Contract farming: A new horizon for Bangladesh
Saturday, 30 July 2011
possibilities to other corners of the world,
Syed Ejaz Ahsan Food is the basic necessity of human beings. Secured food supply is the prime objective of all nations. But the world has started to face an alarming situation with the prices of foodgrains continuously soaring high. The main reasons are increasing world population, crop failure due to climate change, some countries using cereals for fuel production, rapid urbanisation resulting reduction of agricultural land. Enhanced food prices decrease the standard of living especially for the low income group of the society as they spend a significant amount of their income for purchasing food items. Eventually the inflationary pressure on food items turn to social and political unrest. Two options are open to cope up with the situation, one is providing massive subsidy on food items and the other one is increasing production. In both cases solutions are not easy. Government might have to face budgetary crisis to give food subsidy. Increasing production needs huge cultivable land which Bangladesh does not have. On the other hand demand for land is increasing to cater the housing need of ever increasing population and also for industrialization. It is hardly possible to accommodate over 150 million people within an area of 144 thousand square kilometer. There is a possible solution to overcome the land constrains and food shortage problems-- contract firming. Some east African countries have offered Bangladesh to cultivate their agricultural lands at a very lucrative term. It may open up a new horizon for Bangladesh towards solving food problem. Identification of such opportunities was needed much earlier. The east African countries have vast unutilised land, but they lack skilled labour force, investment capital, agricultural research facilities, and experienced agricultural management system. Bangladesh has them all except land, and African countries can offer only land. So there will be a win-win situation for both the parties. Before entering the venture Bangladesh needs to take some well calculated steps, which would secure the long term interest of Bangladesh and assure the growth prospect of the prospective venture. This venture is not necessarily confined to Africa only; this might be expanded to other corners of the world with similar prospects. First of all an appropriate labour policy has to be formulated, i.e. wages and other terms and conditions, health facilities, accommodation, benefits. Absence of a well protected labour policy in this regard will create labour dispute and ultimately productivity will suffer. Another bitter experience of expatriate workers is that they do not get wages and benefits according to service contract. It is likely that side by side with Bangladeshi workers African laboures would also be hired by the Bangladeshi companies engaged in cultivation there. Right kind of agreement should be made keeping this in view. Bagladesh Peace mission in different African countries have earned a good reputation and even some African countries have accepted Bangla as their second language as a mark of respect and love for the peoples of Bangladesh. Contract farming is not the end; it is just the beginning of a new era in the field of economic cooperation between Africa and Bangladesh. Though once known as Dark Continent Africa is enriched with mineral resources as well as other natural resources. If Bangladesh can attain success in this venture through planned investment, better management, and favourable labour policy; other avenues of business venture will be opened for Bangladesh gradually. As expected there is a wide market for Bangladeshi products in Africa. Under this venture Bangladesh has also opportunity to produce fruits and vegetables. Bangladesh has achieved significant progress in agriculture research. Some research institutes have earned international reputation such as Bangladesh Agricultural research Institute (BARRI) and Tea Research Institute (TRI). Bangladesh can utilise services of these institutes. Through large scale production facility Bangladesh will enjoy economies of scale. So in any consideration it is a great opportunity for Bangladesh provided we utilise this opportunity properly. Except transportation cost all other factors are in our favour; but if companies can reduce production cost, it is expected to be very competitive and convenient for Bangladesh. Bangladesh is importing food grain from more distant areas paying higher transportation cost. In the first step if Bangladesh can achieve success in contract farming in east African countries, it will help expand such activity all over Africa and then explore the possibilities to other corners of the world. Increased food production will assure food security; side by side it will reduce unemployment and create another source of earning foreign currency. We are very much optimistic about the opportunity, but at the same time there are some risk factors involved which we have to take into consideration. African continent is vulnerable to HIV aids virus along with other deadly diseases. A large number of our migrant workers may be exposed to such dangerous diseases. There also remains a risk of spreading the diseases in Bangladesh when the infected workers come home. Companies involved in contract farming should be very careful about such threats and adequate health safety measures could protect the workers from this threat. In addition other welfare measures like good accommodation, minimum wages, and health facilities should be taken. The government should provide incentives to the companies as well, such as tax benefits for profit remittance, export credit guarantee support in case of exporting to other countries. Bangladesh missions in those countries should be active and pay attention to any of their needs. In the era of globalisation we have options to explore the world to harness untapped resources and develop our own economy. We can thus help the world economy to grow. What we need is to explore the world, design rules and regulations to guide our companies, create a good impression of Bangladesh abroad as trusted development partner, and earn the confidence of the host countries by creating a win-win situation. This will take Bangladesh to a new height and give new identity as a prosperous wealthy country. The writer is a lecturer, BIS School and College and can be reached at email: seahsan@gmail.com
