The central bank in an analysis has suggested the food ministry to be rational in estimating the demand for, and supply of, food grains in the country, taking into consideration the global price of the same and future food security.
The Bangladesh Bank (BB) analysis that examines the current methodology of fixing requirements and availability of food grains identifies several specific areas where efforts are needed to rationalise the estimates.
"The issues are important, especially in view of the urgent need to rationalise food grains demand and supply estimates to ensure more credible planning of food grains production and their availability in the context of rising prices in both domestic and international markets," said the analysis.
BB's policy analysis unit prepared the analysis styled, 'Rationalizing Food Demand and Supply Estimates'.
The analysis, according to the experts, is timely as the caretaker government faced difficulties in tacking the country's food situation due to price hike in the international market and crop losses at home last year.
"It has identified important areas which should not be overlooked for managing country's food security situation better," said a finance ministry official.
The analysis said the assumed value of per capita requirement seems unrealistic, especially in view of significant differences in per capita consumption both in terms of rural-urban areas and economic status of households.
In preparing the food grains balance sheet, the food ministry considers public food grains stock only, without taking into account the private stock presumably due to lack of data.
"In practice, private stock of food grains, especially of rice, plays an important role in food grains consumption throughout the year," said the analysis.
The composition of cereal consumption (e.g. rice and wheat) changes in relation to prices of the two cereal products.
"The issue needs further study to see the implications of price changes on demand for food grains, especially on the consumption of rice," it said.
While estimating food supply situation by the food ministry, the analysis said, the current process is time consuming, inefficient, and subject to biases.
"....it is important to adopt a more scientific method of calculating total production," it said.
It also said: "The aggregate picture of food balance over the year is somewhat misleading as it is likely to mask significant variations in availability over specific periods within the fiscal year."
For monitoring availability and prices, it is important to compute food balances over specific periods within a year and adopt appropriate measures, it added.
The analysis suggested effective and joint coordination (e.g. among field units of BBS, Ministry of Agriculture, and FPMU) to generate more realistic estimates of production based on uniform and mutually agreed methodology at the sub-national levels.
