WASHINGTON, D.C., U.S. — In market year 2016-17, production of Bangladesh rice is forecast to fall to 34.51 million tonnes from an estimated 11.7 million hectares on reduced planting of its summer rice and increased winter rice production, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Services (FAS) said in an Aug. 5 report. Summer rice production was estimated lower at 2.4 million tonnes due to decreased acreage against the initial expectation due to insufficient irrigation.
Field sources said many farmers switched from producing summer rice to jute, maize and vegetable cultivation due to higher returns. Bangladesh’s notification for mandatory use of bulk burlap bags for five agricultural commodities is driving demand for jute and farmers have responded by increasing jute cultivation, which is expected to be more profitable than summer rice. However, winter rice production was forecast marginally higher and was revised up to 18.8 million tonnes, according to the FAS.
The forecast for wheat production for market year 2016-17 remained unchanged at 1.33 million tonnes assuming normal weather conditions during the planting and crop season, the FAS said.
The market year 2016-17 rice import forecast was lowered to 0.15 million tonnes on expectation of strong import protection policy impact. On June 2, Bangladesh increased tariffs from 10% to 25% and removed 10% regulatory duty on rice imports in place since December 2015, the FAS said. The added 25% tariff on rice imports further affected import prospects.
In addition, Bangladesh imposed a 15% value added tax (VAT), an advance income tax (AIT) of 5%, and an additional advanced trade VAT (ATV) of 4%. The tariff was raised and other taxes were added to stop cheaper Indian rice imports that generally constitute the largest share of the import market, according to the FAS.
Market year 2015-16 rice imports were revised marginally lower to 0.22 million tonnes based on the latest customs data, the FAS said. Market year 2016-17 wheat import forecast was raised to 4.4 million tonnes on expected strong domestic demand and lower international prices. Based on the current pace of imports, the report’s market year 2015-16 wheat import estimate was revised up to 4.2 million tonnes on competitive prices, the FAS said.
In the budget fiscal year 2016-17, Bangladesh withdrew the VAT for imported wheat and rice milling equipment and parts. In the budget, Bangladesh raised custom duty of wheat starch from 10% to 15%, the FAS said. For fiscal year 2016-17, Bangladesh extended the export ban on non-fragrant rice. Bangladesh may allow aromatic or fragrant rice exports, pending permission from its Ministry of Commerce, according to the FAS.