The major donors such as the World Bank (WB), United States Agency for International Development (USAID) and also Asian Development Bank (ADB) exerted considerable influence to bring about the above policy changes. This was effected through policy-based lending. The specific instruments used were (i) Import Programme Credit (IPC), (ii) Fertilizer Distribution Project (FDI) I and II, (iii) National Minor Irrigation Development Project (NMIDP), (iv) Food Crop Development Programme Loan (FCDPL) and finally (v) Agricultural Support Services Project (ASSP). FCDPL also contributed to liberalisation of the food trade, allowing a larger role for the private sector and removing restrictions on food trade.

All of the above changes occurred mainly between 1980 and 1992. There was little or no parliamentary debate or public debate on such a vital issue because of the nature of the state and politics at the time.

In respect of fertilizer, some senior and mid-level civil servants emphasized the need for maintaining buffer stock, in particular for the northwestern region of the country. At least two committees were formed to work out the modalities for maintaining buffer stock. Both the committees recommended that buffer stock at least for urea fertilizer should be maintained by the public sector to deal with unforeseen shortages. Their advice went unheeded because the major donors did not like the idea.

Then came the shock and a major shock at that, the urea fertilizer crisis of 1995. The Minister for Agriculture (Abdul Mannan Bhuiyan) immediately decided to establish buffer stock system for urea fertilizer following the crisis. The government of the day also constituted a one-man judicial commission led by a High Court Judge. As with many commissions of enquiry, the report went into oblivion. As far as is known, the commission also recommended maintenance of buffer stock and subsidy in inputs.

The other initiative that the minister had taken then related to appointment of fertilizer dealers at the district level and below. This was a rational action because inquiries then conducted had established the fact that the private sector traders lifted urea and sold it at the factory gate rather than to the district markets. The decision was not taken unilaterally. Consultations were made with the Bangladesh Fertilizer Association (BFA), which supported the new initiative.

The donors reacted to the government decisions of maintaining buffer stock by the public sector and appointment of district-based dealers. The reaction was conveyed to the agriculture minister in a rather unusual fashion. A letter was sent to the minister signed by as many as seven major and minor donors. The minister replied, defending his decision. The donors again wrote back, but the decision was not changed. Buffer stock is still in place. It has more or less proved to be effective in containing speculative behaviour of the fertilizer market during the peak season of January to March.

The above reaction of the donors should be seen in the context of accountability which the donors expect from the government. In the ultimate analysis, only the government remains accountable to the people and not the donors. This point used to be a favourite theme with Mannan Bhuiyan's successor in office, Matia Chowdhury. She used to vehemently stick to this line of reasoning, referring to the fertilizer crisis when reportedly as many as 18 farmers had died. Where were the donors then, she used to ask the question? The above analysis raises the substantive concept of ethical dimension of development, which Amartaya Sen so cogently advocates.

During the Awami League (AL) rule (1996-2001), the dealership system was further consolidated and expanded. The system of monitoring of fertilizer lifting and distribution was also strengthened. All these actions proved to be of benefit to the farmers. The action taken by two successive governments of differing ideology helped to establish a free but fair market for the farmers who have to use fertilizers. If the government in 1995 had yielded to donors pressure, the market would have been less than fair.

The AL government in 1996 went a step further by announcing and spending more than Tk. 200 crore as subsidy for fertilizer. This amount was used largely for meeting the import needs of urea fertilizer. Some amount was also spent for import of Diammonium Phosphate (DAP) by the public sector and the private sector later took it over.

The Bangladesh Nationalist Party (BNP) from 2001 onward also declared its intention to allocate funds for subsidizing agriculture. It is said that so far an allocation of Tk.19 crore has been made. However, the largest amount of Tk. 310 crore asked for by the Ministry of Agriculture (MOA) to subsidize diesel used by the farmers has not been agreed to by the Ministry of Finance. MOA is understood to have been pressing for the said allocation. BNP is thus going one step further in broadening the net of subsidy.

Subsidy elimination and privatization were parts of the liberalisation efforts in order to ensure private sector development and allow the market forces to operate freely. This was done at a time when Organization for Economic Cooperation and Development (OECD) countries were subsidizing their farmers to the heaviest extent possible. There was thus not a level playing field between developing and developed countries. Yet the very same countries in control of multi and bilateral aid giving agencies pushed Bangladesh hard for establishing level playing between the public and private sector. This attitude continues even today despite the Agreement on Agriculture (AOA) under World Trade Organization (WTO).

