Food Procurement policy
Syed Jamaluddin | Tuesday, 24 June 2008
FINANCE Adviser has announced in his budget speech that 3.2 million (32 lakh) metric tonnes of foodgrains will be procured during the next financial year. This will include domestic procurement, food aid and imports from abroad. As against this, food distribution will include open market sale (OMS), vulnerable group feeding, test relief, gratuitous relief, vulnerable group development and so on. One million (ten lakh) metric tonnes of food grains will be kept as reserve by the end of the next financial year. Supply will be ensured under all circumstances. This is an impressive policy statement by the government.
Procurement of 3.2 million (32 lakh) metric tonnes of food grains is a gigantic task. It is very often found that procurement work is stuck up for various reasons. The Chief Adviser (CA) has directed the authorities concerned to gear up the internal food procurement drive. He has also asked the food procurement agency for raising the collection of Boro rice to at least 0.8 million tonnes by June 30. The CA issued such directive, considering the current slow pace in procurement. The govt has set the targets of procurement at 1.2 million tonnes for rice and 0.3 million tons for paddy during the current Boro season. The purchase drive is to continue until August 31, 2008.
The Department of Food has so far collected 465,000 tonnes of rice out of the agreements signed with the millers on procurement of about 622,000 tonnes of rice. It is pointed out that a mismatch between the prices fixed for official procurement and those prevailing in the open market is the main reason for the shortfall in collection of Boro rice. Prices of both rice and paddy in open markets are higher than those fixed for official procurement, despite the fact the country has experienced a bumper Boro crop this year. The mismatch between official price and prevailing market price was noticed in previous years also. This is a basic flaw in our procurement exercise. Food ministry officials have recommended a cap on rice stocks by farmers, hoarders and millers to help fulfill the current foodgrain procurement target. But such a recommendation does not seem to be workable.
India is yet to fulfil the pledge it had made to support Bangladesh following the devastating cyclonic storm in November last. India has so far supplied around 90,000 tonnes of rice. Bangladesh is still trying to import the remaining quantity of rice, out of 0.5 million tonnes of their commitment. The two sides signed an agreement on April 03 for importing rice at an average rate of $430 per tonne by Bangladesh. The export of 0.4 million tonnes of rice was scheduled to be completed within two months from the date of the agreement. Though the deadline of rice import has expired, Delhi did not supply the rice and failed to keep her commitment. It is unwise to depend on a particular country for importing a critical item like rice. We can expect similar experience with India in future. Our policy makers must take note of such events for future guidance. The Food Ministry will know whether there is any provision in the agreement to deal with non-compliance by India.
Inspite of our best efforts for domestic procurement, we have to depend on import of a substantial quantity of rice from outside, even if we have to subsidise the procurement price. There must be an advance planning for procurement. Private sector may be reluctant to import rice because of high price. We have to find a mechanism to involve the private sector. It is predicted that high prices of food grains will continue in the next few years. This is because food price is linked to prices of petroleum products, energy, industrial raw materials and feed stuff which are on the rise. While planning for import, we must concentrate on increasing local production. An IPRI study has found that Bangladesh has the potential and comparative advantage to attain sustainable food security and become a net rice exporter. It is argued that food production can be doubled easily by providing the right mix of agricultural inputs. Government has given high priority to agricultural production and research in the new budget.
Bangladesh has to make an assessment of availability of food aid for the next year. There is a wide gap between pledge, commitment and disbursement. This assessment is necessary for making food delivery accurate and timely. Domestic procurement, import and food aid have to be co-ordinated in such a manner that food is delivered at the right time and at the desired destination. Food donors must make their policies known to the Bangladesh authorities on a regular basis so that planning of food distribution is conducted professionally. No government agency should blame the other for failure. Agencies should share their information with the public through the media. No information gap should be created.
The recent World Food Summit in Rome discussed collective action on food. Forty heads of state gathered in Rome under the auspices of the FAO to talk about the state of world farming and what to do about this. For the first time in a generation, soaring food prices have convinced everyone that something is wrong with world farming and that needs to be changed. The Rome summit made progress on a number of items. The summit announced an extra $1.2 billion of food aid. Saudi Arabia made a contribution of $500 million. The conference could not rationalise biofuels policy. Non-governmental organisations wanted a moratorium on ethanol output, saying this would cut grain prices by 20 per cent. But multinationals wanted restrictions on the production of corn based ethanol. The US Secretary of Agriculture claimed that ethanol accounted for only 2.0 or 3.0 per cent of the increase in world food prices. IFRI's view was 30 per cent. This controversy left the summit paralysed over biofuels.
The ban on export of food by many countries has created a serious situation. Around forty food exporting countries have imposed some sort of trade restriction on food-taxes, quotas or across the board bans. A study by the International Food Policy Research Institute (IFPRI) calculates that getting rid of these would reduce world cereal prices by an average of 30 per cent. The summit could not take any clear cut decision on this issue. However, some countries have promised to reopen some of their rice exports. The problem is that the interest of the countries differs. Most developing countries are net food importers but some are net exporters. Amartya Sen, Nobel laureate says that rising demand from the Asian middle classes -- and not falling productivity -- is the main reason for the current crisis. Another view is the decline in agricultural productivity.
The Rome meeting made some progress. The UN Secretary General said food output needs to rise by 50 per cent by 2030. Countries are preparing a long list of promises to help finance research into new seeds, build irrigation canals spread fertiliser use among small farmers. These promises are regarded as the main achievements of Rome summit, according to western media.
Some ague that a second green revolution will be harder to achieve. There is not enough water to permit a big expansion of irrigation, say, in Africa. Oil at $125 a barrel makes fertiliser too expensive. There has been an enormous fall in agricultural investment over 30 years.
