Farm subsidy to continue

Country's 13 million farm families will continue to enjoy incentives in terms of subsidised fertilisers and other farm-input support as they did for the past several years.  

The government's proposed budget for 2015-16 sanctions Tk 12,699 crore for farm sector, of which Tk 9,000 is earmarked for subsidies.

But, one may still wonder why then agricultural GDP growth plummeted in a year that saw robust growth in cereal production.

Some answers are there in the government's budget plan, while sector experts also provide a few clues to this puzzle.

As government statistics show, country's food production hit a record growth from a yearly output of 28 million tonnes to over 38 million tonnes in a decade's time. But contrarily, the farm sector's input growth to GDP almost halved from 6.15 in 2009-10 to 3.04 (projected) in current fiscal (2014-15).

The farm sector's contribution to GDP also fell from 15.17 percent in 2006-07 to 12.27 percent in 2014-15.

Talking to The Daily Star, farm sector experts said that patronising the crop sub-sector alone is not enough to propel agriculture's growth engine. Rather, fisheries and livestock sub-sectors also deserve the government's policy attentions equally.

The finance minister's budget speech is a testimony to that. He says, "...progress in livestock is lacklustre. Except in artificial insemination, no effective initiative has taken place; even the food supply system in this sector is quite weak."

"Only growth of crop sub-sector would not take us too far. We need to support otherwise neglected sub-sectors of livestock and fisheries," agriculture economist Dr Mahabub Hossain said. Bangladesh is 4th and 5th in inland fisheries production and in culture fisheries respectively, says Bangladesh Economic Survey 2015 published yesterday.

Fisheries and livestock together contribute one fourth of agriculture GDP but receive barely 10 percent of total sector allocation.

The farm sector might not require the Tk 9,000 subsidy anymore, especially as the price of chemical fertilisers in international markets has seen a 40 percent fall, Hossain said. He is currently serving as an advisor at Brac. 

"So from the very outset, the government can reallocate a certain amount to growth of fishery and livestock sub-sectors and also for agriculture research and development."   

Dr M Asaduzzaman is a professorial fellow of Bangladesh Institute of Development Studies (Bids), the country's premier think-tank. He observed that despite subsidies and policy support, agricultural GDP growth is falling "because, we need to do a little more to arrest the fall."

"We have to provide support to non-crop sub-sectors along with the crop sub-sector. We have to mend the weaknesses in value chain management and market-linkage. We have to help farmers lower production costs by assisting them in introducing cost-efficient irrigation technologies.”

“And, instead of providing blanket subsidy, we need to give more subsidies to farmers who apply urea in granular form instead of powder form."

For farmers to get benefit out of increased production, government's prompt policy actions are necessary, expert added. 

Government statistics show that Bangladesh attained self-sufficiency in rice production, so much so that 25,000 tonnes of coarse rice was exported to Sri Lanka for the first time in the outgoing fiscal year. 

However, in the same time private traders imported over 2.7 million tonnes of rice from India, thereby dampening the staple's price in local markets in peak production season.

That actually acted as a disincentive to Boro growers, Mahabub said.

“Had the government imposed import tariff on rice earlier than it did, farmers would have gotten better prices.”