Bangladesh Rice Market – Commodity Price, Production, Consumption and Trade Analysis (2016-2023)
Report on Bangladesh Rice Market – Commodity Price, Production, Consumption and Trade Analysis (2016-2023)
Introduction to Bangladesh Rice Market
Approximately half of the world population, and virtually all of the Eastern and Southeast Asian nations including Bangladesh take rice as their staple diet. Demand for rice in Bangladesh has always surpassed its domestic supply and due this it imports large quantities of rice from India, China and Pakistan. The growing population of Bangladesh is the major driver of the increase in demand of rice. The dependency of the population on rice implies dependency of population on rice prices and hence all factors which directly or indirectly impact the price of rice have significant impact on livelihood of people.
The major factors affecting the price of rice are:
- Weather: Weather is the most important factor which impacts the price of the rice. Temperature, type of soil and its moisture content are some important parameters which determine the yield. Bangladesh being a nation endowed with abundant rainfall is in a sweet spot for rice cultivation
- Natural Disasters: Markets keep track of any natural calamity which can cause hindrance to crop production or distribution. Bangladesh suffers from floods due to heavy rainfall every year and thus exposes itself to price risk.
- Consumer Demand: This demand includes both domestic and import demand. Consumption is basically dependent on income of the population. Low income population consumes more rice and as the income increases, consumption starts to decline after a point.
- Macroeconomic Environment: These include exchange rates, fiscal target by the govt. etc.
- Minimum Support Price: Changes in MSP from govt. or regulatory bodies have profound impact on price of rice and those dependent on it.
- Seasonal cycle: Price are relatively lower during harvest and higher during sowing.
Historic Market Prices:
Rice commodity markets are OTC and based on the information from tradingeconomics, rice reached an all-time high of 24.46 USD/CWT in April 2008, however after the financial crises, the prices crashed to 10 USD/CWT by 2011. From 2012 onwards, it started to rise and stabilized near the mark of 15 USD/CWT but again fell to 10 USD/CWT during 2015. It has remained stable around this mark since then. It closed at 10.84 USD/CWT on 22nd October 2018.
Production and Consumption Statistics:
According to GAIN and Bangladesh Bureau of Statistics, rice production in Bangladesh in 2017 was 34.5 MMT and it is forecasted to be 34.18 MMT in the next year due to unfavourable weather conditions. Boro variety dominates the production with 18.7 MMT followed by Aman with 13.2 MMT and Aus with 2.6 MMT. The production of rice has stabled in recent years to around 34MMT. Consumption of rice has been estimated to be around 35 MMT and is expected to increase in the coming years due to increasing population.
Region-specific Commodity Index and Local Price Discovery Systems:
Bangladesh currently doesn’t have any rice specific commodity exchange. It only has Tea commodity market ‘Chittagong Tea Auction’, which is the main auction house of tea industry.
Major market players:
Major market players in this market are Agro Organica, Ovijat Foods, Rice Factory/ ACI Limited