The food minister claimed that there is such a huge production of food that the government cannot accommodate those in the store houses.
This year there is a huge production of rice but to him, it has become a problem as the market price of rice has fallen down due to this ample supply.
The government is in dilemma to balance the interest of the consumer and the producer of rice. To him, when there is massive production, the poor farmers of the country do not get proper price and, on the other hand, when there is less production and less supply in the market, the poor consumers like day labourers, rickshaw-pullers etc. cannot purchase it with the high price due to limited supply.
He demanded that the price of rice in the market has fallen drastically and that is why the poor farmers are very dissatisfied as they cannot run their family with such low returns of production.
Food grain is such a sensitive thing that it demands a strategic and balanced handling of the processes involved.
If there is less production, it is problematic and, again, if there is a huge production, it is also problematic.
Just a year ago, according to the Trading Corporation of Bangladesh (TCB), the price for the coarse rice (<>iSwarna, bought by the majority poor) was lowest at Tk.32 and now it is still at the same price.
So, the rice price in the market has not decreased and the poor consumers are purchasing the rice with the same expense. On November 17, 2012, when the minister had stated this fact, the rice price of in the retail market according to TCB was Tk.27-48 having almost no change from that of the month before.
But really the price of rice has decreased; the farmers have sold rice even at the rate of Tk.300 per mound when production cost of that was more than Tk.400. But last year, farmers got better price in comparison to this year. So, the calculation remains: this year, the farmers sold rice with lower price but the consumers are purchasing that rice almost with the same price. Now the question is what is working in between these processes?
The minister of course deserves the credit for this achievement of rice production, but it also equally goes to the poor people, who after all those obstacles, produced rice other than tobacco or some other cash crops. And as I always highlight, it is very important for us to keep the farmers in the food grain production and the government needs to do everything for it.
The minister is trying to lead his ministry very tactfully and has achieved a significant success but the major problem perhaps is the failure to control the middlemen of this cycle.
The middlemen benefits the most. They, in many ways, capture and manipulate the market. Not only this, the millers purchase the rice at a very low price in advance when the paddy is in the field. Just one or two months before the harvest season, the farmers suffer from money shortages and the millers and the businessmen grasp this opportunity as well. They provide money to the needy farmers in that rainy day with the condition that the borrower will give them rice once it is husked. And of course, in calculation, the farmers lose the most.
This demand for loan could easily be met by the government banks with some easy conditions. If the government own banks could give some small loans to those needy farmers only for those few months, it could be beneficial for both the government and for the farmers at stake.
Production of one kilo of rice requires 1.5 kg of paddy. Paddy at Tk.550-600 per mound means that Tk.21-22 worth of paddy is required for production of one kilo of rice. As there is a huge production of rice, government can easily distribute the paddy with low price to the farmers -- it will definitely help them from the start.
Then comes the other input costs like those of diesel, electricity, fertiliser and insecticide. In this situation, the government can aim at exporting rice and the capital from this trade can be easily used for subsidies for these inputs.
People do not want a kilo of rice with Tk.10, or like those from the period of Saesta Khan. Rice procurement with proper price and urban rationing can also be good options for the government. Through this, the farmers will not be deprived as that price will at least cover the production cost of rice and the poor consumers; especially in the urban area (who depend mostly on purchased rice) can have subsidised rice. And with that, controlling the middlemen and the syndicate is also a must for the government.
Again, it is also important to realise that rice is not the only food item that we consume. Prices of other food items have also increased. Within the last one year, onion price has increased by 37%, garlic by 52-109%, pulse (mosur) 37.8% and the prices of other important food items have increased almost 20% on average.
So, while considering food price, we also need to concentrate on these item as well. Farmers need to be incentivised to produce these items. Finally, having no more storage capacity does not mean that we will not produce much, rather now it is important to increase the storage capacity of rice.
There is nothing to be worried about with the huge production of rice and also there is nothing great in keeping all the rice storage full of rice when the market price of remains higher. Rather, people of the country will love to see the government have a more strategically balanced method for the interest of both the farmers and the consumers. I believe this is possible with the resources at hand.
The writer is a development researcher and a technical coordinator at CARE. The opinions here do not necessarily reflect any of the organisation. Email: firstname.lastname@example.org