TIB’s response to the explanation of the Ministry of Food regarding the import of wheat at higher prices

TIB’s response to the explanation of the Ministry of Food regarding the import of wheat at higher prices
TIB’s response to the explanation of the Ministry of Food regarding the import of wheat at higher prices

The statement of Transparency International Bangladesh (TIB) on import of high priced wheat has drawn the attention of the Ministry of Food and clarification on the matter is really encouraging. But the way the ministry has accused the TIB of conspiracy while explaining the purchase of wheat at reasonable prices is really disappointing. At the same time, the explanation left many questions raised by the media and the TIB statement unanswered. TIB’s argument in response to the explanation of the Ministry of Food in this regard is as follows-

Clarification of Ministry of Food on third party affiliation
In purchasing wheat, the Food Ministry did not violate the Public Sector Procurement Act and did not involve any third party in the procurement process. The named third parties are appointed by the Russian government as local agents. In JTUG activities, the government appointed committee members (from various ministries and departments) participated in the negotiation process on behalf of the Bangladesh government and the purchase was unanimously decided at the meeting. After negotiation, the proposal from the Ministry of Food goes to the Purchase Committee. The Purchase Committee gives approval after detailed discussion. Then the Ministry of Food issues work orders. There is no third party participation.

Argument of TIB
According to the food ministry’s claim, ‘National Electronic BD’ is the local agent of Russian wheat exporter Pradintorg. Those who are supposed to ensure the necessary logistic services for importing wheat, but they are not supposed to have a role in fixing the price or agreeing on this matter. But according to the statement of the Food Secretary (September 16, Prothom Alo), two representatives of the company in question were present at the meeting to agree on the price of wheat and helped in the agreement. But the circular of the Prime Minister’s office regarding the purchase of J2G has said that the president of the government committee on price determination will be the secretary or additional secretary of the relevant ministry. The member secretary will be the joint secretary or additional secretary of the same ministry. Apart from this, there will be nominees of the Ministry of Finance and Law, National Board of Revenue, Prime Minister’s Office, Economic Relations Department and related ministries or departments, and there will be no private third party.

Explanation of the Ministry of Food on the price of wheat
Wheat is being bought at a higher price, the Ministry of Food says that the information is not correct, after the start of the Ukraine-Russia war, the procurement of wheat from the international market is in uncertainty. India, one of Bangladesh’s main sources of wheat imports, has imposed a government and private ban on wheat exports, making wheat imports more uncertain. The safety stock of wheat, which is supposed to be at least two lakh metric tons, has come down to 1.25 lakh metric tons. Current stock is 1.22 lakh metric tons. Attempts have been made to source wheat from Australia, Canada, Brazil and Argentina using the GTUZ process. As the price of wheat was over $500 per case, the government was not interested in buying wheat from there.

Argument of TIB
It is true that the world food market was destabilized due to the war in Ukraine, and it is also true that after Ukraine started exporting wheat from August 1 under the tripartite agreement, the price of wheat in the world market started to fall drastically. However, no explanation has been given as to how much the price reduction trend in the international market was considered in the price determination process. The FOB price of Russian wheat is USD 330 and the total price including shipping, loading-unloading, berth operation handling, insurance and lightening is fixed at USD 430, which the Ministry of Food claims is reasonable and correct. But the landing cost of 100 dollars per ton is not explained in detail, there is basically a good luck loophole. At the same time, the comparison of the price of wheat in Australia, Canada, Brazil and Argentina, which is given in the explanation of the ministry, seems to be somewhat intentional, because the black-sea-wheat from Russia and Ukraine is mainly known as low-priced wheat around the world. The current international market rate is also witnessing it.

Explanation of the Ministry of Food on checking the price of wheat
According to the Ministry of Food, on September 17, the FOB price of Russian wheat was 334.25 US dollars. The FOB price of wheat is constantly increasing. In the previous two international tenders of GTUG, the purchase price of wheat was 476.38 and 448.33 USD respectively.

Argument of TIB
Black-Sea-White traded at $310 on September 19, according to data from the Chicago Board of Trade. Meanwhile, the wheat futures contract for delivery in 2023 (June-August period) settled at $296, data from CME Group showed. Therefore, the argument given by the ministry that the price of wheat is constantly increasing does not hold up. At the same time, the ministry did not explain how the price was fixed without completing the market verification before purchasing any product on G2G. Rather, reference is made to the previous two sources of purchase, which include evasion. While it is important to keep track of international markets and suppliers regularly in the purchase of food products, the fact that the Ministry of Food does not keep it, is the lack of information about the cancellation of a contract with Prodintorg in a South Asian country due to increased prices.

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The article is in Bengali

Tags: TIBs response explanation Ministry Food import wheat higher prices

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