Of rice price, statistics and subsidy
Shamsul Huq Zahid | Monday, 23 June 2008
There has been a sort of euphoria among the official circle about Boro rice production this year. But that seems to be fading fast as the rice prices have gone back to their previous highs within a month from the 'record' harvest of Boro crop.
Taking into consideration the bumper production of Boro rice a great many people, including the market analysts, had expected some relief to poor consumers, at least, for two to three months because of abundant supply of the country's main staple in the market. However, no body hoped for any major drop in rice prices. But on-going uptrend in rice prices has come as a surprise to many. The government, it seems, does not have any ready answer to the problem that has made the life of the poor and low-income people unbearable.
Is there any link between the latest hike in rice prices and the suspension of sale of rice at subsidised price through the Bangladesh Rifles-BDR- outlets in Dhaka and some other urban areas? Most unlikely. For, the quantity of rice used to be made available to the poor through the BDR sales outlets daily was very meagre compared to that marketed by private retail and wholesale outlets throughout the country. Then what could be the reasons for the rice prices going up soon after a 'record' harvest and that, too, at a time when the prices of the staple are showing a downtrend in the global market?
There is no denying that this year there was a good Boro harvest, mainly because of favourable weather conditions. Despite some shortcomings, the government could also make available necessary inputs in time. The most important factor that encouraged the farmers to toil hard for reaping a good harvest appears to be the higher rice price.
There exists a gross mismatch between the estimated Boro rice production and the prevailing prices of rice in the market. The projected production of Boro was supposed to leave a cooling effect on rice prices because of increased supply of the same in the market. Usually, marginal and small farmers sell in the market the major part of their harvests to meet other basic needs. It is not unusual that because of higher prices, they might have preferred this time to hold on to a higher quantity of the same. Yet that particular reason should not affect the supply flow because, if the official statistics are true, the Boro output was much higher than anytime before.
At least two reasons seem responsible for the current uptrend in rice prices. One, the millers might have gone for hoarding of rice to reap price benefit later and two, there could be some problems with official statistics involving rice acreage and output. It is the job of the government to see whether the millers have gone for hoarding or not. But that government may not like to initiate such an investigation out of the fear that the same could foil its own rice procurement programme for the Boro season this year. The government, which has until now has achieved less than 50 per cent of its procurement target, remains mainly dependent on the millers for supply of rice to the warehouses of the food department. The food department has struck deals with a large number of millers on the supply of a large quantity of rice under the procurement programme. So, the department would not like to sour its relationship with the millers.
Then, there comes the issue of government statistics on agricultural production. The doubt about the statistics available with the Bureau of Statistics, the Department of Agricultural Extension and other relevant agencies has been widespread. The data collected from the field level are found to be concocted, to some extent, mainly to suit to the needs of the offices at the centre. Besides, the manpower and the funds available at the field level are far from adequate to produce any reliable data.
The government should first make a few random sample surveys on the authenticity of data sent from the field level to the centre, try to locate the problems in getting authentic version of the same and build up a reliable data collection and transfer method. In the past, the problem with statistics came under national focus, but nothing tangible has done until now.
However, these all are theoretical aspects of the problem. But the reality is that the poor and low income people who are now finding it increasingly difficult to find work due to the onset of rainy season are hard-pressed by price escalation of essential commodities, including rice.
A recent government report has revealed that the poor now spend nearly 87 per cent of their food budget on rice. Actually, they do not have any other budget except the one concerning food. Their paltry earnings cannot even meet that budget. They remain half-fed most of the times.
In such a situation, the decision to suspend sale of rice through the BDR outlets at a price lower than that in the market does appear to be rather cruel. The BDR said they do not have fund to sell rice at subsidized prices.
The finance adviser defending the suspension said the government cannot afford the sale of rice round the year at subsidized prices. In reality, the government did not sale rice through OMS and the BDR outlets at subsidized prices. Rather it had made a profit. The rice it sold was procured by the government at a price lower than that sold through OMS. This paper carried a report recently on such sale operation. The finance adviser said the OMS operation would start again in September. But can the poor afford the current prices of coarse rice? When questions about the government's capacity to make available food grains at highly subsidized prices in some other sections of the society are not raised, then why should the government be so concerned about its loss to be incurred due to the sale of rice among the poor and low income people at moderately subsidized prices, and that, too, in such a difficult time?