Over the past three months, pledges of money have surged. The World Bank and International Fund for Agricultural Development (IFAD) have emerged as the main prospective lenders. But the pledges of fund is not really additional. It is diverted from other programmes. In any case, the Rome summit has not addressed the issue of food in a comprehensive manner.
(The writer is an economist and columnist)
Procurement of 3.2 million (32 lakh) metric tonnes of food grains is a gigantic task. It is very often found that procurement work is stuck up for various reasons. The Chief Adviser (CA) has directed the authorities concerned to gear up the internal food procurement drive. He has also asked the food procurement agency for raising the collection of Boro rice to at least 0.8 million tonnes by June 30. The CA issued such directive, considering the current slow pace in procurement. The govt has set the targets of procurement at 1.2 million tonnes for rice and 0.3 million tons for paddy during the current Boro season. The purchase drive is to continue until August 31, 2008.
The Department of Food has so far collected 465,000 tonnes of rice out of the agreements signed with the millers on procurement of about 622,000 tonnes of rice. It is pointed out that a mismatch between the prices fixed for official procurement and those prevailing in the open market is the main reason for the shortfall in collection of Boro rice. Prices of both rice and paddy in open markets are higher than those fixed for official procurement, despite the fact the country has experienced a bumper Boro crop this year. The mismatch between official price and prevailing market price was noticed in previous years also. This is a basic flaw in our procurement exercise. Food ministry officials have recommended a cap on rice stocks by farmers, hoarders and millers to help fulfill the current foodgrain procurement target. But such a recommendation does not seem to be workable.
India is yet to fulfil the pledge it had made to support Bangladesh following the devastating cyclonic storm in November last. India has so far supplied around 90,000 tonnes of rice. Bangladesh is still trying to import the remaining quantity of rice, out of 0.5 million tonnes of their commitment. The two sides signed an agreement on April 03 for importing rice at an average rate of $430 per tonne by Bangladesh. The export of 0.4 million tonnes of rice was scheduled to be completed within two months from the date of the agreement. Though the deadline of rice import has expired, Delhi did not supply the rice and failed to keep her commitment. It is unwise to depend on a particular country for importing a critical item like rice. We can expect similar experience with India in future. Our policy makers must take note of such events for future guidance. The Food Ministry will know whether there is any provision in the agreement to deal with non-compliance by India.
Inspite of our best efforts for domestic procurement, we have to depend on import of a substantial quantity of rice from outside, even if we have to subsidise the procurement price. There must be an advance planning for procurement. Private sector may be reluctant to import rice because of high price. We have to find a mechanism to involve the private sector. It is predicted that high prices of food grains will continue in the next few years. This is because food price is linked to prices of petroleum products, energy, industrial raw materials and feed stuff which are on the rise. While planning for import, we must concentrate on increasing local production. An IPRI study has found that Bangladesh has the potential and comparative advantage to attain sustainable food security and become a net rice exporter. It is argued that food production can be doubled easily by providing the right mix of agricultural inputs. Government has given high priority to agricultural production and research in the new budget.
Bangladesh has to make an assessment of availability of food aid for the next year. There is a wide gap between pledge, commitment and disbursement. This assessment is necessary for making food delivery accurate and timely. Domestic procurement, import and food aid have to be co-ordinated in such a manner that food is delivered at the right time and at the desired destination. Food donors must make their policies known to the Bangladesh authorities on a regular basis so that planning of food distribution is conducted professionally. No government agency should blame the other for failure. Agencies should share their information with the public through the media. No information gap should be created.
The recent World Food Summit in Rome discussed collective action on food. Forty heads of state gathered in Rome under the auspices of the FAO to talk about the state of world farming and what to do about this. For the first time in a generation, soaring food prices have convinced everyone that something is wrong with world farming and that needs to be changed. The Rome summit made progress on a number of items. The summit announced an extra $1.2 billion of food aid. Saudi Arabia made a contribution of $500 million. The conference could not rationalise biofuels policy. Non-governmental organisations wanted a moratorium on ethanol output, saying this would cut grain prices by 20 per cent. But multinationals wanted restrictions on the production of corn based ethanol. The US Secretary of Agriculture claimed that ethanol accounted for only 2.0 or 3.0 per cent of the increase in world food prices. IFRI's view was 30 per cent. This controversy left the summit paralysed over biofuels.
The ban on export of food by many countries has created a serious situation. Around forty food exporting countries have imposed some sort of trade restriction on food-taxes, quotas or across the board bans. A study by the International Food Policy Research Institute (IFPRI) calculates that getting rid of these would reduce world cereal prices by an average of 30 per cent. The summit could not take any clear cut decision on this issue. However, some countries have promised to reopen some of their rice exports. The problem is that the interest of the countries differs. Most developing countries are net food importers but some are net exporters. Amartya Sen, Nobel laureate says that rising demand from the Asian middle classes -- and not falling productivity -- is the main reason for the current crisis. Another view is the decline in agricultural productivity.
The Rome meeting made some progress. The UN Secretary General said food output needs to rise by 50 per cent by 2030. Countries are preparing a long list of promises to help finance research into new seeds, build irrigation canals spread fertiliser use among small farmers. These promises are regarded as the main achievements of Rome summit, according to western media.
Some ague that a second green revolution will be harder to achieve. There is not enough water to permit a big expansion of irrigation, say, in Africa. Oil at $125 a barrel makes fertiliser too expensive. There has been an enormous fall in agricultural investment over 30 years.
Over the past three months, pledges of money have surged. The World Bank and International Fund for Agricultural Development (IFAD) have emerged as the main prospective lenders. But the pledges of fund is not really additional. It is diverted from other programmes. In any case, the Rome summit has not addressed the issue of food in a comprehensive manner.
(The writer is an economist and columnist)