Running the procurement programme efficiently
Thursday, 14 May 2009
Enayet Rasul Bhuiyan
THE agricultural minister was frank and candid in what sounded like a confession to the media on Monday that the government's foodgrain procurement activities are not going as well as these should be in the background of the best ever boro harvest in terms of yields experienced by the country. The bitter experiences of only two years ago when internal foodgrain production was hard hit by natural calamities and the import prices of foodgrains soared, the same duly created the urge for the government to mop up as much of the additionally produced foodgrains, as possible, to build up a buffer stock for short and mid term food security. Government, thus, allocated substantially greater funds for buying foodgrain from farmers and also set a much higher procurement target. The procurement prices of taka 14 for one kg of paddy and taka 22 for one kg of rice, are also notably higher than during previous procurement drives. The higher procurement price setting is squarely aimed to meet the needs of incentives for farmers. Good prices would keep their interest alive to produce foodgrains on the higher side in coming years and this in turn would contribute to the country's food security.
But the realities seem to be far different from what the government authorities are projecting on paper. There are reasons to doubt that farmers are getting the incentive prices on a large scale. There have been little buying and selling at the procurement centres. Farmers across the country were noted for telling the media that they do not know where the procurement centres are located and in some cases where they do know the locations, it becomes not feasible for them to transport their stocks over such long distances. They are habituated to mainly selling to millers and middlemen whom they find close at hand and who, really, buy in big quantities and finally sell to the procurement centres and get the benefits thereof. The middlemen usually offer prices that are not equal to the official procurement prices but may come close to the same. But this year, the middlemen are not buying adequately and this has led to further drops in prices of paddy and rice as the small and marginal farmers cannot afford to hold on to their stocks for long and are persuaded in the short run to even sell their produce below the cost of production, as they need ready cash desperately.
But this forced selling is no good for longer term productivity. Farmers in desperation selling off their produce below the production costs, will likely lose their longer term interest in foodgrain production. Such a development, over time, will only undermine the country's food security.
And it is not for the first time that this is seen to be happening. Following every major harvest of foodgrains, government operates a programme to buy up at a good price the surplus foodgrains from farmers which they do not need for their subsistence. The intention, on paper, is to reward the farmers adequately with attractive prices and to keep the incentive high for them to produce well in the next season in the expectation of getting the good price. In this way, overall production of farm produces is sought to be kept on the high side.
But the reality in most cases is that the farmers do not get the benefits of the official price. The official procurement centres exist all right. But when approached by the small and marginal farmers, the operators of these centres on this or that plea refuse to deal with them. The small and marginal farmers cannot hold on to their stocks for long as they need cash badly to meet their urgent needs. Thus, they are forced to sell their produce to private middlemen at prices well below the officially declared prices. The middlemen then take their stocks and sell the same off easily at the government declared prices at the procurement centres. Thus, the benefits of the better prices go to the middlemen and not to the farmers. The operators of the procurement centres are found having a hand in glove relationship with the middlemen and the real lubricant of this relationship is bribe given by the middlemen to these operators.
Therefore, the corruption at the procurement centres must be eliminated for good. Farmers need to get effective price support not in words but in deeds. The same is vitally important to improve the income of most of them who presently remain in poverty. Large scale poverty reduction in the countryside-- where over eighty per cent of the people of the country live-- is linked considerably to successful operation of policies designed to enable farmers to get good prices for their produce.
The harvesting of boro rice is about to end. Now is the time for the government to sufficiently cleanse the procurement centres of corrupt practices so that a good amount of the boro rice can be purchased and stocked in the government's foodgrain silos while paying fair prices for the same to farmers. And this practice should be aimed for consolidation in the future. A good food stock available with the government adds to the food security of the country. First of all, in that case urgent food imports causing undue pressures on the country's foreign currency reserve are precluded from the keeping of such a good buffer stock. Government can intervene in the market with open market sale (OMS) operations, whenever aberrations are noted in the market prices of rice by releasing food from its stocks at fair prices. These activities are very useful for the poor and help in the stabilisation of market prices of foodgrains. Large stocks also come in aid of developmental activities in rural areas under food for works (FFW) programmes. The poor are significantly aided by such programmes.
Government in Bangladesh has the opportunity this year to build up a good stock of foodgrains to meet any situation specially after last year's food gap created by natural calamity and the difficulties faced in importing large quantities of food grains from international markets with unusually high prices.
Government has done well in spurring on or helping the production of higher rice output in the last two seasons. But favourable climate and a sense of urgency among the farmers, specially the subsistence ones, mainly helped the record bumper harvests. Any downturn in climatic patterns or the occurrence of natural calamities, could once again threaten the economy with the need to go for massive imports that would stress the country's balance of payments position and create other macro economic problems.
Thus, it is so very important to go on streamlining the official foodgrain programmes on a sustainable basis to keep the farmers motivated to go on producing increasingly on the higher side. Equally important would be to mop up the surplus produce from farmers to build bigger food stocks to hedge against any situation. Food security needs to be central to planning in the backdrop of recent experiences. The building of this security will also contribute to overall economic security for the country.
The streamlining of the foodgrain procurement programme essentially involves very much improving the accessibility of farmers to the procurement centres. The procurement centres will have to be much increased in number and located in a planned manner within easy reach of the farmers so that farmers can easily identify them and take their produce directly to the same for selling. All corrupt practices will have to be weeded out for good at these centres to ensure that farmers can sell promptly at the officially declared prices and get paid instantly.
