Required Report - public distribution

**Date:** 2/12/2004

**GAIN Report Number:** BG4002

BG4002

**Bangladesh**

**Grain and Feed**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Chad R. Russell

U.S. Embassy, FASNEWDELHI

**Prepared by:**

Sayed Sarwer Hussain

**Report Highlights:**

Bangladesh's foodgrain production in 2004/05 is forecast to increase to
28.1 million tons (26.6 million tons of rice and 1.5 million tons of
wheat), up 2 percent from the 2003/04 estimate. Imports of rice are
forecast to decline to 500,000 tons, while wheat imports are forecast up
at 1.8 million tons. India continued to be the single largest supplier
of rice and wheat to Bangladesh.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

New Delhi \[IN1\]

\[BG\]

Table of Contents

[SECTION I -- SITUATION AND OUTLOOK 3](#section-i-situation-and-outlook)

[RICE 3](#rice)

[Production 3](#production)

[Table 1: Area and Production of rice by seasons
3](#table-1-area-and-production-of-rice-by-seasons)

[Consumption 3](#consumption)

[Trade 3](#trade)

[Stocks 4](#stocks)

[Policy 4](#policy)

[Marketing 4](#marketing)

[WHEAT 4](#wheat)

[Production 4](#production-1)

[Consumption 5](#consumption-1)

[Trade 5](#trade-1)

[Stocks 5](#stocks-1)

[Policy 5](#policy-1)

[Marketing 6](#marketing-1)

[SECTION II -- STATISTICAL TABLES 7](#section-ii-statistical-tables)

[Table 1: Commodity, Rice Milled, PSD
7](#table-1-commodity-rice-milled-psd)

[Table 2: Commodity, Rice Milled, Import Trade Matrix
8](#table-2-commodity-rice-milled-import-trade-matrix)

[Table 3: Commodity, Rice Milled, Price Table
9](#table-3-commodity-rice-milled-price-table)

[Table 4: Commodity, Wheat, PSD 10](#table-4-commodity-wheat-psd)

[Table 5: Commodity, Wheat, Import Matrix
11](#table-5-commodity-wheat-import-matrix)

[Table 6: Commodity, Wheat, Prices Table
12](#table-6-commodity-wheat-prices-table)

#   {#section .unnumbered}

# SECTION I -- SITUATION AND OUTLOOK

## RICE

### Production

Assuming a normal summer monsoon, MY 2004/05 (July-June) rice production
is forecast at 26.6 million tons from 11.2 million hectares. Production
in MY 2003/04 is currently estimated at 26.0 million tons. Remunerative
prices led to an increase in planted acreage, and prompted farmers to
shift from low yielding, traditional varieties to high yielding
varieties (HYVs). Bangladesh harvests three rice crops in a year. The
first crop *Aus* (planted in March/April and harvested in June/July)
produced 1.8 million tons, compared to 1.9 million tons in 2002/03. The
second crop *Aman* (planted in July/August and harvested in
November/December), despite adverse weather conditions, is estimated at
11.5 million tons, compared to 11.1 million tons in 2002/03. The third
crop, *Boro* (planted in December/January and harvested in April/May),
presently in its vegetative stage, is estimated at 12.7 million tons,
assuming normal weather conditions through harvest. Area and production
estimates of rice by season are shown in Table 1.

## Table 1: Area and Production of rice by seasons

+---------+---------+---------+--------+---------+--------+---------+
| Crop    | **20    |         | **200  |         | **200  |         |
|         | 01/02** |         | 2/03** |         | 3/04** |         |
|         |         |         |        |         |        |         |
|         | **(Offi |         | **(    |         | (*     |         |
|         | cial)** |         | Estima |         | *Estim |         |
|         |         |         | tes)** |         | ate**) |         |
+---------+---------+---------+--------+---------+--------+---------+
|         | Area    | Pro     | Area   | Pro     | Area   | Pro     |
|         |         | duction |        | duction |        | duction |
|         | (tha)   |         | (tha)  |         | (tha)  |         |
|         |         | (tmt)   |        | (tmt)   |        | (tmt)   |
+---------+---------+---------+--------+---------+--------+---------+
| Aus     | 1,243   | 1,810   | 1,245  | 1,850   | 1,150  | 1,830   |
+---------+---------+---------+--------+---------+--------+---------+
| Aman    | 5,650   | 10,730  | 5,685  | 11,115  | 5,750  | 11,500  |
+---------+---------+---------+--------+---------+--------+---------+
| Boro    | 3,773   | 11,770  | 3,847  | 12,222  | 4,000  | 12,700  |
+---------+---------+---------+--------+---------+--------+---------+
| **Total | 10,666  | 24,310  | 10,777 | 25,187  | 10,900 | 26,030  |
| Rice**  |         |         |        |         |        |         |
+---------+---------+---------+--------+---------+--------+---------+

