Bamboo Castle
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http://www.thefinancialexpress-bd.com/index.php?ref=MjBfMDZfMDZfMTNfMV82XzE3MTg0OA==
Is the national budget of Fiscal Year (FY) 2013-14 going to present anything good to our frustrated farmers? Though answering this in a single word is very difficult, our attention goes to two of the upcoming crucial decisions of the government i.e. cutting food grain procurement for keeping rice price lower in the domestic retail market and cutting subsidy on some of the agricultural inputs. We need to seriously look into why the decisions are coming and what the impact of these will have on the country.
The national budget this year is very crucial on many respects, particularly because it is an election-year budget. It is natural that an incumbent government will try to secure its vote bank in any upcoming election and that is why, governments usually give lots of visible incentives to the people.
Interestingly, rice price has been something to play a key role in securing vote bank and that is why, political parties promise to keep rice price lower in their election manifesto. It is not very difficult to understand that low food price in the market also means low return for agricultural production of the farmers. Again, it is also true that for the large part of the population, who are food buyers, it is very essential to keep the food price lower but on the other hand, for retaining farmers in the agricultural production, it is vital to ensure a proper price for their produce. Governments often struggle to balance between the interests of these two groups.
In the forthcoming budget, there may be some bad news for the agricultural sector of Bangladesh - and this is at a moment when farmers have already started getting discouraged in producing food grains due to continuous lower price and they are tending to cultivate tobacco or other cash crops instead of rice.
There has been bumper production of rice during the last several seasons for which the farmers made tremendous efforts. But ironically, the farmers are continuously receiving prices lower than their production cost. In this year, the government decided to procure food grains directly from the farmers with a reasonable price and we all welcomed this decision. But in reality we found a very limited implementation of this decision and the farmers had to sell their rice to the millers and in the local market at a lower price. There is a surplus supply of rice in the market, and the price is, therefore, low. But surprisingly, the government is planning to import rice.
According to newspaper reports, the government aims to import 0.25 million (2.5 lakh) tonnes of rice next fiscal year. But it may not become necessary to import the entire targeted amount if there is no natural calamity. Well, I think, there is no harm with this if the government takes it as a contingency plan but concern arises when it decides to slash the local procurement of rice by 3.0 per cent.
The government cut imports but raised domestic procurement in the current fiscal year to help farmers get fair prices amid a bumper production. Even after this decision, the government could not ensure proper price for rice and the situation will worsen if it now decides to slash local procurement.
At another plane, the government will, according to newspaper reports, drastically cut down expenditure on subsidies to Tk 280 billion (28,000 crore) in the coming fiscal, down from Tk 350 billion (35,000 crore) in the outgoing fiscal. A report says that in the coming budget, subsidies on agriculture will decrease and out of Tk 90 billion (9,000 crore) to be given in subsidies in this sector, Tk 30 billion (3,000 crore) would be spent to clear arrear bills for fertilisers, diesel, pesticides and other inputs. So, what is the net support the agricultural sector would get in the next budget?
Now let us see what these decisions are for. Firstly, the government wants to satisfy the largest portion of population who are the food buyers and want to buy food in cheaper prices. The government might have been anxious of seeing that in this first quarter of year, the average retail price of coarse rice has increased significantly by 12 per cent from last quarter. The countrywide retail prices of coarse rice started to increase from November 2012 following the increase in wholesale price of rice. The average retail price of Aman HYV coarse rice in March was 29.2 Tk/kg, which is 4.5 per cent higher than a year ago (FAO, 2013). This trend is very likely to have a significant impact in the next election. That is why, the government does not apparently want the rice price go up in the last year of its present tenure.
Secondly, the government had agreed to cut down subsidies to fulfill IMF (International Monetary Fund) conditions for accessing its nearly one-billion-dollar credit support in seven installments. So, the farmers need to bear some extra burden of pricy inputs in the coming year also when they have no hope of getting a proper price for their produce.
Finally, let us see what can be the consequences. I have talked to some tobacco farmers who cultivated rice on their field last year. Now, when they are not certain about getting a fair price for rice but have some security of return, especially financially, from the tobacco manufacturing companies, they are contemplating to return to tobacco cultivation. BRAC has also recently got a similar finding that cultivated land area has decreased this year.
These signals are never good for the country. The government needs to understand that the food producers i.e. the farmers and their family members are also voters and getting their votes is also important and at the same time, it is more important to save our farmers if we really want to develop the country. A pro-farmer food procurement policy and its effective implementation are mandatory. Cut in agricultural subsidy and local food grain procurement will never bring anything good for the country.
