M A Taslim

Food grain production and self-sufficiency

December 30, 2012

agriculture (6)One of the redeeming features of our economic development during the last four decades has been the steady increase in food grain production despite all odds, both natural and man-made. The country barely produced enough food grains to feed the population when it emerged as an independent nation. The total production of food grains (mainly rice) was less than 10 million tons in 1972-73. Scarcity of food, maldistribution and incorrect polices contributed to a devastating famine in 1974 in which tens of thousands of people perished.  The famine left an indelible mark on the psyche of the government since then. The attainment of self-sufficiency in food production became a major objective of economic policy notwithstanding the fact that serious doubts were raised if the famine was due mainly to a food shortage (A K Sen). Efforts of successive governments and the hard work of the farmers paid rich dividends; rice production increased by three and half times by 2011-12.

What is remarkable is that this large increase in rice production was achieved with a dwindling supply of cropped land. Bangladesh had a very adverse land–man ratio, which progressively worsened as the population size increased over time. The rising demand for land for new housing, infrastructure and other economic activities gradually encroached on agricultural land. Net cropped area declined at an average annual rate of 0.2 percent during the post-independence period (Table 1).  This could accelerate in future.

m a taslim 1Table 1: Annual growth rates 1972-73 to 2010-11 (percent)

In the face of a dwindling supply of cropped land, farmers took to multiple cropping to increase the effective supply of arable land. Gross cropped area increased by 0.6 percent per annum during this long period.

However, the increase in gross area explains only a small part of the increase in rice production. The greater part was achieved through an increase in the productivity of land. The yield rate of rice increased from 0.34 tons to 0.91 tons per gross cropped acre between 1972-73 and 2010-11. The higher yield was brought about by a rapid diffusion of cultivation of high yield varieties (HYV) of rice and a reduction in the area devoted to low yield local varieties of rice.

The cultivation of HYV crops required controlled water and chemical fertiliser. The privatization of agricultural input marketing at the beginning of 1980s greatly facilitated the spread of mechanised irrigation. Area irrigated increased from paltry 3 million acres to 17 million acres. The spread of irrigation permitted widespread dry-season cropping. Since dry season crops were less likely to be damaged by weather conditions or floods, farmers increasingly leaned toward dry season cropping. Over time the importance of dry-season crops outstripped that of rain fed crops in total production.

There was little use of chemical fertiliser in the early years. But the switch to HYV cultivation increased the demand for chemical fertiliser. The use of such fertiliser increased nearly nine-fold. Indeed as early as 2001-02, Bangladesh was the leading chemical fertilizer user in South Asia (Table 2).

m a taslim 2Table 2: Chemical fertiliser use in

selected countries (kg/ha)

Source: BARC

The rapid increase in the use of irrigation and chemical fertiliser (together with improved seeds) led to the fairly high rate of increase in rice production of 3.26 percent per annum. This was much in excess of the average annual increase in population of 1.9 percent. Thus the per capita availability of rice nearly doubled during this period.

The success of crop agriculture encouraged the government to claim attainment of self-sufficiency in food grain production. However, it is not very clear what really is meant by self-sufficiency. The general tone of discourse would suggest that it implies enough food grain is produced domestically to meet the existing demand for cereals, i.e. there is no need for net import of food grains.

However, a look at agricultural statistics suggests that the country was never really self-sufficient in cereal production; it had to import a substantial fraction of its production to meet the domestic demand.  Indeed, the shortage in production (to meet the domestic demand) was the highest last year since the turn of the millennium. The data also show that Bangladesh imported more food grains than what it imported in 2010-11 in only one year (1998-99) during the last four decades. In other words, the demand for food grains more than matched the rising production necessitating greater import.

The demand for food increases due to both an increase in population and an increase in income. In fact the latter is quantitatively more important determinant of the incremental demand than the former. The amount by which demand increases depends on the elasticity of demand with respect to income. In an indigent country such as Bangladesh food elasticity tends to be quite high, perhaps one-half or higher. What it means is that if the income of a household increases by 2 percent the demand for food will increase by at least 1 percent.

