Business Today

TIB’s statement on wheat import is wrong: Ministry of Food

Recently, the Ministry of Food has given its statement regarding a press release titled ‘Import of wheat at higher prices’ sent to the media by Transparency International, Bangladesh (TIB). In a press release sent by the ministry on Monday, it has been said that TIB’s statement has given incorrect and inconsistent information. The Ministry’s circular has responded to the questions raised in various parts of TIB’s statement by commenting that such a press release creates confusion in the public mind.

According to the explanation of the Ministry of Food, the Ministry of Food has not violated the Public Sector Procurement Act in purchasing wheat and rice and has not involved any third party in the procurement process. A third party named in some media reports has been appointed as a local agent by the Russian government. No third party was involved in the negotiation, pricing and policy-making process of Bangladesh’s wheat procurement. In JTUG activities, the government appointed committee members (various ministries and departments) participated in the negotiation process on behalf of the Bangladesh government and unanimously took the purchase decision in a 4-hour long meeting. After conciliation, the proposal from the Ministry of Food goes to the Purchase Committee. The Purchase Committee gives its approval after detailed discussion. Then the Ministry of Food issues work orders. There is no third party participation.

According to the ministry, the information about wheat being bought at higher prices is not correct as per TIB’s complaint. The price of wheat fluctuates constantly in the international market.

After the start of the Ukraine-Russia war, international market wheat procurement fell into uncertainty, one of the sources of wheat imports of Bangladesh, India imposed a ban on public and private wheat exports, wheat imports became more uncertain. However, wheat collection becomes very important for running social security programs of the government, conducting other regular activities and for food security. The safety stock of wheat, which is supposed to be at least 2 lakh metric tons, has come down to 1 lakh 25 thousand tons at one stage. Current stock is 1 lakh 22 thousand tons. 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 above $500 per case.

Apart from this, no decision has been taken to buy wheat very quickly. The first wheat import agreement with Russia started on June 23 this year. At that time, Russia did not agree to supply wheat, then diplomatic contacts began at the government level. After three months of successful diplomatic contacts, the Ambassador of Bangladesh in Russia paid a courtesy call on the Food Minister. During the meeting, the Secretary of the Ministry of Food, Additional Secretary, Director General and Additional Director General of Food Directorate were present. On August 24, the second agreement meeting on wheat import was held with Russia. At that time, the FOB price of Russian wheat was USD 330. The total price including freight, loading and unloading, berth operator handling, insurance and lightening is fixed at USD 430, which is reasonable and correct.

The procurement process is approved by following all procedures of government procurement process. It should be noted that the Ministry of Food does not have the capacity to bring and store 5 lakh tons of wheat in the country.

On the other hand, due to the Ukraine-Russia war, there are not enough ships to bring wheat from Russia at the moment. Ship owners do not want to ship in this region. The supply of wheat from Russia will continue for 4 months. Russia will supply wheat at the contract price even if the FOB price of wheat increases in the third and fourth months. The Food and Agriculture Organization of the United Nations has said in a forecast that there may be a food shortage in the world next year. That is why it has been decided to purchase 5 lakh metric tons of wheat as an advance precaution to ensure the food security of the people.

On September 17, the FOB price of Russian wheat was $334.25. 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.

According to the explanation of the Ministry of Food, Pradintorg is the organization designated by the Russian government for the export of Russian wheat. The Government of Bangladesh has not nominated Pradintorg. Since 2016-17 financial year, the company has been supplying wheat to Bangladesh on G2G basis. Russia has been supplying wheat to Bangladesh for a long time like other countries under the JTUG program. In the last fiscal year 2021-22, Pradintorg has supplied 3 lakh tonnes of wheat to Bangladesh on time and as per rules. In 2020-21, during the Corona period, 2 lakh tons were contracted. In the face of adversity, they also supply 1 lakh metric tonnes of wheat. In the previous financial year 2019-20, Pradintorg had supplied 2 lakh metric tonnes of wheat to Bangladesh. Pradintorg has supplied a total of 4 lakh metric tonnes of wheat correctly in FY 2017-18 and FY 2016-17.

The Ministry of Food does not have detailed information on whether any country in the world has canceled its contract with Pradintorg, or why. The Food Ministry feels that the TIB has sent statements to the media to intentionally mislead the public by concealing correct information. They are conspiring to bring the government into trouble.