Russia offers wheat, fertilizer imports appear to decline

Clouds of uncertainty hanging over Bangladesh’s wheat imports will finally lift as Russia offers 3 lakh tonnes of wheat and senior US official says sanctions ‘do not prevent Russia from exporting its grain or its fertilizers”.

Russia, the world’s biggest wheat exporter, on Thursday offered to export 3 lakh tonnes of wheat within 60 days, officials said after a virtual meeting to sign the supply agreement.

Food Minister Sadhan Chandra Majumder also yesterday informed parliament about the Russian offer to export wheat to Bangladesh.

Officials who attended the virtual meeting said Bangladesh had agreed to the proposal but wanted a two-phase wheat supply – 2 lakh tonnes in 60 days and an additional 1 lakh tonnes in 90 days to avoid congestion. at the port.

Moscow has offered Dhaka a rate of $440 to $450 per ton.

The two sides will come to a final decision on wheat prices and delivery time at the next meeting to be held on July 4.

Meanwhile, the Assistant Secretary of the US State Department’s Bureau of Economic and Business Affairs, Ramin Toloui, has made it clear that the import of Russian food and fertilizers is not subject to US sanctions regarding the war of Moscow in Ukraine.

He suggested that countries seek help from the United States if they have problems importing Russian food and fertilizer, according to a Reuters report.

The news came as a relief for Bangladesh which is struggling to find countries to source wheat and fertilizer from.

Agriculture Secretary Md Sayedul Islam told The Business Standard they would consider how to resume fertilizer imports from Russia following the US official’s statement.

The resumption of fertilizer imports from Russia will greatly ease the pressure of government subsidies, he believes.

“The United States does not want there to be barriers to the ability of countries, companies to buy Russian food, Russian fertilizers and for these products to enter international markets,” the US official said. Toulouse.

He encouraged countries to contact the US Treasury Department or local US embassies if they encountered any problems.

Foreign relations analyst Humayun Kabir told TBS: “We must inform the West first before importing wheat and fertilizer from Russia so that no confusion arises.”

In addition, a diplomatic initiative is needed to negotiate with Russia and ensure that Western countries do not oppose imports, he added.

Thus, the Ministry of Foreign Affairs should also be engaged in this regard, he also said.

“Our main weakness is the lack of cooperation between government agencies in dealing with foreign issues,” said Humayun Kabir, also a former ambassador to the United States.

In FY22, there is a demand for 57.50 lakh tons of chemical fertilizers – 26 lakh tons of urea, 7.5 lakh tons of TSP, 7.5 lakh tons of MoP and 16.5 lakh tons of DAP.

Russia is the main import source of non-urea fertilizers for Bangladesh. Additionally, Bangladesh imports 7.5 lakh tons of MOP from Belarus and Canada every year.

Food Secretary Md Ismail Hossain led the Bangladeshi side in the virtual bilateral meeting held to finalize the wheat supply deal with Russia.

After the meeting, he told TBS that they had a positive discussion with Russian Ministry of Food and Agriculture officials to source wheat from the country under a government agreement to government.

“They expressed interest in exporting 2-3 lakh tonnes of wheat to us and we agreed,” he said.

An agreement will be signed with Moscow on wheat imports after the wheat prices and method of payment are finalized in upcoming meetings, he noted.

A Food Ministry official, speaking on condition of anonymity, told TBS that Russia had recently notified Bangladesh of its interest in exporting wheat to the latter. Previously, Dhaka, through its embassy in Moscow, had also asked Moscow to supply it with the food grains.

The food secretary said that although there are plans to import 2 lakh tonnes of wheat from Russia, the amount could increase to 3 lakh tonnes during final negotiations.

Bangladesh is now trying to source wheat from different countries after its main supplier, India, banned grain exports last month to rein in its local prices.

The national wheat production of Bangladesh stands at 10 lakh tons per year. In FY22, the government set a target of importing 9 lakh tons and has so far signed agreements with various countries for supplies of 6.5 lakh tons. Total imports now stand at 4.7 lakh tonnes, according to the Ministry of Food.

On the other hand, private imports dropped drastically to 31 tons in FY22 from 48 lakh tons in FY21 and 60 lakh tons in the pre-pandemic year of 20.

