YPF for higher budget allocation to agriculture in FY 2020-21

Youth Policy Forum (YPF) has been organising a series of webinars to analyse Bangladesh's upcoming national budget with field experts and policy teams.

After hosting their first webinar exploring Bangladesh's health care system, Youth Policy Forum held a second budget dialogue webinar on May 22 which focused on agriculture and food security of Bangladesh.

Zeeshan Abedin, the country economist of International Growth Centre (IGC), was moderating the discussion comprising panelists: Dr Nazneen Ahmed, senior research fellow at Bangladesh Institute of Development Studies (BIDS); Dr AKM Nazrul Islam,  associate professor of Environments Economics at Dhaka School of Economics (DScE); Rubaiyath Sarwar, managing director of Innovision Global Consulting Limited; Dr Mehrab Bakhtiar, associate research fellow at the International Food Policy Research Institute (IFPRI); and Md Zafar Sadique, senior research associate at the Centre for Policy Dialogue (CPD).

The focus of the session was on the challenges brought on by the Covid-19 pandemic, as well by the damages from Cyclone Amphan on the agricultural sector of Bangladesh. The policy team's research suggested that the budget for FY 2019-2020 allocated BDT 16,986 crore for the agriculture sector (including fisheries and livestock), which was 7.6 percent higher in normal terms from the budget in the previous fiscal year. While there has been an existing fixed budget of BDT 9,001 crore allocated for subsidies and incentives in the agricultural sector, the discussion included the importance of effective use of this fixed subsidy to benefit the farmers who are suffering because of the current market distortion caused by the pandemic.

The panelists suggested models and methods to protect the farmers from price volatility that would be caused by the current market distortion. They discussed the challenges faced in 2019 when the focus was to revive the rural economy, depressed by the losses from the Boro paddy farmers. To tackle the recent challenges, Dr Mehrab suggested that an increase in government procurement percentage directly from farmers instead of the millers would increase the income of the farmers. Dr AKM Nazrul suggested using marshlands that stay empty for efficient surface water irrigation utilising the surplus budget allocated for the underground water irrigation method.

Additionally, Md Zafar Sadique suggested the reallocation of the subsidy towards crops which are in demand instead of focusing largely on Boro production can be useful for the expansion of underdeveloped crops.

Farmers do not directly procure seeds and fertilisers as they are usually procured indirectly from the market. Dr Nazneen suggested that given these markets are currently under lockdown, preparations need to be taken for a lower production if safe distribution of seeds and fertilisers, along with the ones we import from neighbouring countries, is not secured.

Md Rubaiyath shed light on the current reduction of income because of supply failures and highlighted that there is an overall reduction of protein consumption by 67% due to lack of demand. He suggested that besides giving loans or subsidies, governments should engage in some direct procurement management so that the next generation of food production isn't largely affected by this.

The panelists acknowledged how the government's stimulus package for the agriculture sector was a major fiscal measure for which the priority beneficiaries need to be reached at a grass root level along with the new demographic groups who will soon turn to agriculture for income opportunities as pointed out by CPD.

The relationship between the wholesalers and the producers was also focused on. Dr Nazneen suggested that farmers aren't going to take loans just to be in debt, so the demand side needs to be tackled and pay attention to finance the supply chain from the industries.

Additionally, if the farmers are assured that they will have a fixed order coming in from these industries, there will be fewer instances of agricultural produce being wasted.

Moreover, the panelists discussed many examples of contract farming, suggesting its feasibility in the agriculture sector to protect the farmers from price volatility. Other suggestions for redistribution of the subsidy for the improvement of supply methods, including government-subsidised vehicles that farmers can use to transfer the goods safely based on the localities.

Additionally, it was acknowledged that this sector has the potential to be the most resilient in overcoming the current and upcoming damages. With proper identification of market opportunities through evidence-based research and implementing the right strategies for expanding the production of new and underdeveloped crops, Bangladesh will be able to increase household incomes, and improve nutrition.

The webinar can be viewed on YPF's Facebook page. Tune in to the page for the third dialogue of the series about social protection on May 27 at 7:30pm.