Food ministry clarification on import costs of US wheat

The food ministry said the current price difference between Russian and US wheat on the international market is minimal -- at about $2 per tonne.

It said Russian wheat is trading at around $230 per tonne on a Free on Board (FOB) basis, while US wheat is around $232 per tonne.

In a clarification issued after this newspaper published a report on October 27 headlined "US wheat costing more due to binding agreement", the ministry said the story contained "some misleading information regarding the government's wheat import process."

The ministry said the imports are taking place under a government-to-government arrangement, as per a memorandum of understanding with the United States.

It said Bangladesh first signed a contract to import 2.20 lakh tonnes of wheat at $302.75 per tonne, including cost, insurance and freight and port-related charges, referred to as the CIF Liner Out price.

A second contract was later signed for an additional 2.20 lakh tonnes at $308 per tonne, also on a CIF Liner Out basis, said the ministry.

It added that the cost of Russian grain, including transportation, insurance and port-related charges, is currently $295 to $300 per tonne, while the cost of US wheat is $308 to $310 per tonne.

It said the report by this newspaper comparing the CIF Liner Out price of US wheat with the FOB price of Russian wheat "is completely incorrect and misleading."

The ministry said the price of US wheat includes international transportation, insurance, unloading and port-based expenses, whereas an FOB quote covers only the cost up to the port.

On quality, the ministry said US wheat is superior to Russian wheat. It said Russian wheat contains on average 11 percent protein, while US wheat contains 13.50 percent protein.

"Therefore, considering the superior quality, higher protein content and international transportation costs, the slightly higher price of US wheat is reasonable and consistent with market standards."

The food ministry stated that "there has been no irregularity, overpricing or special favour in importing wheat from the US under the government-to-government arrangement."

Our reply

In our report, we did not include freight and other transportation costs when using the prices of Russian wheat and comparing them with the price of US wheat bought by the food ministry. In fact, the import cost of Russian wheat would be higher than the prices we mentioned in our report.

We regret the mistake.