Higher import tariffs on rice led to larger price spikes in a year, according to a major cause cited in a study
presented at an annual
seminar organised by Bangladesh Institute of Development Studies (BIDS).
A robust production as well as government intervention through procurement and sale could keep rice market stable, said Nicholas Minot, a senior research fellow of the International Food Policy Research Institute (IFPRI), while presenting the report of the research.
The seminar is part of the academic session-4 of the four-day Annual BIDS Conference on Development (ABCD) 2024.
Higher tariffs might generate more revenue initially, but after certain points, revenue levels decline, Minot said.
"Reducing food operation by half, the government could impact the rice market by 12-13 per cent," he said explaining the impacts of certain government
decisions on food operations.
"A buffer stock has the potential to significantly reduce price instability, but it is difficult to get the price band right," he also said, highlighting one of the features of a purchasing and selling mechanism's (buffer stock) effect on the price band.
Price band is a value-setting method in which a seller indicates an upper-and lower-cost limits, between which buyers are able to place bids.
The study also said low price band causes stock depletion while high price band results in over-accumulation.
"Imports to replenish public stocks and exports to surplus stocks helps solve this problem, but it is expensive. Adaptive buffer stock (with adjustable prices) reduces cost compared to traditional buffer stock," said Minot.
Minot also recommended eliminating or reducing the rice import tariff as this reduces price instability at a little cost in terms of revenue or farmer incentives.
He also advocated for "matching pattern of procurement/distribution more closely to surplus/deficit pattern".
He showed that procurement and distribution could be more closely linked to prices.
"Just 9.0 per cent of procurement occurs in May, 2024 yet the month has lowest prices," Minot said citing the research paper.
Encouraging private-sector storage by farmers and traders for a sound market has also been recommended during the presentation.
Meanwhile, three other papers on fisheries; food security; and South Asian food price policy and food stocks were also discussed by IFPRI officials at the academic session.
The IFPRI session on agriculture and food security was chaired by Shahidur Rashid, the director of the institute's South Asia region.
Paul Dorosh, a senior research fellow of IFPRI, presented a paper titled 'Food Price Policy in South Asia: Cereal Stocks, Prices and Trade'.
Benjamin Belton, another IFPRI senior research fellow, presented 'Aquaculture Value Chain Development: Emerging Policy Insights' while MA Sattar Mandal a BIDS professorial fellow, gave a speech on corporate agriculture.
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