Transparency International Bangladesh (TIB) says the explanation given by the Ministry of Food regarding the import of wheat at higher prices is encouraging. However, while explaining the ministry’s purchase of wheat at reasonable prices, the agency also termed the allegations of ‘conspiracy’ against TIB as disappointing.
TIB responded to the Food Ministry’s explanation on Tuesday (September 20). This information has been revealed in a statement signed by Sheikh Manzoor-e-Alam, Director of Outreach and Communication of TIB.
Clarification of Ministry of Food on third parties: Local agents appointed by the Government of Russia. 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.
TIB’s Argument: 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, two representatives of the company in question were present in 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 from 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. The procurement of wheat from the international market is uncertain after the start of the Ukraine-Russia war. India, one of Bangladesh’s main sources of wheat imports, has imposed a ban on public and private wheat exports, making wheat imports more uncertain. The safety stock of wheat, which was supposed to be at least 2 lakh metric tonnes, eventually came down to 1.25 lakh metric tonnes. Current stock is 1.22 lakh metric tonnes. Attempts have been made to source wheat from Australia, Canada, Brazil and Argentina using the GTUZ process. The government was not interested in buying wheat from there as the price of wheat was more than 500 dollars per case.
TIB’s Argument: Just as it is true that the world food market was destabilized by the Ukraine war, it is also true that after Ukraine began exporting wheat from August 1 under the Tripartite Agreement, wheat prices on the world market began to fall sharply. However, no explanation has been given as to how much the price reduction trend in the international market was taken into account in the price determination process. The FOB price of Russian wheat is USD 330, along with shipping, loading-unloading, berth operation handling, insurance and lightening, the total price is USD 430, which the Ministry of Food claims is reasonable and correct. But the landing cost of $100 per ton is not explained in detail, there is basically a lucky 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 all over the world, black-sea-wheat from Russia and Ukraine is mainly known as low-priced wheat. The current international market rate is also witnessing it.
Explanation of the Ministry of Food on checking the price of wheat: The Ministry of Food says that on September 17, the FOB price of Russian wheat was 334.25 US dollars. The FOB price of wheat is constantly increasing. The purchase price of wheat in the previous two international tenders of JTUZ was USD 476.38 and USD 448.33 respectively.
TIB’s argument: Chicago Board of Trade data shows Black-C-White traded at $310 on September 19. Meanwhile, CME Group data showed that the wheat futures contract, which will be delivered in 2023 (June-August period), settled at $296. 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 JTUG. Rather, reference is drawn to the previous two sources, which include skipping. While it is important to regularly inquire about the international market and suppliers 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 South Asian country’s contract with Pradintorg due to increased prices.
Source: Dhaka Post