# 

### Consumption

MY 2004/05 rice consumption (including food, seed, and feed) is forecast
to increase to 27.0 million tons, due principally to population growth.
Consumption in MY 2003/04 is estimated at 26.7 million tons. Per capita
annual rice consumption is estimated at about 197 kg in 2003/04,
slightly lower than in 2002/03.

The average price of coarse rice in July 2003 was Tk. 13.80 (\$0.23) per
kg, which is about 10 percent higher than the average July 2002 price.
The rise was tampered by increased availability through private sector
imports and a good *Aman* rice harvest in December. A scaling down of
the Public Food Distribution System (PFDS) programs, such as food for
work, vulnerable group feeding, etc., contributed to higher rice prices
in recent years.

### Trade

Considering the high carryover stocks of rice with farmers, traders, and
the government, 2004/05 rice imports are forecast to decline to 500,000
tons (mostly private imports) sourced principally from India. On a
calendar year basis, imports in 2004 are forecast at 750,000 tons
compared with 1.6 million tons in 2003 and 552,000 tons in 2002. In
recent years, rice imports have become attractive due to higher domestic
prices. However, following the discontinuation of subsidized rice
exports from India, good domestic harvests, and large private sector
stocks, the import pace has slowed. There have been no government
imports of rice over the past four years.

Newspaper reports mention that some of the imported rice is smuggled to
Myanmar, although no data on the magnitude of such trade is available.
The cheap exports from India have now mostly displaced illegal border
trade.

### Stocks

Public sector carryover stocks of rice in MY 2003/04 are estimated up at
690,000 tons. Stocks with farmers and traders are estimated at around 6
million tons, which are not included in the PS&D table, as it only
reflects government-held stocks. The government's rice procurement
target for MY 2003/04 is 550,000 tons, compared to last year's actual
procurement of 816,000 tons. Public distribution of rice is targeted at
584,000 tons for MY 2003/04, as compared to 761,000 tons in MY 2002/03.

### Policy

In the face of sufficient foreign exchange reserves and an upward trend
in domestic prices of rice, the government has further liberalized rice
imports. The mandatory Letter of Credit (LC) margins for imports has
been abolished, which was 25 percent until December 2003. The trade
opines that this would make imported rice 7 to 10 percent cheaper. The
present tariff structure of rice import consists of a customs duty of
7.5 percent, advance income tax of 3 percent, and a development
surcharge of 3.5 percent. The new tariff policy would discourage illegal
border trade with India. There is no quantitative restriction on rice
imports.

### Marketing

Bangladesh is normally a price buyer, generally purchasing lower quality
(25% or more broken) parboiled rice. The growing purchasing power of the
middle class population, however, is generating additional demand for
medium quality rice. There remains a small niche market for high quality
rice (basmati or its equivalent), which is imported from India/Pakistan,
as well as for the local aromatic varieties.

## WHEAT

### Production

Assuming normal weather conditions 2004/05 wheat production is forecast
at 1.5 million tons from 700,000 hectares, unchanged from the 2003/04
level.

Due to competition from more the remunerative irrigated HYV *Boro* rice
crop and the availability of cheaper imported wheat, wheat cultivation
is gradually becoming a losing proposition. Since the record harvest of
1.9 million tons in 1998/99, both wheat acreage and production have been
declining. However, under non-irrigated condition, wheat is still a
profitable alternative to rice.