Is the national budget of Fiscal Year (FY) 2013-14 going to present anything good to our frustrated farmers? Though answering this in a single word is very difficult, our attention goes to two of the upcoming crucial decisions of the government i.e. cutting food grain procurement for keeping rice price lower in the domestic retail market and cutting subsidy on some of the agricultural inputs. We need to seriously look into why the decisions are coming and what the impact of these will have on the country.
The national budget this year is very crucial on many respects, particularly because it is an election-year budget. It is natural that an incumbent government will try to secure its vote bank in any upcoming election and that is why, governments usually give lots of visible incentives to the people.
Interestingly, rice price has been something to play a key role in securing vote bank and that is why, political parties promise to keep rice price lower in their election manifesto. It is not very difficult to understand that low food price in the market also means low return for agricultural production of the farmers. Again, it is also true that for the large part of the population, who are food buyers, it is very essential to keep the food price lower but on the other hand, for retaining farmers in the agricultural production, it is vital to ensure a proper price for their produce. Governments often struggle to balance between the interests of these two groups.
In the forthcoming budget, there may be some bad news for the agricultural sector of Bangladesh - and this is at a moment when farmers have already started getting discouraged in producing food grains due to continuous lower price and they are tending to cultivate tobacco or other cash crops instead of rice.
There has been bumper production of rice during the last several seasons for which the farmers made tremendous efforts. But ironically, the farmers are continuously receiving prices lower than their production cost. In this year, the government decided to procure food grains directly from the farmers with a reasonable price and we all welcomed this decision. But in reality we found a very limited implementation of this decision and the farmers had to sell their rice to the millers and in the local market at a lower price. There is a surplus supply of rice in the market, and the price is, therefore, low. But surprisingly, the government is planning to import rice.
According to newspaper reports, the government aims to import 0.25 million (2.5 lakh) tonnes of rice next fiscal year. But it may not become necessary to import the entire targeted amount if there is no natural calamity. Well, I think, there is no harm with this if the government takes it as a contingency plan but concern arises when it decides to slash the local procurement of rice by 3.0 per cent.
The government cut imports but raised domestic procurement in the current fiscal year to help farmers get fair prices amid a bumper production. Even after this decision, the government could not ensure proper price for rice and the situation will worsen if it now decides to slash local procurement.
At another plane, the government will, according to newspaper reports, drastically cut down expenditure on subsidies to Tk 280 billion (28,000 crore) in the coming fiscal, down from Tk 350 billion (35,000 crore) in the outgoing fiscal. A report says that in the coming budget, subsidies on agriculture will decrease and out of Tk 90 billion (9,000 crore) to be given in subsidies in this sector, Tk 30 billion (3,000 crore) would be spent to clear arrear bills for fertilisers, diesel, pesticides and other inputs. So, what is the net support the agricultural sector would get in the next budget?
Now let us see what these decisions are for. Firstly, the government wants to satisfy the largest portion of population who are the food buyers and want to buy food in cheaper prices. The government might have been anxious of seeing that in this first quarter of year, the average retail price of coarse rice has increased significantly by 12 per cent from last quarter. The countrywide retail prices of coarse rice started to increase from November 2012 following the increase in wholesale price of rice. The average retail price of Aman HYV coarse rice in March was 29.2 Tk/kg, which is 4.5 per cent higher than a year ago (FAO, 2013). This trend is very likely to have a significant impact in the next election. That is why, the government does not apparently want the rice price go up in the last year of its present tenure.
Secondly, the government had agreed to cut down subsidies to fulfill IMF (International Monetary Fund) conditions for accessing its nearly one-billion-dollar credit support in seven installments. So, the farmers need to bear some extra burden of pricy inputs in the coming year also when they have no hope of getting a proper price for their produce.
Finally, let us see what can be the consequences. I have talked to some tobacco farmers who cultivated rice on their field last year. Now, when they are not certain about getting a fair price for rice but have some security of return, especially financially, from the tobacco manufacturing companies, they are contemplating to return to tobacco cultivation. BRAC has also recently got a similar finding that cultivated land area has decreased this year.
These signals are never good for the country. The government needs to understand that the food producers i.e. the farmers and their family members are also voters and getting their votes is also important and at the same time, it is more important to save our farmers if we really want to develop the country. A pro-farmer food procurement policy and its effective implementation are mandatory. Cut in agricultural subsidy and local food grain procurement will never bring anything good for the country.
