How to solve the rice crisis
THE policy followed by all governments of Bangladesh to maintain a balance between rice producers and consumers need to be critically reviewed at a time when both rice price and stock are in a volatile situation. Although the rice price crisis started at the end of 2006, prices have gone up very rapidly within the last one year.
Increased costs of inputs are pushing production cost higher and higher, putting producer and consumer in a confrontational situation. Technology driven "Green Revolution" seesawed throughout its existence, and high input rice production is thus considered as part of Green Revolution.
For the first time, we are realising that our agriculture is directly tied up with global agriculture and market. It does help us understand that we are moving very fast towards the one global market concept. The fluctuations, either of price or production of any major crop in the global market, are affecting other crops and commodities as well. Use of maize in USA, and oil-seeds in EC, for bio-fuel production has shown impact of the recent price hike of rice.
Another strange development in the era of globalisation is the banning of export of rice by major rice exporting countries. A question that naturally arises is: why this ban when we are proceeding towards one market economy, and how will it effect globalisation? The situation is similar in the case of WTO agreement. When debate is going on globally about the fate of WTO, another issue has come up with regard to trade of staples.
Rice is not only the staple of Asian people, it is also a food security crop for them. Livelihoods of millions of poor people are directly related with the availability and accessibility of this particular crop. The recent ban on export of rice by some countries indicates that they are trying to protect their population from the food crisis at the cost of other countries. It is clearly a violation of the spirit of globalisation.
In addition to maintaining buffer stocks, the government has to keep the price of rice low to make it affordable for the poor,and provide incentive to farmers to grow more rice. It is widely accepted that developing countries cannot achieve both objectives unless they have inexhaustible resources. They have to prioritise one of them without undermining the other. Bangladesh has to make a hard choice at a time when subsidies in agriculture are rising very rapidly.
As far back as in 2003, the Nobel Laureate Professor Amartya Sen observed that "food subsidy (in India) is mainly geared to keep food prices high for the sellers of food, farmers in general, rather than to make food prices low for the buyers of food. The high incentive to produce more food while giving little help to the poorer people to buy food has produced the massive stocks of food grains that we find in India today." It could be a very good lesson for us, too.
However, in Bangladesh both food deficit and surplus production are equally problematic. It can also be mentioned that because of non-availability of land for expansion, transfer of agriculture land for other uses, and limited scope for further increasing cropping intensity (both are responsible for soil degradation and environmental pollution), it will not be possible for Bangladesh to build a food grain stock in the country only through domestic production. It can also be mentioned that no other country of the world has put such a high percentage of its land under cultivation as Bangladesh.
Out of more than 100 countries producing rice only 6 (Thailand, Vietnam, Brazil, USA, India and China) export some 75% to 85%, while 35 countries import rice. In reality, only 7% to 9% of global rice production is traded internationally. Some oil producing countries like Iran and Saudi-Arabia have resources to buy rice at any price from the international market.
Any crisis in global rice import market will affect Bangladesh adversely, mainly due to limited resources for buying food at high price, and poor bargaining capacity. If there is a food crisis due to shortfall in production either in China or in India, they will get priority over Bangladesh in buying food. This is the context for the re-emergence of the concept of food self-sufficiency in the developing countries.
The number of farm holdings having less than 1 ha land rose to 88.49% in 2005 (agriculture sample survey, June 2006) from 79.87% of 1996. The figure was 70.34% in 1983-84. The remaining 11.51% of farm holdings belong to medium and large farmers having land from 1 ha or above. The number of holdings owning no land (absolute landless) rose to 14.03%, up from 8.67% of 1983-94.
Moreover, these 88.49% farm holdings account for only 40% of the farm area in Bangladesh, and are net buyers of rice for their own consumption. In addition, absolute landless families are also associated with rice production through sharecropping. It indicates that making distinction between producer and consumer is not that easy, and that they are interlinked/overlapped.
In the open market economy, consumers get priority over producers. Even if prices of essential commodities go up, service holders (government and non-government) could get benefit from their employee through salary increment.
According to the latest agricultural census, over 13 millions farming households (owner and tenant) are directly involved in rice production. Paradoxically, they have no control or say over the prices of their produce. On the other hand, with freeing of agriculture and its integration with the world market, rice producers have become more vulnerable to rice price fluctuation in the world commodity markets. In the absence of any risk management strategies, the poor farmers in Bangladesh are made to bear the entire burden of large fluctuations in international prices of agricultural commodities, in particular rice.
Pursuing a twin approach, i.e. supporting both producer and consumer, to stimulate rice production and stabilise its price will bring little positive effect in future. Rather, it could lead to further increase of rice price, giving benefit only to middle-men who are involved in rice marketing. The producer should get priority over the consumer in order to create win-win situation for both.
To support both of them simultaneously could be counterproductive and, at times, could go beyond governmental control due to excessive burden of subsidies. What is important is renewed thrust towards increasing rice productivity in the country, which is quite possible provided that strong research and extension facilities are in place and agricultural input (quality seeds, fertilisers, irrigation, and mechanisation) supply systems work smoothly and positively in favour of farmers.
Most importantly, the government policies should be directed towards bringing producer and consumer closer to bring price down by minimising intervention of middle-men and reducing speculations. That is the gigantic challenge ahead for the country. Given the current context of global development, it would be hardly possible for a country like Bangladesh to satisfy both producer and consumer through subsidy.
What is important is to divert scarce subsidy resources for the benefit of producers to increase domestic rice production. Price support to the producer checks distress selling at the time of harvest, and without support to the producer production will go down making rice prices high.
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