Agriculture must take centre stage
Tuesday, 25 March 2008
Syed Fattahul Alim
GLOBALLY, price of food grains have been forced up due to a complex mix of factors. These include frequent droughts, downpours, floods and various other kinds of natural calamities as well as shift in the use of food grains for uses other than human consumption. Last year, Bangladesh was severely battered by these factors of natural origin. As it has to feed a huge population with the crops grown on a limited area of land, which, too, is gradually shrinking to accommodate growing population, the food grains its fields produce are no more adequate to meet the ever growing demand.
So, to meet the deficit, it has to go for importing food grains from abroad. At the moment, Bangladesh is passing through a very critical period. The combined impact of natural calamities like floods and cyclone Sidr left a disastrous impact on the standing crops. So, naturally Bangladesh this year has been forced to opt for import of food grains. Unfortunately, it is exactly at this time that the international food grains market has become uncertain. The price of food grains has, of late, started to shoot up in the international market pushing Bangladesh into a tight corner. For even after import of the food grains at a very high cost from the exporters, the price of the same in the local market will become so high in Bangladesh taka that the local consumers will find it very hard to buy the food from the market.
In that case, what will be the use of the food grains, if those remain beyond the range of the common consumers? So, to keep the millions free from hunger, the government will have to make that food available in the market at a subsidised rate, preferably through rationing and other kinds of controlled market outlets. That would certainly put an extra pressure on the state exchequer after it has paid exorbitantly to purchase the foodstuff from abroad. What is of still greater concern is we still do not know how long the volatility in the food grains price will persist in the international market.
The signs are ominous. Many experts of international repute as well as the UN bodies concerned with food have warned of famines and social unrests globally on account of high price of food as the major producers of this vital item for human survival will grow less of it.
Bangladesh has already started to feel the pinch. The prospect of meeting the deficit through import is gradually becoming problematic for the economy for an indefinite period. What is of still greater concern is that Bangladesh is still a long way to go to win the fight against the scourges of mass poverty and overpopulation. How will it then survive, let alone prosper in the uncertain times lying ahead?
The thought we used to luxuriate in hoping that unlike in the past food is no more an issue of prime concern in the global arena is again on the rocks. The world has again been thrown into an era when food may put the concerns of global growth and prosperity to shade for some time. Governments of the least developed countries (LDCs) like Bangladesh will have to bring the re-emerging issue of food under a still sharper focus now. For us it is going to be the most critical one. Though the government has traditionally been pro-agriculture and pro-poor, the emphasis had always been on especial patronage provided to the farmers and the rural poor.
Now with the prospect of procuring food grains from the international sources dwindling faster than ever before, time has come to have a rethink of agriculture. The attitude of the banks and the non-banking financial institutions (NBFIs) towards agriculture should change.
The state-owned banks and even the specialised banks like Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) are more concerned about how the credit they advance to the farmers is returned to the source than on financing the loan schemes as business ventures. One can notice here a basic flaw in the very attitude of the banks and the non-banking financial institutions (NBFIs) towards agriculture, especially the farmers. As expected, they focus more on the recovery of the loans than on the actual benefits, if any, drawn from those by the end users and the economy in general. Strangely enough, they have left the prospect of considering the government funds channeled through the banks for the development of agriculture as investments out of question. So there is a need for the government to instruct the banks and NBFIs to the effect that the existing loan funds are invested in the agriculture as projects.
The Chairman of the Regulatory Reforms Commission (RRC) Dr. Akbar Ali Khan has expressed his strong view on the issue through the media. According to him, the banks of Bangladesh ignore two basic principles of banking, namely, identification of new clients and calculating the business project.
In fact, the banks giving loans to farmers are hardly ever interested in expanding their client base through identifying new clients. The state-owned banks have the added shortcoming that officials in charge of operating the funds think they are giving a special privilege to the clients. As a consequence, they expect that the clients should run after them for availing themselves of the privilege than the other way around. As result, middlemen enter the scene creating more difficulty for the genuine farmers to access the agricultural loans from the banks. On the contrary, had the bank personnel considered themselves as the managers of a business fund, they would be more concerned about the clients as prospective business entrepreneurs and as such would concentrate more on promoting the business and would refinance the schemes depending on their progress and growth than on putting their entire energy into recovering the loans.
Recognising the difficulties facing the state-owned banks, the RRC chairman, however, viewed that the specialised banks like RAKUB and BKB should play their role more as promoters of agricultural projects than as passive providers of loans to the farmers.
A seasoned banker, Khondker Ibrahim Khalid, on the other hand, is of the view that the recent trend of sharp rise in the essentials price is due mainly to the fact that investment in the rural economy, particularly in the crop sub-sector of agriculture, is on the decline. Small wonder less investment in agriculture means less production. In fact, there is also little scope for putting all the blame at the natural calamities' doorstep for the shortfall in crop loss every year seeing that Bangladesh is and will remain a natural calamity-prone country in the foreseeable future.
The changing food scenario on a global scale will therefore force us to rework all our previous policies about economy and its future growth path. The trend of transferring resources from the rural economy to the urban one has to be stopped. The public and private investment in the rural economy in both the farm and non-farm sectors have also to be so massively increased that employment opportunities in the rural economy may multiply manifold and a brake is put on city-ward internal migration.
The government will also have to decentralise the economy from its present urban bias and distribute industrial sites and economic zones in the different districts taking feasibility aspects thereof into positive consideration.
To sum up, nothing short of a revolutionary change in the outlook about the economy and its future growth would help us to get out of the present predicament. And a fresh look at the rural economy must lie at the core of the new outlook.
