The government has stepped in to boost imports of essential goods, anticipating a surge in demand during Ramadan as import levels for some items fell in the first four months of the fiscal year.

Finance and Trade Adviser Salehuddin Ahmed announced that the government has approved imports of key staples, including rice, sugar and wheat, with sufficient funds allocated to ensure their availability during Ramadan.

“We expect these essential items to arrive very soon,” he said at a meeting of the Food Planning and Procurement Committee at the Secretariat today.

Salehuddin assured that there will be no shortage of rice, wheat and other daily staples such as pulses and dates during Ramadan. “Monitoring the food supply is essential,” he added, stressing the need to assess stock levels and determine import requirements. He also noted that private sector imports have been encouraged to expedite the arrival of these goods.

Alternative banking facilities, particularly from state-owned banks, should be considered to maintain a fluid supply.

Biswajit Saha, Executive Director (Corporate & Regulatory Affairs), City Group

According to the National Board of Revenue (NBR), imports of refined palm oil fell to 434,168 tonnes from 523,693 tonnes in the July-October period year-on-year. Imports of chickpeas and sugar also saw significant declines, with chickpeas falling from 11,366 tonnes to 2,682 tonnes and sugar from 101,143 tonnes to 81,688 tonnes.

Bangladesh Bank data also reflects a decline in imports, with LC openings falling by around 7% in the first quarter (July-September) compared to last year and LC settlements falling by 2.5%.

However, certain commodities saw an increase in imports. Soybean oil imports increased to 228,165 tons from 164,989 tons, and lentil imports increased from 65,996 tons to 189,560 tons, according to BNR data.

What the businesses are saying

Private sector importers have initiated the opening of letters of credit (LC) to prepare for commodity imports in view of the seasonal increase in demand.

While Ramadan usually leads to a peak in food imports about a month before it begins, goods often take over two months to reach domestic markets after initiation of LCs.

This year, however, importers are concerned about the stability of supply due to rising international commodity prices, limited credit lines at several banks and continued economic pressures.

Biswajit Saha, executive director of corporate and regulatory affairs at City Group, one of the country’s major food importers, noted the challenges.

“We have already started the import process to ensure smooth supply of essential products during Ramadan. However, due to deterioration of credit lines in 8-10 banks, we are unable to open LCs with those institutions. Alternative banking facilities, particularly from state-owned banks, should be considered to maintain an even supply.

“Furthermore, the exposure limit of a single borrower should be increased from 15% to 25%. Biswajit noted a 25% rise in edible oil prices in recent months, suggesting that government intervention through subsidies or price adjustments may be required,” he said.

Bank officials in Chattogram confirmed that LCs for food imports are lower this year compared to previous years from Khatunganj importers, one of the largest wholesale markets for essential commodities in the country.

Sabbir Ahmed Chowdhury, vice-president and head of Standard Bank’s Khatunganj branch, said, “After the change in government, the number of LCs opened for food imports has halved. Large industrial groups that previously controlled the food import market now face restricted banking access, limiting their ability to import”.

Sabbir further added that many medium and small importers, who were previously excluded from banking facilities, have been forced to take up their business in recent years.

In light of the current economic difficulties, industry members are recommending renewed bank support for these smaller importers to stabilize supply during Ramadan.

Nurul Alam, owner of Messrs Zaman and Brothers, a prominent importing firm in Khatunganj, said recent economic conditions have affected consumer behaviour.

“People’s purchasing power has decreased and they are more cautious about spending. If excess goods are imported for Ramadan, businesses could face losses,” he said, explaining that these risks have led importers to be cautious in opening LCs.

Alam, who has been importing food products for four decades, expressed his frustration over limited support from banks to genuine importers, which he attributed to ongoing liquidity problems.

“Since the pandemic and especially after the dollar crisis, banks have discouraged small and medium-sized importers from doing business. Meanwhile, some people have misused import facilities by withdrawing money from banks in the name of imports,” he added.

Rising edible oil prices raise concerns

Price hikes in the international edible oil market have also affected importers’ Ramadan plans.

Taslim Shahriar, deputy managing director of Meghna Group, noted that while already booked goods should cover Ramadan demand, there is growing concern over edible oil prices.

“In the last two months, the cost of edible oil has increased by up to $200 per tonne. Based on current prices, importers see no other option but to adjust prices in the domestic market,” Shahriar said.

He noted that soybean oil, which was selling for $980 a tonne two months ago, was now trading at $1,240 and crude palm oil had risen from $970 to $1,180-1,190 a tonne. ton.

As higher prices continue to pressure the industry, some importers believe government intervention may be needed to lower costs for consumers.