Warning about food security
Thursday, 2 August 2007
Enayet Rasul
THE price of ata (wheat flour) consumed by the common man has shot up by some Tk 8 to 10 per kg in the markets of Dhaka within the last couple of days. The rise in the price of rice also continues unabated. The cheapest quality coarse rice that was selling at Tk 20 to 22 per kg about a week ago, now sells for Tk 24. There are all the indications that rice prices will rise further.
There is no need to explain what kind of hardships are caused to people at the fringes of existence when they find their basic subsistence item, ata, jumping up by as much as taka 8 within days. This is probably only the beginning and further rises in its price is apprehended. Wheat production in the country has been remarkably below the target in the last growing season. The import price of wheat that was $160 per tonne some months ago has soared to $330. Thus, even the complete withdrawal of all levies on wheat imports will not suffice to push down its prices substantially in the local markets.
Prices of imported rice is also increasing. India is by far the biggest seller of rice and wheat to Bangladesh. This is only natural considering its nearness to Bangladesh. It proves to be cheaper to import foodgrains from India in a comparative sense because of the vast differences in freighting costs. Freight costs from other countries understandably are much higher because of the distance factor. But there was under production of both commodities in India in the present year which drove up their prices. The higher prices of foodgrains in India are getting reflected in their export prices. Besides, the Indian government is considering restricting their foodgrain exports which must be received as bad news in Bangladesh.
The production of boro rice, the last major rice crop that was grown in Bangladesh, was notably short of target. This alone has created the condition of foodgrain scarcity in Bangladesh and accentuated the need for greater food imports to meet the shortfall in local production. But the situation has a worrying dimension because international prices of foodgrains are also rising uncomfortably. No country has a major surplus to sell.
The Adviser for the Ministry of Food informed in a meeting two months ago that there were some 0.2 million tonnes of foodgrains in the government godowns across the country. Thus, it was no surprise that in the same meeting it was decided that the government would soon embark on a massive foodgrains procurement drive to improve the stock position of food. Usually, a stock in the range of at least 0.4 to 0.6 million tonnes in the government warehouses is seen as comfortable. In some years, following good harvests, even a million tonnes were seen procured for storing in government maintained silos. Thus, this year's stock level dwindling down to only 0.2 million tonnes should be a cause of concern.
A good food stock with the government adds to the food security of the country. First of all, in that case urgent food imports causing undue pressure 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 helps 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.
The unusually big foodgrain procurement target is an indicator of an uneasiness. But the procurement drive was reported to be not progressing well. Even after two upward readjustments of procurement prices, the sellers were not responding enthusiastically. The reasons for this could be several. First of all, production was short of target that meant that many farmers did not have surpluses to sell and were keeping their stocks unsold as they intended to consume the grains or subsist on the same. Or the procurement prices are still not found attractive to them. Even the corruption in the procurement centres could be a factor.
Whatever the reasons, the reported poor performance in the food procurement drive has created all the compulsion to import necessary foodgrains in time and build up a buffer stock to hedge against any worsening of the situation. The private sector will be importing foodgrains as part of their business operations. But government cannot just remain motionless and depend on market forces to meet the requirements for food. It must build up foodgrain stocks itself and keep the same at its disposal to be able to successfully cope with any unwarranted developments. Besides, the government's planning needs to be more attuned towards building up as good a pipeline of food aid as possible. The same should include firm commitments for such aid, arrangements for their earliest deliver, carrying and storage. Arranging for food aid at substantially higher levels and paving the way for arrival of such food at the fastest in the country should also be a cornerstone of government's strategy.
It must be realised at the highest policy planning level that food sufficiency and affordable prices of food are pivotal to retaining a semblance of economic and social stability in Bangladesh. The adversities in the other sectors can be met or endured. But if food security is endangered, then the threat to socio-political and economic stability of Bangladesh could be a very serious one indeed.
THE price of ata (wheat flour) consumed by the common man has shot up by some Tk 8 to 10 per kg in the markets of Dhaka within the last couple of days. The rise in the price of rice also continues unabated. The cheapest quality coarse rice that was selling at Tk 20 to 22 per kg about a week ago, now sells for Tk 24. There are all the indications that rice prices will rise further.
There is no need to explain what kind of hardships are caused to people at the fringes of existence when they find their basic subsistence item, ata, jumping up by as much as taka 8 within days. This is probably only the beginning and further rises in its price is apprehended. Wheat production in the country has been remarkably below the target in the last growing season. The import price of wheat that was $160 per tonne some months ago has soared to $330. Thus, even the complete withdrawal of all levies on wheat imports will not suffice to push down its prices substantially in the local markets.
Prices of imported rice is also increasing. India is by far the biggest seller of rice and wheat to Bangladesh. This is only natural considering its nearness to Bangladesh. It proves to be cheaper to import foodgrains from India in a comparative sense because of the vast differences in freighting costs. Freight costs from other countries understandably are much higher because of the distance factor. But there was under production of both commodities in India in the present year which drove up their prices. The higher prices of foodgrains in India are getting reflected in their export prices. Besides, the Indian government is considering restricting their foodgrain exports which must be received as bad news in Bangladesh.
The production of boro rice, the last major rice crop that was grown in Bangladesh, was notably short of target. This alone has created the condition of foodgrain scarcity in Bangladesh and accentuated the need for greater food imports to meet the shortfall in local production. But the situation has a worrying dimension because international prices of foodgrains are also rising uncomfortably. No country has a major surplus to sell.
The Adviser for the Ministry of Food informed in a meeting two months ago that there were some 0.2 million tonnes of foodgrains in the government godowns across the country. Thus, it was no surprise that in the same meeting it was decided that the government would soon embark on a massive foodgrains procurement drive to improve the stock position of food. Usually, a stock in the range of at least 0.4 to 0.6 million tonnes in the government warehouses is seen as comfortable. In some years, following good harvests, even a million tonnes were seen procured for storing in government maintained silos. Thus, this year's stock level dwindling down to only 0.2 million tonnes should be a cause of concern.
A good food stock with the government adds to the food security of the country. First of all, in that case urgent food imports causing undue pressure 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 helps 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.
The unusually big foodgrain procurement target is an indicator of an uneasiness. But the procurement drive was reported to be not progressing well. Even after two upward readjustments of procurement prices, the sellers were not responding enthusiastically. The reasons for this could be several. First of all, production was short of target that meant that many farmers did not have surpluses to sell and were keeping their stocks unsold as they intended to consume the grains or subsist on the same. Or the procurement prices are still not found attractive to them. Even the corruption in the procurement centres could be a factor.
Whatever the reasons, the reported poor performance in the food procurement drive has created all the compulsion to import necessary foodgrains in time and build up a buffer stock to hedge against any worsening of the situation. The private sector will be importing foodgrains as part of their business operations. But government cannot just remain motionless and depend on market forces to meet the requirements for food. It must build up foodgrain stocks itself and keep the same at its disposal to be able to successfully cope with any unwarranted developments. Besides, the government's planning needs to be more attuned towards building up as good a pipeline of food aid as possible. The same should include firm commitments for such aid, arrangements for their earliest deliver, carrying and storage. Arranging for food aid at substantially higher levels and paving the way for arrival of such food at the fastest in the country should also be a cornerstone of government's strategy.
It must be realised at the highest policy planning level that food sufficiency and affordable prices of food are pivotal to retaining a semblance of economic and social stability in Bangladesh. The adversities in the other sectors can be met or endured. But if food security is endangered, then the threat to socio-political and economic stability of Bangladesh could be a very serious one indeed.