Agriculture and 2014-15 budget

The country's financial policymakers are now busy in preparing the fiscal 2014-15 national budget. The Finance Minister has been exchanging views with different stakeholders seeking their suggestions for the coming budget. There are, however, not adequate discussions on resource allocations for the agriculture sector although the latter still holds the key to Bangladesh's future directly and indirectly.
Given the continuing sluggish investment in industries due to fears of political instability on the issue of a credible parliament, formed on the basis of inclusive election, the economy has to rely on agriculture and its sub-sectors to boost domestic production to feed an ever-bulging population.
The wait-and-see attitude of prospective investors in setting up industries is quite natural against the backdrop last year's political turmoil. The entrepreneurs had to pay a very heavy price. Unless the policy planners give due attention to promoting further development of the farming sector through research, it is feared that food security in the country will come under serious threat.   
Although the share of agriculture in the gross domestic product (GDP) is gradually falling (now about 20 per cent as against 50 per cent in post-independence period) due to structural changes of the economy, it is still a very important sector. According to the Labour Force Survey, agriculture employs about 47 per cent of total employment of the country. Per capita food grain availability has increased from 453 grams to 605 grams due to the admirable performance of the sector.
Agriculture also serves as a supplier of raw materials for the manufacturing sector. Its unprecedented growth has increased the income of farmers and wages of agricultural labourers and has contributed to increase their purchasing power. This, in turn, has contributed to expansion of demand for non-agricultural products.
It is now time for the Finance Minister to allocate sizeable funds for agriculture as the sector's growth rate has been gradually rising. It grew at an average rate of three per cent in last three decades and by 4.19 per cent during 2005-10. Unless adequate incentives are made for investment in agricultural development (sub-sectors included), this year's bitter experience with potatoes and other crops will put a damper on farm production.
The Prime Minister, who recognises the importance of agriculture, has directed the authorities concerned to expand the food processing industries across the country. This will enlarge the nation's export basket to grab the international market by exporting processed agricultural products as well as fish and meat.
The food security of the country's huge population, improvement of their lifestyle and creating employment opportunities for them are directly and indirectly related with agriculture. The importance of increased research in agriculture sector to meet the country's rising demand for food and nutrition through boosting domestic production can never be over-emphasised.
Subsidy has to be provided for ensuring increased agricultural production. This is important for keeping the cost of production affordable for farmers. Input prices have increased pushing up the overall cost of production of the agriculture sector. This has not been matched by selling prices of agricultural products. However, the efficient utilisation and proper targeting of subsidies, their return and impact on the economy are to be probed since subsidy puts pressure on the government's expenditure stream. Therefore, subsidies and other price support schemes for the agriculture sector have to be economically justifiable through efficiency of allocation and maximisation of returns.
The government gave over Tk 240 billion in subsidy to agricultural sector during the last four and a half years and the specialised and other state-owned banks distributed Tk 460 billion as agriculture loans. Besides, agriculture loans were distributed among sharecroppers at a concessionary rate of interest. As a result of government measures, rice production increased to 37.3 million metric tonnes from 33.3 million mts.
Then there is the question of fair prices for agricultural products.  Farmers have always been complaining about the lack of fair prices while consumers have been doing the same about high prices. Many farmers are even willing to forgo input subsidies if they have a guaranteed profit of 10 per cent or even a little less on their products. It is in fact a challenge for the government to guarantee fair prices both at the producer and the consumer levels. This requires improved marketing services, capable of ensuring fair returns to producers, improving market conditions, reducing cost of marketing and ensuring fair market practices. The responsible organisation for this is the Department of Agricultural Marketing. The department has to be strengthened for providing such marketing services ranging from producers to consumers.
It has also been proposed by experts that an Agricultural Price Commission should be set up under the umbrella of the Department of Agricultural Marketing which will give periodic forecasts about the price levels of agricultural commodities so that the government can take necessary measures well in advance. In the budget of fiscal year (FY) 2011-12 it was announced that the government will form additional 600 'Farmers' Marketing Groups' and 6,200 'Farmers' Clubs' and establish four agro-products processing centres. Such initiatives can facilitate agricultural marketing and should therefore be fully operationalised and continued.
It's worth noting that the present government has given importance to agriculture research and it has been able to meet the growing demand for food grains. For the first time in the country's history, it allocated Tk 120 million for research during its previous tenure of office between 1996 and 2001. Later the government increased the allocation for research manifold and increased financial incentives for the researchers, apart from raising their retirement age. The country's researchers have innovated drought- and salinity-tolerant varieties of paddy and helped expand the cultivation of maize and vegetables in char areas, fruits on mountains and floating vegetables on marshy lands. More resource allocations to agriculture and its sub-sectors merit consideration, under the upcoming national budget. One finds it surprising that even after so much of emphasis put by the government, the allocation in this regard as percentage of the total budget is on the decline during the last few years.
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