Bangladesh will export 50,000 tonnes of rice to Sri Lanka for the first time under a government-to-government deal at $450 a tonne including cost, freight and insurance, Food Minister Mohammad Karmul Islam said on Monday.
“We have sufficient stock, and our production is also good. So there will be no crisis due to rice export,” a Bangladesh food ministry official said.
In Sri Lanka, rice prices were up 36 percent by the end of September from a year ago as production dropped due to an 11-month drought, considered by experts to be its worst in recent history.
Sri Lankan Agriculture Minister Mahinda Yapa Abeyawardene, who said in August the country would have to import rice , told Reuters on Monday that it had already imported 40,000 tonnes since August.
A team from Sri Lanka will come soon to Dhaka to settle the deal, said the Bangladesh official, who asked not to be named.
Bangladesh exports a small quantity of aromatic rice, but this government deal would be its first export of non-fragrant coarse rice.
Bangladesh aims to produce more than 34 million tonnes of rice in the current year, up from nearly 33.5 million in the previous year. Its reserves have risen to more than 1.4 million tonnes from nearly 1 million tonnes a year earlier.
The world’s fourth-biggest producer of rice, Bangladesh consumes almost all its production to feed its population of 160 million. It often needs to import rice to cope with shortages caused by natural calamities such as floods or droughts.
Although it did not import rice in the last two years, Bangladesh was ranked as the fourth-largest importer of the grain by the U.S. Department of Agriculture in 2011, with a volume of 1.48 million tonnes.
Late in 2012, the government was considering lifting a four-year old ban on rice exports to support farmers as record crops and bulging domestic reserves pushed prices below production costs.
But prices soared in January 2013, and the government backed away from scrapping the export ban.
Sri Lanka’s Finance Ministry has already reduced taxes on rice imports in April and on pulses in July to help mitigate the effects of this year’s drought on the market.