Daunting challenges on food front
Monday, 12 November 2007
Shamsul Huq Zahid
THE ban on exports of essentials such as rice, wheat, lentil and onion by neighbouring India has put Bangladesh in real difficulty.
India says the restriction that has been imposed due to shortfall in production of the agricultural commodities is not Bangladesh-specific and it is also applicable to export of the same to other countries.
Bangladeshi importers prefer India as a major source of import of food and other items because of its close proximity and hence lower transportation cost.
The Bangladesh team at a two-day meeting of the joint working group (JWG) held in Dhaka last week requested its Indian counterpart to lift the ban on essential exports to Bangladesh. The Indian delegation, according to local media reports, while assuring the Bangladesh side of taking up the issue with the higher authorities in New Delhi wanted Dhaka to lift the ban on export of Hilsha fish to India.
Bangladesh slapped restriction on the export of Hilsha a couple of months back when the prices of the same shot up abnormally in the local markets.
Hilsha is a delicacy no doubt but it is not as essential as rice, wheat, lentil and onion are. The Indian delegation at the JWG meeting though did not tag the Hilsha issue with the Bangladesh's request for lifting ban on essential commodities, had, apparently, taken the request rather lightly.
However, Indian authorities through a circular issued on November 04 last relaxed the restriction on export of rice to Bangladesh but said the export price of the commodity should not be less than $ 425 a tonne.
Actually, it was not any special favour to Bangladesh. The Indian government which in the early October banned export of non-Basmati rice later allowed export of non-Basmati fine variety of rice to all countries at the same price.
The export of non-Basmati fine variety of rice was allowed when the All India Rice Exporters Association (AIREA) questioned the justification of imposing the ban on the export of premium varieties rice that were not needed for public distribution system (PDS). The president of the association claimed that Indian farmers were benefited through the export of non-Basmati fine variety rice.
The reality is that the prices of rice across India increased by 18.5 per cent in the first week of this month compared to an 8.0 per cent hike during the same period last year. There is an expectation of further price hike in the coming weeks. The Indian government has reportedly targeted to procure 27 million tonnes of rice in the current season, which saw a stagnant production of rice (80 million tonnes), through the enhancement of minimum support price by 19 per cent.
It appears that India as a source of rice import will continue to be a dry one in the coming months. The Indian authorities are unlikely to allow export of the coarse variety of rice and the export price fixed for non-Basmati fine variety of rice is prohibitive for Bangladeshi consumers.
The Indian government still has the public food distribution (PDS) system in place. But Bangladesh had long ago abandoned the statutory rationing system that could be helpful now in containing the prices of food items. What the government does now is that it launches an open market sale (OMS) of rice in a limited scale in major cities, particularly when the prices of rice go up abnormally. The government in the months of July and August last distributed about 0.325 million tonnes of food grains through the OMS and the vulnerable group feeding programmes.
It is rather surprising that the government is not considering any OMS operation as of now though the rice and wheat prices have soared to all-time high. Adviser for food Tapan Chowdhury late last week at a press briefing spoke about the government's present food stock of more than 0.75 million tonnes and about the plan to procure 0.20 million tonnes of rice during the next Aman harvesting season but he did not say whether the government had any plan to start OMS operation in view of the abnormal rise in food prices.
There is no reason for the government leaders to be shy about telling the nation about the hard realities of food prices when the director general of the Food and Agricultural Organisation (FAO) of the UN has warned of the effects of food inflation across the globe.
"Many countries will have to take hard decisions because of the impact of food prices", the FAO DG told the prestigious Financial Times (FT) recently.
Russia is introducing controls on some basic food items. Morocco recently cut wheat import tariffs and Egypt has increased food subsidies, the FT said in a recent article.
"If prices continue to rise, I would not be surprised if we began to see food riots", FAO DG Jacques Diouf said.
The government while building up its buffer food stocks through procurement locally and imports needs to take measures to cool down the rising prices of food items. It has already withdrawn duty on food import, which under the prevailing circumstances is not helping much. The policy planners and decision makers will have to devise something more effective to face the food sector challenges that could last longer than usual.