Efforts for wheat from other sources

Additionally, efforts are underway to import 5-6 lakh tonnes of wheat from India on a government-to-government basis, Ismiel Hossain also said, adding, “We have sent a list of 13 Indian dealers to the Indian government through through the High Commission. If they agree, the country’s wheat imports will begin.

“We learned from the Indian media that the Indian government has taken a positive decision in this regard. We will be happy to get at least 2-3 lakh tons of wheat from the country,” he noted.

Besides Russia and India, the government is working to purchase 1 lakh tonnes of wheat each from Canada and Australia under a G2G deal, the food secretary said, adding that they will meet with these countries practically next week.

In addition, negotiations are underway with the Argentine government to import wheat. There will be a virtual meeting with him very soon, he said.

The food directorate also took the initiative to increase stocks by importing wheat through tenders. As part of this, a tender for the import of 1 lakh tonnes of wheat will be launched on July 5, the food secretary said.

Private import from Russia depends on success of G2G initiative

Millers say that if the government’s initiative to import wheat from Russia is successful, the private sector will also resume imports.

But, they are keeping an eye on the payment system that will be adopted because it will be a challenge to pay for Russian wheat given the Western sanctions against Moscow, they point out.

Taslim Shahriar, Senior Deputy Managing Director at Meghna Group of Industries, told TBS that it would be great if the government could import Russian wheat by removing complexities from the payment system.

But whether the private sector will be allowed to use the payment system finalized by the government will be understood later, he said.

When the Russian-Ukrainian war broke out on February 24, the European Union, the United States and their allies imposed sanctions on Russia and cut off its number of banks from the main international payment system, Swift.

The United States has also warned more than once that the West will impose sanctions on countries that import goods from Russia in defiance of the sanctions, which have stopped imports of goods from Russia to many countries in Asia and other countries. Africa, including Bangladesh.

In response, Russia’s blockade of food exports at the Ukrainian seaport of Odessa led to a halt in the country’s food exports. In this situation, the United Nations took the initiative to start exporting the stored food products from Ukraine, expressing the fear of famine in different parts of the world, including Africa and the Middle East.

The United States and the EU have accused Russia of creating a global food crisis.

On the other hand, Moscow says Western sanctions against its banking and shipping sectors prevent Russia from exporting food and fertilizers and scare foreign shipping companies from transporting them. Russian officials are pushing for sanctions to be lifted to get grain to world markets.

In all these contexts, the two superpowers have softened their position on food exports. At a recent Foreign Ministerial meeting with Turkey, Russia agreed to allow ships carrying grain to leave the port of Odessa in Ukraine.

In a statement, Assistant Secretary of the US State Department’s Bureau of Economic and Trade Affairs, Ramin Toloui, said: “Nothing prevents Russia from exporting its grain or fertilizers except its own policies and actions.” , reported Reuters.

“The United States does not want there to be barriers to the ability of countries, companies to buy Russian food, Russian fertilizers and for these products to access international markets,” Toloui said.

US softened stance could open window on Russian fertilizer imports

“The US statement could reopen the way for fertilizer imports from Russia, which will benefit us a lot,” Agriculture Secretary Md Sayedul Islam said.

However, the payment system will be decided by the Bangladesh Bank and the Ministry of Finance, he also said, adding, “We will take the initiative to import fertilizers after considering the whole issue.”

The agriculture secretary said that before the start of the war in Ukraine in February, Bangladesh had approved a proposal to import 1.8 lakh tonnes of fertilizer from Russia, but it was not possible to do so due to payment complications, he noted.

There have been fertilizer crises around the world since it stopped exporting from Russia and Belarus, leading to several hikes in its prices. As a result, global food production is set to decline further in coming years, global agencies fear.

They think the food crisis could take a more terrible form.

Bangladesh is also suffering from its negative effects.

Agriculture Minister Abdur Razzak said the government used to import fertilizer at $300 a ton from Russia before the war started, but now has to import it from Canada at $1 $200 per ton.

Due to the impossibility of importing fertilizers from Russia, it becomes difficult to ensure the supply of fertilizers to farmers in the next Boro season, he added.

The fertilizer subsidy amounted to Taka 28,000 crore in the current financial year due to imports at four times higher prices.

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