October 26, 2010

Bangladesh seeks long-term grain deal with India

Bangladesh is planning to ask India to supply at least half-a-million tonnes grains each year under a long-term agreement, amid a global supply crunch that has forced the South Asian country to scour for imports.

Bangladesh will ask for the supplies on a government-to-government basis, Bangladesh Trade Minister Muhammad Faruk Khan said recently.

Earlier this year, India agreed to supply 500,000 tonnes of rice and wheat to Bangladesh skirting a ban, but the shipments are yet to take place due to procedural delays.

India banned the exports of wheat and rice in 2007 to curb inflation, although it has allowed limited shipments to neighbouring countries for diplomatic reasons.

Bangladesh needs urgent supplies as it is facing a local shortage and its contracts totalling more than 300,000 tonnes were cancelled by suppliers earlier this year due to a drought in the producing Black Sea region.

In a recent tender floated by Bangladesh, the lowest price offer for wheat was around 65% higher than the rate negotiated earlier this year with Russia's state-run United Grain Company as global prices have risen in the past three to four months.

Bangladesh's planned pact with India is aimed at securing supplies and partly hedging against any global shortfall of grains in the future.

The country expects to import one million tonnes of rice and around 750,000 tonnes of wheat in the year through June to tide over the local shortage.

The minister was in India to expedite the current deal to purchase 300,000 tonnes of parboiled rice and 200,000 tonnes of wheat.

Anand Sharma, India's trade minister, said in a statement Saturday (Oct 23) that the grains would be exported to Bangladesh soon, without specifying a time frame.