................................
[email protected]
Taking into consideration the bumper production of Boro rice a great many people, including the market analysts, had expected some relief to poor consumers, at least, for two to three months because of abundant supply of the country's main staple in the market. However, no body hoped for any major drop in rice prices. But on-going uptrend in rice prices has come as a surprise to many. The government, it seems, does not have any ready answer to the problem that has made the life of the poor and low-income people unbearable.
Is there any link between the latest hike in rice prices and the suspension of sale of rice at subsidised price through the Bangladesh Rifles-BDR- outlets in Dhaka and some other urban areas? Most unlikely. For, the quantity of rice used to be made available to the poor through the BDR sales outlets daily was very meagre compared to that marketed by private retail and wholesale outlets throughout the country. Then what could be the reasons for the rice prices going up soon after a 'record' harvest and that, too, at a time when the prices of the staple are showing a downtrend in the global market?
There is no denying that this year there was a good Boro harvest, mainly because of favourable weather conditions. Despite some shortcomings, the government could also make available necessary inputs in time. The most important factor that encouraged the farmers to toil hard for reaping a good harvest appears to be the higher rice price.
There exists a gross mismatch between the estimated Boro rice production and the prevailing prices of rice in the market. The projected production of Boro was supposed to leave a cooling effect on rice prices because of increased supply of the same in the market. Usually, marginal and small farmers sell in the market the major part of their harvests to meet other basic needs. It is not unusual that because of higher prices, they might have preferred this time to hold on to a higher quantity of the same. Yet that particular reason should not affect the supply flow because, if the official statistics are true, the Boro output was much higher than anytime before.
At least two reasons seem responsible for the current uptrend in rice prices. One, the millers might have gone for hoarding of rice to reap price benefit later and two, there could be some problems with official statistics involving rice acreage and output. It is the job of the government to see whether the millers have gone for hoarding or not. But that government may not like to initiate such an investigation out of the fear that the same could foil its own rice procurement programme for the Boro season this year. The government, which has until now has achieved less than 50 per cent of its procurement target, remains mainly dependent on the millers for supply of rice to the warehouses of the food department. The food department has struck deals with a large number of millers on the supply of a large quantity of rice under the procurement programme. So, the department would not like to sour its relationship with the millers.
Then, there comes the issue of government statistics on agricultural production. The doubt about the statistics available with the Bureau of Statistics, the Department of Agricultural Extension and other relevant agencies has been widespread. The data collected from the field level are found to be concocted, to some extent, mainly to suit to the needs of the offices at the centre. Besides, the manpower and the funds available at the field level are far from adequate to produce any reliable data.
The government should first make a few random sample surveys on the authenticity of data sent from the field level to the centre, try to locate the problems in getting authentic version of the same and build up a reliable data collection and transfer method. In the past, the problem with statistics came under national focus, but nothing tangible has done until now.
However, these all are theoretical aspects of the problem. But the reality is that the poor and low income people who are now finding it increasingly difficult to find work due to the onset of rainy season are hard-pressed by price escalation of essential commodities, including rice.
A recent government report has revealed that the poor now spend nearly 87 per cent of their food budget on rice. Actually, they do not have any other budget except the one concerning food. Their paltry earnings cannot even meet that budget. They remain half-fed most of the times.
In such a situation, the decision to suspend sale of rice through the BDR outlets at a price lower than that in the market does appear to be rather cruel. The BDR said they do not have fund to sell rice at subsidized prices.
The finance adviser defending the suspension said the government cannot afford the sale of rice round the year at subsidized prices. In reality, the government did not sale rice through OMS and the BDR outlets at subsidized prices. Rather it had made a profit. The rice it sold was procured by the government at a price lower than that sold through OMS. This paper carried a report recently on such sale operation. The finance adviser said the OMS operation would start again in September. But can the poor afford the current prices of coarse rice? When questions about the government's capacity to make available food grains at highly subsidized prices in some other sections of the society are not raised, then why should the government be so concerned about its loss to be incurred due to the sale of rice among the poor and low income people at moderately subsidized prices, and that, too, in such a difficult time?
................................
[email protected]