THE ban on exports of essentials such as rice, wheat, lentil and onion by neighbouring India has put Bangladesh in real difficulty.
India says the restriction that has been imposed due to shortfall in production of the agricultural commodities is not Bangladesh-specific and it is also applicable to export of the same to other countries.
Bangladeshi importers prefer India as a major source of import of food and other items because of its close proximity and hence lower transportation cost.
The Bangladesh team at a two-day meeting of the joint working group (JWG) held in Dhaka last week requested its Indian counterpart to lift the ban on essential exports to Bangladesh. The Indian delegation, according to local media reports, while assuring the Bangladesh side of taking up the issue with the higher authorities in New Delhi wanted Dhaka to lift the ban on export of Hilsha fish to India.
Bangladesh slapped restriction on the export of Hilsha a couple of months back when the prices of the same shot up abnormally in the local markets.
Hilsha is a delicacy no doubt but it is not as essential as rice, wheat, lentil and onion are. The Indian delegation at the JWG meeting though did not tag the Hilsha issue with the Bangladesh's request for lifting ban on essential commodities, had, apparently, taken the request rather lightly.
However, Indian authorities through a circular issued on November 04 last relaxed the restriction on export of rice to Bangladesh but said the export price of the commodity should not be less than $ 425 a tonne.
Actually, it was not any special favour to Bangladesh. The Indian government which in the early October banned export of non-Basmati rice later allowed export of non-Basmati fine variety of rice to all countries at the same price.
The export of non-Basmati fine variety of rice was allowed when the All India Rice Exporters Association (AIREA) questioned the justification of imposing the ban on the export of premium varieties rice that were not needed for public distribution system (PDS). The president of the association claimed that Indian farmers were benefited through the export of non-Basmati fine variety rice.
The reality is that the prices of rice across India increased by 18.5 per cent in the first week of this month compared to an 8.0 per cent hike during the same period last year. There is an expectation of further price hike in the coming weeks. The Indian government has reportedly targeted to procure 27 million tonnes of rice in the current season, which saw a stagnant production of rice (80 million tonnes), through the enhancement of minimum support price by 19 per cent.
It appears that India as a source of rice import will continue to be a dry one in the coming months. The Indian authorities are unlikely to allow export of the coarse variety of rice and the export price fixed for non-Basmati fine variety of rice is prohibitive for Bangladeshi consumers.
The Indian government still has the public food distribution (PDS) system in place. But Bangladesh had long ago abandoned the statutory rationing system that could be helpful now in containing the prices of food items. What the government does now is that it launches an open market sale (OMS) of rice in a limited scale in major cities, particularly when the prices of rice go up abnormally. The government in the months of July and August last distributed about 0.325 million tonnes of food grains through the OMS and the vulnerable group feeding programmes.
It is rather surprising that the government is not considering any OMS operation as of now though the rice and wheat prices have soared to all-time high. Adviser for food Tapan Chowdhury late last week at a press briefing spoke about the government's present food stock of more than 0.75 million tonnes and about the plan to procure 0.20 million tonnes of rice during the next Aman harvesting season but he did not say whether the government had any plan to start OMS operation in view of the abnormal rise in food prices.
There is no reason for the government leaders to be shy about telling the nation about the hard realities of food prices when the director general of the Food and Agricultural Organisation (FAO) of the UN has warned of the effects of food inflation across the globe.
"Many countries will have to take hard decisions because of the impact of food prices", the FAO DG told the prestigious Financial Times (FT) recently.
Russia is introducing controls on some basic food items. Morocco recently cut wheat import tariffs and Egypt has increased food subsidies, the FT said in a recent article.
"If prices continue to rise, I would not be surprised if we began to see food riots", FAO DG Jacques Diouf said.
The government while building up its buffer food stocks through procurement locally and imports needs to take measures to cool down the rising prices of food items. It has already withdrawn duty on food import, which under the prevailing circumstances is not helping much. The policy planners and decision makers will have to devise something more effective to face the food sector challenges that could last longer than usual.