Staff Correspondent:

Rice procurement in Bangladesh is facing significant disruptions following the recent imposition of a 0.5% source tax on domestic rice procurement. According to an official document presented at the Food Planning and Monitoring Committee (FPMC) meeting held at the Bangladesh Secretariat, the introduction of this tax has raised concerns over procurement targets and hindered the government’s efforts to ensure food security.

The Boro Crop paddy procurement has exceeded expectations, with a total of 3.76 lakh metric tonnes collected as of July 15, surpassing the target of 3.50 lakh metric tonnes. However, rice procurement, especially for parboiled rice, has not met the set goals. By mid-July, only 68.3% of the target for parboiled rice was achieved, while the collection for Atap rice stood at 79.4% of the target.

Despite these challenges, there have been positive developments, with 26,942 MT of paddy procured ahead of schedule, setting a record for the season. However, the imposition of the 0.5% source tax is causing frustration among farmers, as many are now less inclined to sell their rice due to the reduced payouts they receive.

A top food ministry official mentioned that the source tax is complicating procurement, particularly for field officials tasked with collecting rice from farmers. Most of the farmers involved in the government procurement process lack income tax files and knowledge about tax policies. As a result, they often become discouraged when they see their payments reduced due to the tax.

The Food Ministry had set an ambitious rice procurement target of 14 lakh metric tonnes, but so far, only 9.50 lakh MT has been collected. Despite this, officials remain optimistic that the goal will be met. However, they noted that the 0.5% source tax has created a significant hurdle for procurement.

In response to the disruptions caused by the tax, the Food Department has proposed additional procurement of 50,000 MT of Boro parboiled rice and 15,000 MT of parboiled rice from domestic sources. This would help meet the food security target for the fiscal year 2025-26, which aims to distribute 31.23 lakh MT of rice.

However, the 0.5% source tax remains a challenge that has yet to be addressed by the government. While no formal request has been made to withdraw or revise the tax, the Food Ministry continues to monitor the situation and hopes to mitigate the negative effects on rice procurement.

The 0.5% source tax on rice procurement has disrupted Bangladesh’s efforts to meet its rice procurement goals for the 2025-26 fiscal year, causing frustration among farmers and complicating food security strategies. With farmers reluctant to sell their rice due to the reduced payments, the government faces a difficult task in ensuring adequate supply for the country’s population. Resolving the issues related to this tax will be crucial for ensuring food security and meeting procurement targets.