THE agricultural minister was frank and candid in what sounded like a confession to the media on Monday that the government's foodgrain procurement activities are not going as well as these should be in the background of the best ever boro harvest in terms of yields experienced by the country. The bitter experiences of only two years ago when internal foodgrain production was hard hit by natural calamities and the import prices of foodgrains soared, the same duly created the urge for the government to mop up as much of the additionally produced foodgrains, as possible, to build up a buffer stock for short and mid term food security. Government, thus, allocated substantially greater funds for buying foodgrain from farmers and also set a much higher procurement target. The procurement prices of taka 14 for one kg of paddy and taka 22 for one kg of rice, are also notably higher than during previous procurement drives. The higher procurement price setting is squarely aimed to meet the needs of incentives for farmers. Good prices would keep their interest alive to produce foodgrains on the higher side in coming years and this in turn would contribute to the country's food security.
But the realities seem to be far different from what the government authorities are projecting on paper. There are reasons to doubt that farmers are getting the incentive prices on a large scale. There have been little buying and selling at the procurement centres. Farmers across the country were noted for telling the media that they do not know where the procurement centres are located and in some cases where they do know the locations, it becomes not feasible for them to transport their stocks over such long distances. They are habituated to mainly selling to millers and middlemen whom they find close at hand and who, really, buy in big quantities and finally sell to the procurement centres and get the benefits thereof. The middlemen usually offer prices that are not equal to the official procurement prices but may come close to the same. But this year, the middlemen are not buying adequately and this has led to further drops in prices of paddy and rice as the small and marginal farmers cannot afford to hold on to their stocks for long and are persuaded in the short run to even sell their produce below the cost of production, as they need ready cash desperately.
But this forced selling is no good for longer term productivity. Farmers in desperation selling off their produce below the production costs, will likely lose their longer term interest in foodgrain production. Such a development, over time, will only undermine the country's food security.
And it is not for the first time that this is seen to be happening. Following every major harvest of foodgrains, government operates a programme to buy up at a good price the surplus foodgrains from farmers which they do not need for their subsistence. The intention, on paper, is to reward the farmers adequately with attractive prices and to keep the incentive high for them to produce well in the next season in the expectation of getting the good price. In this way, overall production of farm produces is sought to be kept on the high side.
But the reality in most cases is that the farmers do not get the benefits of the official price. The official procurement centres exist all right. But when approached by the small and marginal farmers, the operators of these centres on this or that plea refuse to deal with them. The small and marginal farmers cannot hold on to their stocks for long as they need cash badly to meet their urgent needs. Thus, they are forced to sell their produce to private middlemen at prices well below the officially declared prices. The middlemen then take their stocks and sell the same off easily at the government declared prices at the procurement centres. Thus, the benefits of the better prices go to the middlemen and not to the farmers. The operators of the procurement centres are found having a hand in glove relationship with the middlemen and the real lubricant of this relationship is bribe given by the middlemen to these operators.
Therefore, the corruption at the procurement centres must be eliminated for good. Farmers need to get effective price support not in words but in deeds. The same is vitally important to improve the income of most of them who presently remain in poverty. Large scale poverty reduction in the countryside-- where over eighty per cent of the people of the country live-- is linked considerably to successful operation of policies designed to enable farmers to get good prices for their produce.
The harvesting of boro rice is about to end. Now is the time for the government to sufficiently cleanse the procurement centres of corrupt practices so that a good amount of the boro rice can be purchased and stocked in the government's foodgrain silos while paying fair prices for the same to farmers. And this practice should be aimed for consolidation in the future. A good food stock available with the government adds to the food security of the country. First of all, in that case urgent food imports causing undue pressures on the country's foreign currency reserve are precluded from the keeping of such a good buffer stock. Government can intervene in the market with open market sale (OMS) operations, whenever aberrations are noted in the market prices of rice by releasing food from its stocks at fair prices. These activities are very useful for the poor and help in the stabilisation of market prices of foodgrains. Large stocks also come in aid of developmental activities in rural areas under food for works (FFW) programmes. The poor are significantly aided by such programmes.
Government in Bangladesh has the opportunity this year to build up a good stock of foodgrains to meet any situation specially after last year's food gap created by natural calamity and the difficulties faced in importing large quantities of food grains from international markets with unusually high prices.
Government has done well in spurring on or helping the production of higher rice output in the last two seasons. But favourable climate and a sense of urgency among the farmers, specially the subsistence ones, mainly helped the record bumper harvests. Any downturn in climatic patterns or the occurrence of natural calamities, could once again threaten the economy with the need to go for massive imports that would stress the country's balance of payments position and create other macro economic problems.
Thus, it is so very important to go on streamlining the official foodgrain programmes on a sustainable basis to keep the farmers motivated to go on producing increasingly on the higher side. Equally important would be to mop up the surplus produce from farmers to build bigger food stocks to hedge against any situation. Food security needs to be central to planning in the backdrop of recent experiences. The building of this security will also contribute to overall economic security for the country.
The streamlining of the foodgrain procurement programme essentially involves very much improving the accessibility of farmers to the procurement centres. The procurement centres will have to be much increased in number and located in a planned manner within easy reach of the farmers so that farmers can easily identify them and take their produce directly to the same for selling. All corrupt practices will have to be weeded out for good at these centres to ensure that farmers can sell promptly at the officially declared prices and get paid instantly.