DHAKA (Reuters) - Bangladesh may impose a 28 percent import tax on rice to support local farmers as production from the summer-sown crop is set to surpass the target, two government officials said on Wednesday.
The duty hike would reduce imports, especially from neighbouring India, which emerged as a biggest supplier to the south Asian country last year after floods ravaged its crop.
Bangladesh cut an import duty of 28 percent in two phases in 2017 to 2 percent after domestic prices of the staple grain climbed to a record high.
"At present, the tax on rice imports is only 2 percent. This needs to be raised to protect farmers' interests as prices have started to fall in the domestic markets," said a government official on condition of anonymity. The official is not authorised to speak to the media.
Bangladesh's rice output from the summer crop is likely to hit 19.7 million tonnes against the target of 19 million tonnes, Mohammad Mohsin, director general of Department of Agriculture Extension, told Reuters last month.
The country's production for 2018/19 as a whole is expected to recover to 34.7 million tonnes, up 6.3 percent year-on-year, according to estimates from the U.S. Department of Agriculture attache in Bangladesh.
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"The duty could be increased to 28 percent again," said another official, adding the hike could be announced on Thursday in the country's budget for the 2018/19 fiscal year.
In 2017, the lower duty boosted imports by private dealers, with most of the deals struck with neighbouring India.
Bangladesh imported a record of more than 3.7 million tonnes of rice in the July-April period, data from the country's food ministry showed.
"A duty hike will hit India most. For the last year, exporters in eastern India have been banking on good demand from Bangladesh," said a Mumbai-based exporter with a global trading firm.
"Now Indian rice will become expensive for Bangladeshi buyers and shipments will slow down," the exporter said.
Bangladesh will cancel a deal with India to import 150,000 tonnes of rice over a delay in shipments, Badrul Hasan, the head of Bangladesh's state grain buyer, told Reuters last week.
The deal with India's state-run National Agricultural Cooperative Marketing Federation (NAFED) was signed in December at $440 a tonne as the government raced to shore up depleted stocks and combat record domestic prices.
Bangladesh, however, had imported 100,000 tonnes of rice from another Indian state agency, PEC, at $455 a tonne.
It also imported 250,000 tonnes of rice from Vietnam and 100,000 tonnes from Myanmar, while 450,000 tonnes were imported through tenders.
(Reporting by Ruma Paul and Rajendra Jadhav in MUMBAI; Editing by Mark Potter)