### Consumption

Assuming the present wheat/rice price relationship holds, and taking
into account the additional demand generated by population growth, MY
2004/05 wheat consumption is forecast at 3.30 million tons. The MY
2003/04 consumption is 6 percent lower than the 2002/03 consumption,
largely due to lower PFDS supplies and the larger availability of rice.
Wheat consumption reached a record 4 million tons in 1998/99, following
large international donations in the aftermath of a devastating flood.

As the second staple food in Bangladesh, wheat represents around 10
percent of the total foodgrain consumption in a normal year. In rural
areas, wheat consumption largely depends on its availability under the
PFDS programs, and on the relative price of rice versus wheat. In urban
areas, however, consumers are becoming more dependent on wheat
flour-based foods due to changes in food habits. The fast food sector
and restaurants in Bangladesh have been registering a healthy growth,
generating an additional demand of around 100,000 tons of wheat every
year.

The average retail prices of white fine flour and atta (coarse flour) in
MY 2003/04 are Tk. 17.00 (\$ 0.29) per kg and Tk 14 (\$0.24 approx.),
respectively. Both are slightly up over last year.

### Trade

Imports of wheat in MY 2004/05 are forecast at 1.8 million tons,
consisting of 300,000 tons food aid, 100,000 tons public sector imports,
and 1.4 million tons private commercial imports. Imports in 2003/04 are
estimated at 1.8 million tons, up by about 8 percent from the 2002/03
imports. Up to December 2003 in the current MY, about 1.0 million tons
of wheat has reportedly already arrived, including 215,000 tons of food
aid and 28,500 tons of government imports. There have been no government
wheat imports in the last three years. Private sector imports recorded
continuous growth due to lower domestic productions, availability of low
cost wheat from the international market (especially the subsidized
wheat from India), and the higher domestic price of rice.

### Stocks

Ending stocks are projected at 186,000 tons. The current year's
government procurement target is 200,000 tons, as compared to last
year's actual procurement of 136,000. Private sector wheat stocks (not
included in the PS&D table) are estimated at around 100,000 tons.

### Policy

In December 2003, the government removed the mandatory LC margin for
import of food items, including wheat, and allowed the margins be
determined by the importer-bank relationship. This is the culmination of
the measures initiated in February 2003, when the government reduced the
LC margin to 25 percent and withdrew the regulatory duty on wheat
imports. The present tariff structure of wheat imports consists of a 7.5
percent customs duty, 3 percent advance income tax, and a 2.5 percent
infrastructure development surcharge. There is no quantitative
restriction on wheat imports.

### 

### Marketing 

US wheat Associates' efforts to address the issues of acceptable
contract terms and pricing should continue. Most Bangladeshi importers,
being very small buyers (5,000 to 10,000 tons at a time), find the cost
of transportation from the United States prohibitive, which prompts them
to source wheat from closer origins. They are, however, very interested
in the high and consistent quality of U.S. wheat. Almost every year, a
couple of Bangladeshi flour millers attend the flour milling short
course offered by the US Wheat Associates.

# SECTION II -- STATISTICAL TABLES

## Table 1: Commodity, Rice Milled, PSD 

  ------------------- ---------------- ------------ -------- ------------ ----- ------------ --------------
  **PSD Table**                                                                              

  **Country:**        **Bangladesh**                                                         

  **Commodity:**      **Rice, Milled**                                                       

                                       **2002**              **2003**           **2004**     UOM

                      Old              New          Old      New          Old   New          

  **Market Year                        **Jul-02**            **Jul-03**         **Jul-04**   (MONTH/YEAR)
  Begin**                                                                                    

  Area Harvested      11,059           10,777       11,100   10,900       0     11,150       (1000
                                                                                             Hectares)

  Beginning Stocks    400              420          510      560          0     690          (1000 MT)

  Milled Production   25,360           25,187       26,000   26,030       0     26,550       (1000 MT)

  Rough Production    38,044           37,784       39,004   39,049       0     39,829       (1000 MT)

  Milling Rate(.9999) 6,666            6,666        6,666    6,666        0     6,666        (1000 MT)

  TOTAL Imports       850              1,553        600      800          0     500          (1000 MT)

  Jan-Dec Imports     1,050            552          500      1,634        0     750          (1000 MT)

