Food price-hike must be contained
At this moment all including professionals, intellectuals, elite, specialists have the same question on their lips: "will the prices of food stuff come down". Simultaneously all seek a consolation by referring to the fact that the present CTG has achieved a lot of successes, so it may be able to contain the price hike of foodstuff, too. The most common doctrine of economics is "when supply goes up in relation to demand, the price decreases and vice versa." It is not necessary to become an economist to understand this doctrine. It may be mentioned that in mid 2006 the price of sugar was Tk 65 per kg, but it came down to Tk 25 per kg in the 1st quarter of 2007. It happened so because at that time despite hundreds of tons of sugar lying in the godowns of the local sugar mills, more sugar arrived from India through import or smuggling. This was clearly a game of demand and supply. I believe currently the price hike of foodstuff is also the same game though there may be some hoarding and profiteering motive, but that would be automatically eliminated if the supply goes up substantially.
Some proposals
According to the opinion of specialists there was a shortage of rice to the extent of 20-25 lac m. tons in Agrahayon after two times damage by floods and lastly by Sidr cyclone. Meanwhile though some rice has been imported, yet the need up to Baishakh, the month of harvesting Borro/Irri crop is estimated at 20 m. tons which must be imported until the harvest. Out of this, the government is importing 5 lac m. tons from India and the private sector importers are procuring the rest. This 5 lac m. tons should have been imported earlier and private sector importers encouraged to import by way of offering incentives viz., zero-margin L/C, lower rate of interest on bank loans, preference in release of rice at the ports, etc. Moreover, TCB, BDR, Army should have been given authority and loan/capital to import and distribute rice in the country. However, it is a matter of hope that though late the government has deployed TCB to import rice and other foodstuff. Due to delay in import and a gap created in food storage in the silos the importers and dealers seem to have taken advantage to raise the rice price. This situation should be avoided in future by deploying TCB, BDR, Army to import food stuff whenever shortage arises or the private sector importers tend to be non-cooperative in importing or taking up policy of go-slow. In fact, when shortage prevails in the international market the private importers would always hesitate in importing, then it is the government, who should import directly.
Production has no alternative
The price of a commodity depends on its availability in the international market. Currently the big producers of rice in the world viz., India, Vietnam, Thailand etc have restricted their export due to their own demand. So the price has gone up and it might go up further. Even USA has started importing rice. India has restricted its export to Bangladesh for the second time Hence it may not be possible for us to import rice as much as necessary. Internal production is therefore the best source of food supply to feed our own people. The government targeted a production of 28 lac m. tons of Irri/Boro primarily. The target should be increased to 50 lac m. tons. Irri/Boro crop is the best opportunity ahead of us to avail in order to increase production and reduce the shortage. And to achieve this, the government should utilise the agri-subsidy in procuring shallow and deep tubewells for irrigation. If irrigation is provided free the farmers will be encouraged to cultivate all available lands including amon lands which is not utilised for Boro production usually.
Irrigation is disrupted due to disruption in electricity supply and supply of diesel but farmers get subsidy on diesel in many cases that does not reach the actually needy farmers. If irrigation is provided by the government through Agricultural Extension Deptt, or local administration then the question of subsidy and supply of electricity will be taken care of by the same deptt. Then question comes regarding high-breed seeds and fertiliser. The agriculture ministry, more specifically the agriculture extension deptt, is bound to ensure reaching high- breed seeds and fertiliser to the farmers in time. I like to suggest that this deptt should be given more trained manpower and budgetary allocation and instructed to remain in the fields to train and help the farmers always. Already there is a crisis of fertiliser in some areas. The dealers who are given the duty of distribution allegedly do a lot of discrimination in selling the fertiliser. Many farmers who want to buy do not get the required quantity. So the government has to either increase quantity and number of dealers or make the fertiliser available in the open market at a fixed price so that the farmers can buy it according to their necessity. If this is not done the targets cannot be achieved.
No duty, tax, VAT and middlemen
All import duty, VAT and tax should be withdrawn from imported food stuff. This will not necessitate any under-invoicing by the importers as they usually tend to do. Capital for import of the items will also be less. Consequently clearance of the imported food items at the port by customs authority will be quick since physical verification of the quantities will be minimal. The loss of revenue of the state arising from withdrawal of duty-tax can be compensated by increase of duty, tax and VAT on luxury items. Similarly all middlemen between the importers, wholesalers and retailers should be eliminated by way of establishing distribution centers by TCB or BDR or food ministry in all districts who will buy rice from the importers and sell it to retailers at minimum or no profit. The same centres can serve as distribution centres of local agricultural produce as well.
Not increase in prices of agricultural implements
Donors are currently pressing for increase of price of electricity, gas and fuel oil. As I mentioned earlier, in many cases the actual poor farmers do not get the benefit of subsidy on diesel and fertiliser. The beneficiaries are the rich farmers or businessmen who operate the irrigation pumps and dealership of fertiliser. In such situation if the prices of diesel, electricity etc are increased it will have an adverse affect on the cost of cultivation and hence targets of Irri/Boro cannot be achieved. And it is again the poor farmers who have to bear the brunt. However a day might come when irrigation pumps would be operated with CNG. The government should make sure that it happens. In that case price hike of electricity will not affect the cost of production of rice.
Efficiency in distribution of subsidies
Cash subsidy for diesel does not reach the really needy in many cases. Hence a scientific method should be adopted so that the subsidy reaches the needy farmers in time. Otherwise as proposed earlier instead of paying diesel subsidy in cash, irrigation should be made free for all farmers at the cost of agriculture ministry. Similarly fertilizer, which is imported with huge subsidy from government exchequer, should be made available to all farmers equally in time.
Internal production is the last resort for supply of foodstuff and other agricultural commodities. The country should be made self sufficient in food and other agricultural products. We should enhance budget allocation for research and technical methods of farming like neighbouring countries in order to improve the growth.
Ali Idris is a freelance writer.
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