The per capita income of Bangladesh has increased by about 5 percent per annum during the first decade of the new millennium. This alone must have raised food demand by about 2.5 percent per annum. Add to it the rate of population growth of 1.4 percent and the total food demand would have increased by 3.9 percent. Disregarding substitution, the demand for the principal food item, cereals, could be expected to have increased at about this rate. However, the average growth in cereal output during this period was only 2.6 per cent, implying that production did not keep pace with the rising demand necessitating greater import of cereals. The cereal output growth was higher during the 1990s (3.6 percent). Hence, import requirements were lower. The decadal average of cereal import was 2.75 million tons per year during the first decade of the new millennium. It was lower at 2.08 million tons during the 1990s. The import requirement was even lower during the 1980s – only 1.84 million tons per year. As Chart 1 shows there is a trend increase in the import of cereals during the last three decades. As long as cereal demand rises at least as fast as the growth in production, the absolute food gap will keep on increasing necessitating greater amounts of cereal import. This has been the situation during the past three decades, and it will persist unless the productivity of crop agriculture increases substantially.

m a taslim 3Another entrenched belief is that self-sufficiency (or surplus) in food production helps to keep a lid on the food prices, and hence on the general price level. Good harvest may bring down the harvest prices due to market imperfections; but it does not have much impact on the retail prices where the market is more competitive.  The gradual integration of the domestic economy with that of the rest of the world through more liberal trade in goods and services has meant that domestic prices are determined less by domestic supply-demand balance and increasingly more by global supply-demand balance. When the domestic balance is fortuitously similar to the global balance (as happened in 2008), the domestic prices spuriously appear to respond to the domestic balance.

In the current environment international prices are passed through to the domestic prices fairly quickly. This is reflected in Chart 2 below. There is very little difference between the domestic and the international price of rice from 2004 onward. It may be recalled that Bangladesh adopted a flexible exchange rate regime in May 2003. Till then there was a gap between the fixed rate and market equilibrium rate resulting in a divergence between the two prices. As the exchange rate moved closer to the equilibrium rate after the adoption of flexible exchange rate, the two prices converged.

m a taslim 4The dominance of the international market can be viewed both as a tyranny and an opportunity. Domestic prices can deviate from the international trend over substantial time only at the expense of introducing various market and trade distortions. These may be neither desirable nor feasible as the costs could be very high. However, it is possible to devise policies to profit from the international price movements or to minimise the pains. The government should expend its efforts in this direction rather than in costly experiments to control the market or trade.

————————————
M. A. Taslim is a Professor of Economics of the Department of Economics, University of Dhaka. He is currently holding the charge of the Chairman of the Department. He was formerly the Chairman of Bangladesh Tariff Commission.

Tags: , , ,

WARNING: Any unauthorised use or reproduction of bdnews24.com content for commercial purposes is strictly prohibited and constitutes copyright infringement liable to legal action.
| | More
----------------------------------------------------------------------
(The opinions expressed below are those of the writer's and do not necessarily reflect that of bdnews24.com. bdnews24.com accepts no responsibility, legal or otherwise, for the accuracy or content of member comments.)
----------------------------------------------------------------------

6 Responses to “ Food grain production and self-sufficiency ”

  1. Dr.S.M. Jalil on July 22, 2013 at 7:07 pm

    We all are concerned in food production and self sufficiency. So naturally all of us have one and the same target. we should make it a point that though agriculturists are considered shouldering the responsibility of food production, it is not! All most everybody this or that way are involved in food production. To achieve desired food production, the investments required are basic capital-the land and the environment. Therefore, not only to ensure sustainable production of desired food content, the improvement and simultaneous protection of our precious land and environment are our obligatory function. Be it economist or agriculturalist, it should not be left with them alone, all of us should put our expertise to make it long term viable.
    Dr. S.M. Jalil. President. Forestry n Environment forum Bangladesh.

  2. Dr. S.M.Jalil. on May 27, 2013 at 2:40 pm

    Under Agriculture sector, I find people, writting, reporting, commenting in the news paper appears very good and useful. None is found writting, reporting or commenting on forest, forestry, forest education, research, industry, export import of forest product, forestry skill export etc . There is no separate forestry sector,it is a sub-sector under agriculture and in fact it is concealed. As forestry or no forestry, the subject world wide is very important related to economy, ecology and total environment of any country, it should be given due position. If it is done so, we will have expertise opinion, peoples view and general comment concerning national interest. It is not getting its position is definitely a loosing concern. The cumulative adverse effect when surfaced will hardly find proper redress!