  Jan-Dec Import U.S. 0                0            0        0            0     0            (1000 MT)

  **TOTAL SUPPLY**    26,610           27,160       27,110   27,390       0     27,740       (1000 MT)

  TOTAL Exports       0                0            0        0            0     0            (1000 MT)

  Jan-Dec Exports     0                0            0        0            0     0            (1000 MT)

  TOTAL Dom.          26,100           26,600       26,400   26,700       0     27,000       (1000 MT)
  Consumption                                                                                

  Ending Stocks       510              560          710      690          0     740          (1000 MT)

  **TOTAL             26,610           27,160       27,110   27,390       0     27,740       (1000 MT)
  DISTRIBUTION**                                                                             
  ------------------- ---------------- ------------ -------- ------------ ----- ------------ --------------

## Table 2: Commodity, Rice Milled, Import Trade Matrix

  -------------------- ---------------- -------------------- --------------
  **Import Trade                                             
  Matrix**                                                   

  **Country:**         **Bangladesh**   Units:               Metric Tons

  **Commodity:**       **Rice, Milled**                      

  **Time period:**                                           

  **Imports for**      **2002**                              **2003**

  U.S.                                  U.S.                 

  Others                                Others               

  India                485000           India                1485000

  Pakistan             12000            Pakistan             28000

  Thailand             25000            Thailand             46000

  Vietnam              14000            Vietnam              36000

  Myanmer              0                Myanmer              0

                                                             

                                                             

                                                             

                                                             

                                                             

  **Total for Others** 536000                                1595000

  **Others not         16000                                 39000
  listed**                                                   

  **Grand Total**      552000                                1634000
  -------------------- ---------------- -------------------- --------------

## Table 3: Commodity, Rice Milled, Price Table

  ------------------- ---------------- --------------------- ----------------
  **Prices Table**                                           

  **Country:**        **Bangladesh**                         

  **Commodity:**      **Rice, Milled**                       

  Year:               2003                                   

                                                             

  Prices in           Taka             per (uom)             metric ton
  (currency)                                                 

                                                              

  Year                2002             2003                  \% Change

  Jan                 12280            13470                 9.7%

  Feb                 12660            14050                 11.0%

  Mar                 12700            13900                 9.4%

  Apr                 12880            13310                 3.3%

  May                 12050            12550                 4.1%

  Jun                 12120            12760                 5.3%

  Jul                 12570            13800                 9.8%

  Aug                 13220            14370                 8.7%

  Sep                 13110            14400                 9.8%

  Oct                 13280            13800                 3.9%

  Nov                 13250            13750                 3.8%

  Dec                 13220            13470                 1.9%

                                                              

  Exchange Rate       59               (Local currency/US     
                                       \$)                   

  Date of Quote       08-Feb-04        (MM/DD/YY)             
  ------------------- ---------------- --------------------- ----------------

## Table 4: Commodity, Wheat, PSD 

  ------------------- ---------------- ---------- ------- ---------- ------- ---------- --------------
  **PSD Table**                                                                         

  **Country:**        **Bangladesh**                                                    

  **Commodity:**      **Wheat**                                                         

                                       **2002**           **2003**           **2004**   UOM

                      Old              New        Old     New        Old     New        

  **Market Year                        **0**              **0**              **0**      (MONTH/YEAR)
  Begin**                                                                               

  Area Harvested      778              707        800     700        0       700        (1000
                                                                                        Hectares)

  Beginning Stocks    600              444        350     156        0       186        (1000 MT)

  Production          1550             1510       1650    1500       0       1500       (1000 MT)

  TOTAL Mkt. Yr.      1100             1652       1300    1780       0       1800       (1000 MT)
  Imports                                                                               

  Jul-Jun Imports     1100             1652       1300    1780       0       1800       (1000 MT)

  Jul-Jun Import U.S. **72**           **55**     **0**   **106**    **0**   **150**    (1000 MT)

  **TOTAL SUPPLY**    3250             **3606**   3300    **3436**   0       **3486**   (1000 MT)

  TOTAL Mkt. Yr.      0                0          0       0          0       0          (1000 MT)
  Exports                                                                               

  Jul-Jun Exports     0                0          0       0          0       0          (1000 MT)

