Price drops of farm produce
Saturday, 6 February 2010
There is, no doubt, great merit in price stabilization of kitchen commodities to help the common people to keep on consuming nutrients cheaply. But there are also the other vital aspects to be considered such as keeping the farmers motivated towards higher production. Farmers in one season who produce amply but do not get good returns, are likely to under produce in the next season leading to scarcity of that commodity and its higher price at retail levels. Thus, there are many sides to the production and finally the consumer level prices of these goods to be considered to get or disperse benefits at all levels. First of all, there has to be accurate demand assessment of a farm product ranging from its internal demand as well as the external one to be met through exports. Only the total demanded quantities should then sought to be produced and marketed leaving incentives at different tiers.
For example, potato production is a case in point. Farmers all over the country but particularly in the northern region appear to have exceeded the targeted production in the current season by some nine per cent according to media reports. The producers of some early varieties of potatoes gained from receipt of high prices at the outset. But this trend did not persist as the full produce are coming to the markets and the excess production in the absence of adequate preservation is helping to create a glut like situation which in turn is causing a big drop in prices. Thus, its wholesale prices in many places have gone down to as low as Taka 11-14 per kilogram whereas the price was some Taka 30-32 only about a month ago.
The potato producers are in a bad mood and many of them are saying that the present wholesale prices are hardly enough to match their production costs, not to say anything about leaving a decent profit to them. When asked why they were so enthusiastic about higher production, they point to governmental supports in the form of reduced price of the requisite fertilizers, liberal credit support to even share cropping level farmers, etc. The same inspired the farmers to produce more but also led to an imbalance between demand and supply that have created conditions for losses for them.
The same kind of a mismatch is noted in the production of tomatoes. It was reported that prices of tomatoes have declined so much that in many areas of Rajshahi district cows are being fed with tomatoes as producers find no incentive to take these to markets. Reports are also always noted about this or that vegetable being overproduced and the consequent net losses for the producers.
What would be the ways of coming out of such predicaments on a sustainable basis ? First of all, authorities need to be alert and suspend imports of agro-produce that would be at the cost of the local producers. For instance, it is complained that the on going depressed prices of potatoes have a lot to do with allowing import of some 5,956 tonnes of potatoes through the Bennapole border till January. Allowing the same kind of import of tomatoes also encourage its price drops locally. Therefore, government needs to keep suspended import of such produce selectively for periods during their high production in the country. A crash programme needs to be started all over the country to set up refrigeration units of perishables close to the areas of production and users should find the charges for their use affordable. Government can declare special incentive measures for the exporters of such goods. Even local industries like the makers of potato flakes and other potato based products for local and foreign markets, makers and exporters of tomato based products, etc., such industries can be benefited by government's fiscal measures that would encourage them to use much greater quantities of the primary produce.
For example, potato production is a case in point. Farmers all over the country but particularly in the northern region appear to have exceeded the targeted production in the current season by some nine per cent according to media reports. The producers of some early varieties of potatoes gained from receipt of high prices at the outset. But this trend did not persist as the full produce are coming to the markets and the excess production in the absence of adequate preservation is helping to create a glut like situation which in turn is causing a big drop in prices. Thus, its wholesale prices in many places have gone down to as low as Taka 11-14 per kilogram whereas the price was some Taka 30-32 only about a month ago.
The potato producers are in a bad mood and many of them are saying that the present wholesale prices are hardly enough to match their production costs, not to say anything about leaving a decent profit to them. When asked why they were so enthusiastic about higher production, they point to governmental supports in the form of reduced price of the requisite fertilizers, liberal credit support to even share cropping level farmers, etc. The same inspired the farmers to produce more but also led to an imbalance between demand and supply that have created conditions for losses for them.
The same kind of a mismatch is noted in the production of tomatoes. It was reported that prices of tomatoes have declined so much that in many areas of Rajshahi district cows are being fed with tomatoes as producers find no incentive to take these to markets. Reports are also always noted about this or that vegetable being overproduced and the consequent net losses for the producers.
What would be the ways of coming out of such predicaments on a sustainable basis ? First of all, authorities need to be alert and suspend imports of agro-produce that would be at the cost of the local producers. For instance, it is complained that the on going depressed prices of potatoes have a lot to do with allowing import of some 5,956 tonnes of potatoes through the Bennapole border till January. Allowing the same kind of import of tomatoes also encourage its price drops locally. Therefore, government needs to keep suspended import of such produce selectively for periods during their high production in the country. A crash programme needs to be started all over the country to set up refrigeration units of perishables close to the areas of production and users should find the charges for their use affordable. Government can declare special incentive measures for the exporters of such goods. Even local industries like the makers of potato flakes and other potato based products for local and foreign markets, makers and exporters of tomato based products, etc., such industries can be benefited by government's fiscal measures that would encourage them to use much greater quantities of the primary produce.