  3. Mohammad Afzal on February 28, 2013 at 4:38 pm

    I thank the writer for bringing to the fore the corelationship of food grain production and self sufficiency. In fact, if one looks at the success of developed countries it becomes obvious that the development journey started with Agriculture, this came before the industrial revolution. The key to this was that they ( the developed countries) viewed agruculture on a “commercial perspective” which I would like to term as ” Commercialization of Agriculture”- the whole concept started off when the farmers/growers had excess of the agricultural products- these were marketed in their raw form and institutions were set up to take care of the marketing such as the “wheat marketing board”
    ” cotton marketing board”-these boards were created by the collective platform of the growers to maximize their return on investments- which were supported by Government policies.

    Contrary to the above, in Bangladesh we find growers being at the “wrong end of the stick” all the time, whilst the middlemen and brokers enjoying the bulk of the profits- this is because of the failure of the farmers to come under a “formal platform” such as the Farmers of the developed countries- the root cause being absence of farmer friendly policies by the Government and the lack of inititiaves of the farmers themselves as they fail to look at Agriculture as a commercial pursuit but only as a means of livelihood bestowed with a piece of land mostly inherited lacking the ingredients of a commercial pursuit- mainly finance. A farmer only grows for his own self and his family and as long as he has enough rice in his store for the rest of the year he is happy- this attitude needs to be changed and can be changed if the farmer starts looking at Agriculture as a commercial proposition which may start with grouping themselves under a platform- can have any name -it could be a “cooperative” , a “limited liability company” a “registered partnership” this then moves the farmer to a new league whereby he / they will look at farming as a commercial pursuit and will allow them to make decisions on a commercial footing.

    It takes a few to kick off this initiative- in fact back in the 60’s the Cooperative concept developed by BARD whose head was Late Akhter Hamid Khan did wonders in greater Comilla district and the same spirit is still being practiced by the people in that area and through which they have prospered better than their colleagues in other districts.

    Concurrently, these commercial entities of the farmers will have to create a platform to “lobby” with the policy makers of the Government as a collective body of that segment-today each and every trade/industry/commercial enitity have their own Associations and Chambers ( approved by the MoC- DTO is the authority)-they are the “mouthpiece” / “protector ”
    of their respective business sectors.They interact with the Government bodies for “business friendly” policies of their respective field which is pivotal in the success of their businesses.

    In the agri sector to upgrade it to a “commercial business platform” the immediate policy initiatives should in my view come in the following areas-
    1- Allow them to form an Association
    2- Guaranteed pricings to be declared before the sowing season.
    3- Financial support to viable business concepts through the Krishi Bank / Commercial banks.
    4- Crop insurance ( which is now tied to fire insurance policies)
    5- Setting up of Storage facilities / Warehouses by the Govt for the farmers/ producers which would be rented out to them-as is the case in India, China and all agri growing countries.
    6- Facilitating setting up localised processing plants- to convert the basic products to processed products- e.g. rice can be processed to make rice crispies, fruits could be converted to fruit juices- the key is to avoid selling the ‘basic” product rather elevate the basic products through processing which justifies commercial operations and fetches better returns.
    7- Facilitate Marketing Boards for each major products- rice, wheat, vegetables etc.

    Unless agriculture is viewed as a “commercial” pursuit Bangladeshi farmers will not be able to graduate themselves to a higher standard of living and economic excellence hence just appreciating that the farmers have done wonders does not change the fate of the farmers unless ” Commercialization of Agriculture” takes place either through collective efforts of some Farmers groups backed by the policy support of the Government which will not only increase the GDP but also the earnings of a large segment of society which will influence the purchasing power which in turn will lead to economic growth in the industrial sector and other related sectors which will lead us closer to the dream of becoming a “middle income’ nation within the shortest possible time.

    Concluded

  4. Tonmoy on January 2, 2013 at 9:09 pm

    Do we really have a better future ahead? We have to remember that Bangladesh is an agricultural country. We have to promote and support this sector at any cost.

  5. Sajjad on December 31, 2012 at 5:31 am

    A very important issue to address before another crisis sets in motion. Thanks Taslim bhai for raising the alarm.
    One minor correction: flood protection allowed some areas to move from single to multiple crops, where as, irrigated HYV rice reduced cropping intensity to two or less in many other areas. This had been the trend till vegetables opened up increased use of land again.

  6. Md Islam on December 31, 2012 at 12:31 am

    A very good attempt to examine one ‘positive’ indicator of our economy. Although the concluding suggestion very clear, the Government machinery should take it into their policy planning.

Leave a Reply

Get Adobe Flash playerPlugin by wpburn.com wordpress themes

 

December 2012
S S M T W T F
« Nov   Jan »
1234567
891011121314
15161718192021
22232425262728
293031