Food import: For whom?

Photo: Firoz Gazi/ Drik News

Recently, the government took a decision not to buy rice from the farmers but to import it from abroad. The reason given is that rice price is already high in the market. The decision is not as simple as it looks. Agricultural price policy is very crucial for a country as 60% of the population depend directly on agriculture.
Stabilising food grain market is important for any government for many reasons, of which the two main ones are (i) if the farmers do not get the proper price, they will lose their incentive for agricultural production next year and (ii) if the food grain price is too high, the industrial sector will have to lose their profit as higher price tends to bring an increase in wages. Both of these two situations can be disastrous for our country.
Considering the interests of both the farmers and the industrialists is equally important. If the government cannot give proper price to the farmers for their food grains, they may even move to the cash crops and the food security of our country will be threatened. In the northern part and in the hill tracts many farmers have turned to cultivating tobacco, and in the southern part they have taken up shrimp farming, which is not a good signal for our country.
A study shows that by 2050, 17% of the South Asian people will suffer food crisis, and by 2100 the number will rise to 35% (Basak, 2010). The World Bank estimates that 882 million people in developing countries are facing food insecurity in 2010. This is alarming indeed for all of us, and ensuring food security should be of utmost importance for the government as there is distressing increase of population as well as demand for food.
To keep the farmers in the agricultural production system the government usually follows either of two major policies -- price support or input subsidy. In developing countries like Bangladesh, both policies are often adopted. The government has allocated Tk.4,006 crore for agricultural input subsidy (in the last FY, it was Tk.4,200 crore). This was done so that the input cost remained low and rice price in the market could cover or exceed the input cost. But, because of the weak distribution system and dealership management, and corruption at every stage, farmers cannot reap the benefit.
Along with input subsidy, the government buys rice from the farmers directly at an assured price. It keeps the food grain market stable as the government fixes the floor price of the food grains. This system can easily help in ensuring fair price for the farmers.
Now let us look at what will happen because of the decision of not buying rice from the farmers, and see how logical it is.
First of all, we have to bear in mind that rice price in any market in the country and the price received by the farmers are not the same. Last year, farmers got a maximum of Tk.600 for a maund of rice, but in the market we got prepared rice of the same amount (25 kg of prepared rice is produced from one maund of rice) almost Tk.1,000. Almost Tk.600 goes into the pockets of the middlemen who buy rice from the field, prepare it, transport it and sell it in the market.
This new type of business emerged in the villages only one and half decades ago, and now it is rising fast. It is the middlemen not the farmers who are earning a huge amount of money from food grains. So high price in the market does not indicate that farmers are getting the right price.
The government has 8 lakh metric tonnes of food grains in stock, and has decided to import another eight lakh metric tonnes from abroad. This will increase the profit of the middlemen. There is no farmers' union in any locality of our country, but middlemen can dictate the terms by creating a union among themselves. When the government is not the buyer, these businessmen will easily control the market and it will be the farmers who will lose out again. This, in turn, will discourage them from producing food grains next year.
In India, inflation in food price was 20% in FY 2009-10. Even then, Haryana Chief Minister Bhupindar Singh Hooda urged the central government to peg the minimum support price of food grains at 50% higher than the actual cost of cultivation. But, Bangladesh, with a food inflation of 9.72% (as of September, 2010), is thinking of not buying rice, which raises the question as to why we should take away price support when it has the potential of becoming a boon for our agricultural sector.
In creating a better food grain policy it is imperative to look at the entire system of food production, food procurement and the release and distribution of food. There are basically two motives for food grain procurement by the state -- to provide food security to the vulnerable population and to smooth out food grain price fluctuation from year to year. So, there are plenty of things to be considered before taking any decision concerning agriculture and food grain as the entire population is affected by it.

M. Mizanur Rahman and Shammunul Islam are Masters of Development Studies, University of Dhaka.