated the discussion.
"You can form joint ventures with foreign firms in countries that have made strides in the halal food segment," Kamal said.
The global halal market is estimated at $2.3 trillion with 67 percent of the market, or $1.4 trillion, consisting of food and beverages, according to Organisation of Islamic Cooperation.
Citing cattle sales worth Tk 19,229 crore ahead of Eid-ul-Azha every year, he said this is a huge market.
Kamal also called upon businesses to go for ventures under public-private partnership to develop the country's livestock sector.
Analysts said an inadequate supply of vaccines and improved breeds, dearth of field level staff at the Department of Livestock Services, absence of cattle disease diagnostic centres and inadequate financing are major barriers to livestock development.
"We are yet to evaluate the importance of the livestock sector. We can get more benefits than other countries by considering it as an industry," Kamal said.
Bangladesh has more than 2.5 crore cattle and is producing more than 60 lakh tonnes of milk a year.
However, the country has to import powder milk to meet its domestic requirement.
Kamal said 56 percent of the local requirement for milk and milk products is met through imports. "We can reduce import by giving priority to the sector."
The government recently approved some projects to promote development of the livestock sector, he said. The sector will not only provide nutrition but also generate jobs and boost export, he added.
Kazi Abdul Fattah, a former director general of the Department of Livestock Services, said strengthening the department with adequate manpower is needed immediately. Capacity building is also necessary, he said.
FH Ansarey, executive director of ACI Ltd, stressed the need to increase productivity in cattle rearing to reduce costs of production.
Pasturelands are not essential for cattle farming as cattle can be reared in a confined environment, he added.
"We see a frequent occurrence of diseases. The extent of diseases will decline if farmers are trained on hygiene practices," he said.
He also called for giving soft loans to establish disease diagnostic centres for cattle in the suburbs.
Moshiur Rahman, convener of Bangladesh Poultry Industries Coordination Committee, said the government's permission to import vaccines enabled the poultry sector to remain free from the avian influenza in the last couple of years.
"Suddenly, the livestock department has stopped giving clearance to import vaccines, although imports have not been banned," he said, adding that no permit was given to import vaccines in the last four months.
Fazle Rahim Khan Shahriar, managing director of Aftab Bahumukhi Farms, and M Anisur Rahman, chief operating officer of Pran Dairy Ltd, also spoke.

BB orders tighter security for ATMs

Steps underway to compensate fraud-hit cardholders

Star Business Report

The central bank yesterday asked all banks to tighten security, including installing anti-skimming devices at their ATM booths, in a bid to crack down on rising card frauds.
The move comes after fraudulent cash transactions were detected at six ATM booths of three banks on Friday.
The incidents have rattled the banks and their customers, who are increasingly relying on ATMs to take out cash instead of the human tellers at bank counters.
In a statement, Bangladesh Bank said it is working to repay the money the cardholders lost as a result of the fraud.
Fraudsters took out cash from 21 cardholders by hacking their personal identification numbers (PIN) by installing skimming devices at six ATM booths in the city, according to the BB.
The PIN is not printed or embedded on the card but is manually entered by the cardholder during ATM transactions.
To make out the PINs and card numbers, fraudsters install skimming devices or video cameras at the ATM booths.
They then make duplicate cards with the stolen information and withdraw money from the booths.
Installing anti-skimming devices is not enough; the banks will have to monitor the video footage regularly, the statement said.
The latest incident has forced many banks to switch off their national payments switch, the common platform through which electronic payments originating from different channels like the ATMs, points of sales, internet and mobile devices, take place.
Consequently, many cardholders failed to withdraw money from ATMs in the past two days.
Meanwhile, Eastern Bank Ltd issued a statement pledging full reimbursement of the money to the affected cardholders of EBL, subject to an investigation report.
The bank said it received complaints on Friday from some of its cardholders through their contact centre that their cards were being used at other banks' ATMs for cash withdrawals.
“As soon as these unauthorised transactions were reported to us, we blocked the reported 21 cards. Moreover, to protect customers, we blocked all the cards that were used in the suspected two ATM booths in Gulshan area,” said Ziaul Karim, head of communication of EBL.
The bank said fraudsters copied cardholders' data by using skimming devices.
EBL claimed that it has anti-skimming devices at all of its ATM booths.
Kazi Saifuddin Munir, managing director of IT Consultants Ltd that owns Q-Cash, the country's biggest payment processing consortium, said the incidents that took place on Friday were not the first ATM frauds in Bangladesh.
“Often, banks do not report the fraudulence. As the banks are now connected to the national payment switch, the issue has come to the knowledge of the central bank and the public as well.”
He said these frauds are happening mostly due to banks' negligence.
There is nothing wrong with the central bank's NPS platform, Munir said, adding that the banks should take measures to protect their customers' PINs.
“Though anti-skimming devices are available in the country, many banks are yet to install those, making their clients vulnerable to frauds.”
Q-Cash has 43 banks and financial institutions as its clients, meaning that cardholders of these banks can use Q-Cash ATM booths for transactions.
There are around 7,000 ATMs around the country, through which 2 to 3 lakh transactions take place per day.