BMI View: We forecast Bangladesh's rice production to grow for the fourth consecutive season in 2013/14 to 34.3mn tonnes, up 0.9% year-on-year. Once again, Bangladesh will be on the verge of reaching rice self-sufficiency as the country will record a small production deficit of 550,000 tonnes. Imports are estimated to remain limited due to production growth and sufficient stocks.
We forecast Bangladesh's rice production to grow for the fourth consecutive year and maintain a positive yet mild growth rate in the 2013/14 season which started in May 2013. We see output coming at 34.3mn tonnes, up 0.9% year-on-year (y-o-y), assuming normal weather conditions. The Government renewed incentives to boost the Aus crop, amidst concerns over depleting water tables from extensive cultivation of the largely irrigated Boro crop. At NDT430mn (US$ 5.4mn), the support package allocated for the purpose is to provide an estimated 325,500 smallholders with free fertilizers and seeds of high yielding and Nerica rice varieties.
Harvesting of the smallest and mostly rainfed Aus paddy crop is about to start and will continue into August. In mid-May tropical cyclone Mahasen brought heavy rains to south-western coastal areas, flooding some cropped fields, particularly in various districts of Barisal Division. The USDA estimates the Aus crop will reach 2.5mn tonnes, or around 7% of the total crop. The Aman crop - Bangladesh's second largest harvest - also looks in good condition. Output could reach 13.2mn tonnes, up 3.1% y-o-y according to the USDA, or almost 40% of the total crop.
|Bangladesh - Rice Production (LHS) & Imports, '000 tonnes|
Once again, Bangladesh will be on the verge of reaching rice self-sufficiency in 2013/14. Production will come short of consumption by 550,000 tonnes, compared with a 10-year average of 1.1mn tonnes. The introduction of hybrid rice and favorable weather in the last few years have helped the country approach self-sufficiency in rice. Growing domestic production, sufficient stocks, and the continued relative low price in the domestic market have effectively decreased demand for rice imports in recent year. Imports came in at as little as 40,000 tonnes in 2012/13, while they averaged 856,000 tonnes from 2002/03 to 2011/12. Looking at the 2013/14, imports are estimated to remain limited around 200,000 - 375,000 tonnes by the UNFAO and USDA respectively.
|Low Domestic Prices Deterring Imports|
|Rice - CBOT Rough Rice, India Export Prices & Bangladesh Wholesale Prices (US$/tonne)|
The government allowed in 2011/12 exports of aromatic rice to help farmers earn better returns after nearly four years of export ban on rice exports. However, export of non-aromatic rice is still banned due to price fluctuations and low storage capacities. The country is now aiming to increase its rice storage capacity to around 3mn tonnes by 2020, around 76% from the present capacity of 1.7mn tonnes, in order to increase food security and aromatic rice export capacity in years of bumper harvest. The increase in storage capacity will maintain buffer stocks and refrain from banning exports if domestic rice prices increase.
|Notes: f BMI forecasts. Sources: 1 USDA.|
|Rice Production, '000 tonnes 1||33,700.0||34,000.0||34,300.0||35,500.5||36,388.0||37,261.3|
|Rice Consumption, '000 tonnes 1||34,300.0||34,505.8||34,850.9||35,669.5||36,487.8||37,305.1|