Syed Ejaz Ahsan Food is the basic necessity of human beings. Secured food supply is the prime objective of all nations. But the world has started to face an alarming situation with the prices of foodgrains continuously soaring high. The main reasons are increasing world population, crop failure due to climate change, some countries using cereals for fuel production, rapid urbanisation resulting reduction of agricultural land. Enhanced food prices decrease the standard of living especially for the low income group of the society as they spend a significant amount of their income for purchasing food items. Eventually the inflationary pressure on food items turn to social and political unrest. Two options are open to cope up with the situation, one is providing massive subsidy on food items and the other one is increasing production. In both cases solutions are not easy. Government might have to face budgetary crisis to give food subsidy. Increasing production needs huge cultivable land which Bangladesh does not have. On the other hand demand for land is increasing to cater the housing need of ever increasing population and also for industrialization. It is hardly possible to accommodate over 150 million people within an area of 144 thousand square kilometer. There is a possible solution to overcome the land constrains and food shortage problems-- contract firming. Some east African countries have offered Bangladesh to cultivate their agricultural lands at a very lucrative term. It may open up a new horizon for Bangladesh towards solving food problem. Identification of such opportunities was needed much earlier. The east African countries have vast unutilised land, but they lack skilled labour force, investment capital, agricultural research facilities, and experienced agricultural management system. Bangladesh has them all except land, and African countries can offer only land. So there will be a win-win situation for both the parties. Before entering the venture Bangladesh needs to take some well calculated steps, which would secure the long term interest of Bangladesh and assure the growth prospect of the prospective venture. This venture is not necessarily confined to Africa only; this might be expanded to other corners of the world with similar prospects. First of all an appropriate labour policy has to be formulated, i.e. wages and other terms and conditions, health facilities, accommodation, benefits. Absence of a well protected labour policy in this regard will create labour dispute and ultimately productivity will suffer. Another bitter experience of expatriate workers is that they do not get wages and benefits according to service contract. It is likely that side by side with Bangladeshi workers African laboures would also be hired by the Bangladeshi companies engaged in cultivation there. Right kind of agreement should be made keeping this in view. Bagladesh Peace mission in different African countries have earned a good reputation and even some African countries have accepted Bangla as their second language as a mark of respect and love for the peoples of Bangladesh. Contract farming is not the end; it is just the beginning of a new era in the field of economic cooperation between Africa and Bangladesh. Though once known as Dark Continent Africa is enriched with mineral resources as well as other natural resources. If Bangladesh can attain success in this venture through planned investment, better management, and favourable labour policy; other avenues of business venture will be opened for Bangladesh gradually. As expected there is a wide market for Bangladeshi products in Africa. Under this venture Bangladesh has also opportunity to produce fruits and vegetables. Bangladesh has achieved significant progress in agriculture research. Some research institutes have earned international reputation such as Bangladesh Agricultural research Institute (BARRI) and Tea Research Institute (TRI). Bangladesh can utilise services of these institutes. Through large scale production facility Bangladesh will enjoy economies of scale. So in any consideration it is a great opportunity for Bangladesh provided we utilise this opportunity properly. Except transportation cost all other factors are in our favour; but if companies can reduce production cost, it is expected to be very competitive and convenient for Bangladesh. Bangladesh is importing food grain from more distant areas paying higher transportation cost. In the first step if Bangladesh can achieve success in contract farming in east African countries, it will help expand such activity all over Africa and then explore the possibilities to other corners of the world. Increased food production will assure food security; side by side it will reduce unemployment and create another source of earning foreign currency. We are very much optimistic about the opportunity, but at the same time there are some risk factors involved which we have to take into consideration. African continent is vulnerable to HIV aids virus along with other deadly diseases. A large number of our migrant workers may be exposed to such dangerous diseases. There also remains a risk of spreading the diseases in Bangladesh when the infected workers come home. Companies involved in contract farming should be very careful about such threats and adequate health safety measures could protect the workers from this threat. In addition other welfare measures like good accommodation, minimum wages, and health facilities should be taken. The government should provide incentives to the companies as well, such as tax benefits for profit remittance, export credit guarantee support in case of exporting to other countries. Bangladesh missions in those countries should be active and pay attention to any of their needs. In the era of globalisation we have options to explore the world to harness untapped resources and develop our own economy. We can thus help the world economy to grow. What we need is to explore the world, design rules and regulations to guide our companies, create a good impression of Bangladesh abroad as trusted development partner, and earn the confidence of the host countries by creating a win-win situation. This will take Bangladesh to a new height and give new identity as a prosperous wealthy country. The writer is a lecturer, BIS School and College and can be reached at email: seahsan@gmail.com