Top 50 millers have capacity to influence rice market

Finds a bids study

Staff Correspondent | Published: 00:00, Dec 02,2019

 
 

The top 50 auto rice millers with 20 per cent of the national milling capacity had the power to influence the supply and prices of rice in the country, according to a study of the Bangladesh Institute of Development Studies.

The study, however, found that there was apparently no syndicate in the country’s rice market, said BIDS senior research fellow and one of the authors of the study, Nazneen Ahmed, at a programme in Dhaka on Sunday.

BIDS arranged the two-day programme titled ‘BIDS Research Almanac 2019’ to publish the findings of 15 researches, including one on ‘Rice Market in Bangladesh: Role of Key Intermediaries’, carried out in the year.

The 50 large millers’ total fortnightly milling capacity was found to be 78,686 tonnes, she said.

There were 20,000 registered rice millers in the country while the number of auto rice mills stood at 949.

Although there was strong belief among market participants that millers influenced the market price, the evidence was not absolutely concrete to support that, said the report.

‘Since millers have a strong network and evidently long trading relationship with aratdars (wholesalers) in the upstream and those in the downstream, they may temporarily slowdown the production process which may push for a spike in rice prices,’ it said.

Nazneen said that it was not sure whether big millers were engaged in syndication but they could store huge amounts of rice legally as per the storage act.

A miller could store paddy and rice respectively in amounts equivalent to five times and twice the mill’s fortnightly milling capacity for up to 30 days for paddy and 15 days for rice, according to the law.

If the big millers stored rice every two to five additional days instead of 15 days, it might influence the prices upward, she said, adding that large corporate entities which entered into the rice business had the capacity and establishment to storage of the item.

The study found millers who procured paddy exerted the most dominance during the harvest season when prices were low and stored the grains to continue milling for several months until the next harvest.

It also said that very big mills could afford storage of rice but small and small and medium-sized mills could not afford the facility.

The study was carried out among 88 traders in four major rice districts —Dinajpur, Bogura, Kushtia and Naogaon — involving milling and trading of rice, and wholesalers of four major rice markets at Badamtoli Babubazar, Kawran Bazar, Mohammad Krishi Market and Cantonment Kochukhet Bazar in Dhaka.

BIDS research fellow Mainul Haque and research associate Nahian Azad Shashi were the co-authors of the study.

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