GLOBALLY, price of food grains have been forced up due to a complex mix of factors. These include frequent droughts, downpours, floods and various other kinds of natural calamities as well as shift in the use of food grains for uses other than human consumption. Last year, Bangladesh was severely battered by these factors of natural origin. As it has to feed a huge population with the crops grown on a limited area of land, which, too, is gradually shrinking to accommodate growing population, the food grains its fields produce are no more adequate to meet the ever growing demand.
So, to meet the deficit, it has to go for importing food grains from abroad. At the moment, Bangladesh is passing through a very critical period. The combined impact of natural calamities like floods and cyclone Sidr left a disastrous impact on the standing crops. So, naturally Bangladesh this year has been forced to opt for import of food grains. Unfortunately, it is exactly at this time that the international food grains market has become uncertain. The price of food grains has, of late, started to shoot up in the international market pushing Bangladesh into a tight corner. For even after import of the food grains at a very high cost from the exporters, the price of the same in the local market will become so high in Bangladesh taka that the local consumers will find it very hard to buy the food from the market.
In that case, what will be the use of the food grains, if those remain beyond the range of the common consumers? So, to keep the millions free from hunger, the government will have to make that food available in the market at a subsidised rate, preferably through rationing and other kinds of controlled market outlets. That would certainly put an extra pressure on the state exchequer after it has paid exorbitantly to purchase the foodstuff from abroad. What is of still greater concern is we still do not know how long the volatility in the food grains price will persist in the international market.
The signs are ominous. Many experts of international repute as well as the UN bodies concerned with food have warned of famines and social unrests globally on account of high price of food as the major producers of this vital item for human survival will grow less of it.
Bangladesh has already started to feel the pinch. The prospect of meeting the deficit through import is gradually becoming problematic for the economy for an indefinite period. What is of still greater concern is that Bangladesh is still a long way to go to win the fight against the scourges of mass poverty and overpopulation. How will it then survive, let alone prosper in the uncertain times lying ahead?
The thought we used to luxuriate in hoping that unlike in the past food is no more an issue of prime concern in the global arena is again on the rocks. The world has again been thrown into an era when food may put the concerns of global growth and prosperity to shade for some time. Governments of the least developed countries (LDCs) like Bangladesh will have to bring the re-emerging issue of food under a still sharper focus now. For us it is going to be the most critical one. Though the government has traditionally been pro-agriculture and pro-poor, the emphasis had always been on especial patronage provided to the farmers and the rural poor.
Now with the prospect of procuring food grains from the international sources dwindling faster than ever before, time has come to have a rethink of agriculture. The attitude of the banks and the non-banking financial institutions (NBFIs) towards agriculture should change.
The state-owned banks and even the specialised banks like Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) are more concerned about how the credit they advance to the farmers is returned to the source than on financing the loan schemes as business ventures. One can notice here a basic flaw in the very attitude of the banks and the non-banking financial institutions (NBFIs) towards agriculture, especially the farmers. As expected, they focus more on the recovery of the loans than on the actual benefits, if any, drawn from those by the end users and the economy in general. Strangely enough, they have left the prospect of considering the government funds channeled through the banks for the development of agriculture as investments out of question. So there is a need for the government to instruct the banks and NBFIs to the effect that the existing loan funds are invested in the agriculture as projects.
The Chairman of the Regulatory Reforms Commission (RRC) Dr. Akbar Ali Khan has expressed his strong view on the issue through the media. According to him, the banks of Bangladesh ignore two basic principles of banking, namely, identification of new clients and calculating the business project.
In fact, the banks giving loans to farmers are hardly ever interested in expanding their client base through identifying new clients. The state-owned banks have the added shortcoming that officials in charge of operating the funds think they are giving a special privilege to the clients. As a consequence, they expect that the clients should run after them for availing themselves of the privilege than the other way around. As result, middlemen enter the scene creating more difficulty for the genuine farmers to access the agricultural loans from the banks. On the contrary, had the bank personnel considered themselves as the managers of a business fund, they would be more concerned about the clients as prospective business entrepreneurs and as such would concentrate more on promoting the business and would refinance the schemes depending on their progress and growth than on putting their entire energy into recovering the loans.
Recognising the difficulties facing the state-owned banks, the RRC chairman, however, viewed that the specialised banks like RAKUB and BKB should play their role more as promoters of agricultural projects than as passive providers of loans to the farmers.
A seasoned banker, Khondker Ibrahim Khalid, on the other hand, is of the view that the recent trend of sharp rise in the essentials price is due mainly to the fact that investment in the rural economy, particularly in the crop sub-sector of agriculture, is on the decline. Small wonder less investment in agriculture means less production. In fact, there is also little scope for putting all the blame at the natural calamities' doorstep for the shortfall in crop loss every year seeing that Bangladesh is and will remain a natural calamity-prone country in the foreseeable future.
The changing food scenario on a global scale will therefore force us to rework all our previous policies about economy and its future growth path. The trend of transferring resources from the rural economy to the urban one has to be stopped. The public and private investment in the rural economy in both the farm and non-farm sectors have also to be so massively increased that employment opportunities in the rural economy may multiply manifold and a brake is put on city-ward internal migration.
The government will also have to decentralise the economy from its present urban bias and distribute industrial sites and economic zones in the different districts taking feasibility aspects thereof into positive consideration.
To sum up, nothing short of a revolutionary change in the outlook about the economy and its future growth would help us to get out of the present predicament. And a fresh look at the rural economy must lie at the core of the new outlook.