  Feed Dom.           0                0          0       0          0       0          (1000 MT)
  Consumption                                                                           

  TOTAL Dom.          2900             3450       3000    3250       0       3300       (1000 MT)
  Consumption                                                                           

  Ending Stocks       350              156        300     186        0       186        (1000 MT)

  **TOTAL             3250             **3606**   3300    **3436**   0       **3486**   (1000 MT)
  DISTRIBUTION**                                                                        
  ------------------- ---------------- ---------- ------- ---------- ------- ---------- --------------

## Table 5: Commodity, Wheat, Import Matrix 

+----------------------+---------------+-----------------+-------------+
| **Import Trade       |               |                 |             |
| Matrix**             |               |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Country:**         | *             | Units:          | Metric tons |
|                      | *Bangladesh** |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Commodity:**       | ###### Wheat  |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Time period:**     | **Jul/Jun**   |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Imports for**      | **2002**      |                 | **2003**    |
+----------------------+---------------+-----------------+-------------+
|                      |               |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Concessional**     |               | *               |             |
|                      |               | *Concessional** |             |
+----------------------+---------------+-----------------+-------------+
| USA                  | 55,000        | USA             | 106,000     |
+----------------------+---------------+-----------------+-------------+
| WFP                  | 114,000       | WFP             | 65,000      |
+----------------------+---------------+-----------------+-------------+
| Australia            | 49,500        | Australia       | 45,000      |
+----------------------+---------------+-----------------+-------------+
| Canada               | 31,984        | Canada          | 39,100      |
+----------------------+---------------+-----------------+-------------+
| EU                   | 0             | EU              | 13,000      |
+----------------------+---------------+-----------------+-------------+
|                      |               |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Commercial**       |               | **Commercial**  |             |
+----------------------+---------------+-----------------+-------------+
| India                | 1,091,000     | India           | 1,176,000   |
+----------------------+---------------+-----------------+-------------+
| Canada               | 56,000        | Canada          | 76,000      |
+----------------------+---------------+-----------------+-------------+
| Australia            | 178,000       | Australia       | 180,000     |
+----------------------+---------------+-----------------+-------------+
| Argentina            | 34,000        | Argentina       | 25,000      |
+----------------------+---------------+-----------------+-------------+
| Pakistan             | 8,500         | Pakistan        | 13,000      |
+----------------------+---------------+-----------------+-------------+
|                      |               |                 |             |
+----------------------+---------------+-----------------+-------------+
|                      |               |                 |             |
+----------------------+---------------+-----------------+-------------+
|                      |               |                 |             |
+----------------------+---------------+-----------------+-------------+
|                      |               |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Total for Others** | 1,617,984     |                 | 1,738,100   |
+----------------------+---------------+-----------------+-------------+
| **Others not         | 34,000        |                 | 42,000      |
| listed**             |               |                 |             |
+----------------------+---------------+-----------------+-------------+
| **Grand Total**      | 1,651,984     |                 | 1,780,100   |
+----------------------+---------------+-----------------+-------------+

## Table 6: Commodity, Wheat, Prices Table

  ----------------------- ---------------- ------------- -------------------
  **Prices Table**                                       

  **Country:**            **Bangladesh**                 

  **Commodity:**          **Wheat**                      

  Year:                   2003                           

                                                         

  Prices in (currency)    Taka             per (uom)     metric ton

                                                         

  Year                    2002             2003          \% Change

  Jan                     8540             8680          1.6%

  Feb                     8500             9100          7.1%

  Mar                     8380             9180          9.5%

  Apr                     8350             9030          8.1%

  May                     8320             9350          12.4%

  Jun                     8270             9560          15.6%

  Jul                     8360             9750          16.6%

  Aug                     8440             9770          15.8%

  Sep                     8430             9800          16.3%

  Oct                     8440             9830          16.5%

  Nov                     8520             9890          16.1%

  Dec                     8510             9870          16.0%

                                                         

  Exchange Rate           59               (Local        
                                           currency/US   
                                           \$)           

  Date of Quote           08-Feb-04        (MM/DD/YY)    
  ----------------------- ---------------- ------------- -------------------