Election headed budget and our frustrated farmers

WILL the national budget of Fiscal Year (FY) 2013-14 be good for our frustrated farmers? Though answering this in a single word is very difficult, our attention goes to two of the upcoming crucial decisions of the government i.e. cutting food grain procurement for keeping rice price lower in the domestic retail market, and cutting subsidy on some of the agricultural inputs. We need to seriously look into why the decisions are coming and what the impact of these will have on the country.

The national budget this year is crucial in many aspects among which its connection to the national election is the most crucial. The last year in budget of any government will try securing its vote bank in the upcoming election and that is why governments usually give lots of visible incentives, having direct implications to the people.

Interestingly, rice price plays a key role in securing the vote bank and that is why political parties promise to keep rice price lower in their election manifesto. It is not very difficult to understand that low food price in the market also means low return of agricultural production for the farmers. Again, it is also true that for the large part of the population, who are food buyers, it is very essential to lower the food price but, on the other hand, for retaining farmers in the agricultural production, it is vital to ensure a proper price for their production.

Governments often struggle to balance the interests of these two groups.

In this coming budget, there is some bad news for the agricultural sector of Bangladesh, and this news is coming at a time when farmers are already discouraged in producing food grains due to continuous low price, and they are tending to cultivate tobacco or other cash crops instead.

It is good to see that from the last few seasons, we are having bumper production of rice where the tremendous effort by our farmers is the most important one. But ironically, they are continuously receiving prices lower than their production cost.

This year, the government decided to procure food grains directly from the farmers with a reasonable price and we all welcomed this decision. But in reality we found a very limited implementation of this decision and farmers went selling their rice to the millers and in the local market with a lower price. This scenario gives a plain calculation -- due to surplus supply in the market, price is lower.

But surprisingly, with this given scenario, the government is planning to import rice.

According to a Daily Star report, the government aims to import 2.5 lakh tonnes of rice next fiscal year. But it may not become necessary to import the entire targeted amount if there is no natural calamity. Well, I think, there is no harm with this if government takes it as a contingency plan but when it decides to slash the local procurement of rice by 3%, concerns arise.

The government cut imports but raised domestic procurement in the current fiscal year to help farmers get fair prices amid a bumper production. Even after this decision, the government could not ensure proper price for rice and the situation will worsen if government now decides to slash local procurement.

In the other scene, according to the New Age report, in the coming fiscal the government would drastically cut down expenditure on subsidies to 28,000 crore, down from 35,000 in the outgoing fiscal. The report says that in the coming budget, subsidies on agriculture is decreasing and out of 9,000 crore to be given in subsidies to this sector, 3,000 would be spent to clear arrear bills for fertilisers, diesel, pesticides and other inputs.

So, what is the net support for the agricultural sector in this budget?

Now let us see what these decisions are for.

Firstly, the government wants to satisfy the largest portion of population who are the food buyers – wanting to buy food in cheaper prices. Government might have been anxious of seeing that in this first quarter of year, the average retail price of coarse rice has increased significantly by 12% from the last quarter. The countrywide retail prices of coarse rice started to increase from November 2012 following the increase in wholesale price of rice.

The average retail price of Aman HYV coarse rice in March was 29.2 Tk/kg, which is 4.5% higher than a year ago (FAO, 2013). This trend is very likely to have a significant impact in the next election. That is why, in the last part of this tenure, Awami League does not want the rice price go up.

Secondly, the government had agreed to cut down subsidies to fulfill International Monetary Fund (IMF) conditions for accessing its nearly one billion dollar credit support in seven installments. In this crucial time, government does not want overlook this condition and be in an uncomfortable relationship with IMF. So, the farmers need to bear some extra burden of pricy inputs in the coming year also when still they have no hope of getting a proper price for their production.

Finally, let us see what can be the consequences. I have talked to some tobacco farmers who even in the last year cultivated rice on their field. When they are getting some security of return, especially financially, from the tobacco manufacturing companies, rice producers are again and again being frustrated with the government policies posing a threat of unsecured return of their production. As a result, they are turning them away from food grain production. Recently Brac has also got a similar finding that cultivated land area has decreased in this year.

These signals are never good for the country. Government needs to understand that the food producers i.e. the farmers and their family members are also voters and getting their votes is also important and at the same time, it is more important to save our farmers if we really want to save the country.

We need to look into the path in between the farmers, the primary producers and the final buyers. And for doing this, a pro-farmer food procurement policy and its effective implementation are mandatory. Cutting agricultural subsidy and local food grain procurement will never bring anything good for the country.

The writer is a development researcher and working for an international humanitarian organisation.
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