Building buffer stock of food

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Shahiduzzaman Khan
BUILDING a buffer stock of foodgrains has become a prime concern for the interim government. The advisers are giving urgent attention on procuring rice from abroad to meet the projected shortfall. Challenges for the government are tough and rough: containing price spiral, restoring business confidence and meeting food shortages.
Food security has been the focus of the media for the past few weeks. Rice import has already started. High-powered missions are visiting probable countries wherefrom rice and wheat can be procured. Now the question is: will the government be able to avoid food deficit and build a comfortable stock of the foodgrains?
Food grain production in Bangladesh started to exceed the amount required from 1999. Production remained above the requirement level for the next seven years, even in years where there were severe floods, such as 2004. However, the amount required rose sharply over fiscal year 2006-07 as compared to previous years. Food grain availability, which comprises net domestic production, imports and food aid received, was still significantly above the required level this fiscal.
Some recent events have negatively impacted food grain availability. World prices of rice and wheat have been steadily rising. Also, many farmers in developed countries have recently switched from production of rice and wheat to grains used in biofuels, such as maize, due to the availability of increased government subsidies for biofuels.
Then, 2007 was an unusual year for Bangladesh in terms of natural disasters. The country experienced severe floods covering up to one third of the country during July-September, and a devastating cyclone ravaged the south of the country in mid-November. Early estimates of the damage to rice crops from these disasters were around 2.0 million tonnes.
The nation was not prepared for such events and it needed around 1.0 million tonnes of food grains to tackle these problems, but the actual amount in stock during mid-November was only 0.73 million tonnes. There was a shortfall in domestic production last year following failure to supply fertiliser to farmers in time, inadequate rainfall and shortages of power for irrigation.
As most rice imports in Bangladesh are from India, a major price hike in the local market occurred when the Indian government announced that it would not allow exports of rice produced in India at less than US$ 425 per tonne. Prior to this announcement, the price was around US $310.15 per tonne. The rice stocks in India were relatively low. There was also a ban imposed on the export of all rice priced below US$ 400 per tonne. India lifted this ban shortly after Bangladesh was struck by Cyclone Sidr in mid-November.
In India, which transformed itself from a food deficit to a food surplus country, a sizeable portion of its population is still deprived of three decent meals a day. This means that food insecurity is not just a function of domestic production, rather it is strongly linked to entitlement to food. A country may produce and/or make enough food available in aggregate terms by increasing commercial imports, but a significant portion of its citizens may remain food insecure due to inadequate purchasing power, which is a major determinant of food entitlement.
Meanwhile, country's prominent economists and business leaders made a passionate plea to the top policy makers to help tackle inflation, restore business confidence avoid food deficit to help give a boost to the cyclone-ravaged country. According to latest estimate, around 40 per cent of the 140 million people of Bangladesh still live below the poverty line, and the poorest 14 per cent are recognised as being ultra food-deficient.
A number of steps were taken to contain the price spiral, but the result is yet to be felt by the common people. On its past, the government will need to take consistent steps for creating a congenial environment where freedom of transaction exists, so that supply is augmented in the market.
The country needs to keep an eye on already thin world rice market which might look thinner in the wake of demands from China and Indonesia, who are faced with lower output. Simultaneously, the government will require to monitor closely the situation relating to supplies of seeds, fertilisers, and credit in due time and appropriate doses at the field level. A bumper crop, in tandem with appropriate public policy supports, might help stabilise the prices, particularly those of foodgrains.
Some scientists fear the frequency and severity of natural disasters affecting Bangladesh to rise in the future due to the effects of global climate change. It is, therefore, in the country's interests to ensure sufficient buffer stocks of rice and wheat. Trade liberalisation in food grains has meant that the country relies heavily on the private sector to ensure that there are adequate supplies of food grains in the local markets, But given the scenario of high world prices of food grains coupled with multiple natural disasters in 2007, it may be more prudent for Bangladesh to build comfortable stocks of foodgrains, particularly in public sector.