Despite commitments to reduce farm subsidy under WTO agreement, the level of export subsidy in these countries has increased from 31 percent in 1997 to 40 percent in 1999. A US farmer is said to receive annually about $75,000 from the government as direct support.

It can, therefore, be said that the post-1991 governments despite their continued practice of confrontational politics, have shown agreement on an important issue. However, it remains to be seen how much direct subsidy can the farmers get to minimize cost of production.

The overriding issue of minimizing cost of production of high yielding variety (HYV) rice in order to achieve regional competitiveness has engaged the attention of policy analysts. Dr. Mahabub Hossain who raised the issue of achieving regional competitiveness by reducing cost of irrigation threw some light on the controversial issue of subsidizing diesel for farmers. Reduced price may induce transborder movement besides being costly for the government. As a way out, he suggested rural electrification in the long run and substantial increase in public expenditure on expansion of rural electrification.

Transborder movement assumes a reduced price of diesel. It is gathered that MOA is not pursuing this approach. It intends to pay the diesel using farmers the difference between the cost of electricity and diesel without reducing price. Even this approach is fraught with difficulties. Apart from partisan considerations that may influence the selection of farmers, it is widely known that there are Water Lords who sell irrigation water. The benefits of such transfer will accrue to them and they may not pass on the benefit to the buyers of water who depend on Water Lords for irrigation.

The crux of the issue is operationalising cash transfer to the farmers who use diesel for irrigation purposes. According to available statistics, there are about 800,000 Shallow Tube Wells (STW). Low Lift Pumps (LLP) number about 80,000 and Deep Tube Well (DTWs) 30,000. These statistics are from National Minor Irrigation Census (NMIC) 1999-2000. After 2000, no census has been carried out. Providing cash support to 800,000 farmers by itself is a daunting task. The question then centres on the feasibility of direct support to farmers.

Apart from this, it is perhaps necessary to look at the current status of electrically powered irrigation equipment. NMIC indicates that the total number of equipment, only 7 percent of STWs, 51 percent of DTWs and 9 percent of LLPs are electrically driven. No investigation as yet has been made as to the very low number of electrically powered STWs and LLPs and relatively high number of DTWs.

Experiences indicate that DTWs are in the nature of fixed assets as it cannot easily be moved from one location to the other. STWs and LLPs are not so. STWs shift their locations depending on rise and fall of water table as well as demand for water. LLPs again may change locations depending on surface water availability. Added reasons are (a) uncertainties in power supply and (b) the burden of having to pay fixed minimum charge. The latter issue was repeatedly taken up in the past and MOA recommended complete waiver. This has been agreed to by the Ministry of Energy on grounds of subsidy. Minimum agreement on this was reached between the two Ministries based on the assurance that if necessary budget allocation is made, it would be possible to draw on the amount to provide the subsidy.

All of the above difficulties will have to be kept in view even if long term solution of electrification of irrigation pumps is accepted.

In fact the issue of subsidizing irrigation cost was also considered during the AL regime but in a different context. It was in the context of supplementary irrigation during Amon season. Amon is a wet season crop. However, research conducted by the Bangladesh Agriculture Research Council (BARC) during the eighties led to the findings that there were about 2.5 million hectares of land mainly in the northwest and southwest regions of the country which were prone to drought. If supplementary irrigation could be provided to Amon crop, the yield gains would 15 to 20 percent higher than the existing yield. This would be a big gain for increase in yield.

A specific project for supplementary irrigation was approved at a cost of Tk. 113 crore. At that time also the difficulties in opertionalising cash transfer programme were debated. The Department of Agricultural Extension (DAE) which was to execute the programme felt that a cash transfer might lead to abuse and leakage. However, other support measures such as supply of pipes and other materials were provided. The impact of the project remains to be assessed. The identification of possible impediments to operationalise the concept of minimizing cost of production should in no way be construed to mean that the concept is not workable. The idea is to point out the difficulties that lie ahead and the complexities involved. It would perhaps be desirable to make an assessment in the field through a carefully planned survey that includes farmer's perception of the issues and their views to deal with the issues.

The traumatic experiences of the farmers following the fertilizer crisis of 1995 clearly indicate that the pathways for development of poor farmers of Bangladesh need not be externally induced. It should be solidly based on indigenous knowledge and perceptions and be firmly rooted in ethical elements, which appear to be lacking in externally conceived perceptions.

The author is a former Agriculture Secretary.