Paying the penalty for low food stock

Reaz Ahmad
Thursday, November 30th, 2017


Photo: Internet

 

There are many good reasons why should a government maintain a minimum food reserve in the country. First of all the government has to run several dozens of food-aided social safety net programmes under the public food distribution system and to do so government must have certain volume of food in the public granaries. Unless the reserve is at sufficient level it may constrain government’s capacity to cater to the needs of ultra-poor, who are generally the beneficiaries of the safety net programmes. Secondly, a good food stock comes handy for government to intervene into the market if it (market) behaves erratic. It gives the cushion against abnormal price spiraling or market manipulation. Thirdly, a better food reserve always gives the government a much needed comfort that it is well poised as far as responding to the special situations are concerned. Drought or deluge – for whatever natural causes – if crop/s fail and if the growers and consumers are in need, then a government having well-maintained food reserve is in no trouble. It can respond to the situation immediately with food succour. Fourthly, government does the stock building through procurements from the producers. In the process, the farmers get price benefit. Ideally, food department is supposed to do the cereal purchase in harvesting seasons directly from the farmers. Often it’s not the case. In reality, the millers and traders first buy the rice and wheat from the primary producers and then sell the same to the food department thereby, getting the best out of the government-provided price benefits. Yet, the food procurement drives by the government have some trickle down effect on the farming community and the purchase prices set by the government have some positive impacts in the open market. The process helps keep some controls over the largely privately-operated grain markets and keep the grains’ prices buoyant so that farmers do not count loss. Last but not the least, preserving foodstuffs in the government silos also comes with a heavy cost. Costs are involved for upkeep of the silos, for providing the salaries to the food godown staffs, for year-round maintenance, transportation, deliveries and loading and unloading. So to make a sense out of this huge public sector investment, it’s wise to keep a minimum standard reserve of food intact in the silos, and then distribute and replenish on an orderly routine.

 

This year Bangladesh’s failure to maintain a minimum food stock had many bearings on our public food distribution system. Government eventually took note of it and is now employing its efforts in stock building. It’s happening with a heavy price though. Due to negligence on the part of food department in maintaining proper stock in time, government has to spend a hefty amount now for importing rice in excess of 1.5 million metric tons from all the traditional and non-traditional source countries like: Vietnam, Cambodia, Thailand, India and Myanmar. We are now paying the penalty for having a low food stock.

 

As against a stock capacity of two million metric tones of food, government’s opening stock of rice in the public granaries was as low as 1.5 lakh metric tones in the current fiscal (2017-18). When government went gung-ho in exhausting all the old stock by distributing over 7 lakh metric tones of rice among five million ultra-poor at a token price of Tk. 10-a-kg, little did it think of future stock building. As a flashflood struck too early into the growing season, and fungal attacks (rice blast) destroyed crops in Haors and beyond, we lost 20 lakh metric tones of last Boro production. Subsequent floods across the country caused much suffering in as many as 34 out of 64 districts in the country and inflicted losses on Aman seedbeds. Government failed to internally procure rice due to production loss, couldn’t replenish the dried up stock in the silos and did much foot-dragging in lowering an exorbitant 28 percent import tax on rice. By the time the private sector was allowed to import rice at low tariff it was already late and a section of hoarders and dishonest traders already had seized the opportunity to push the rice price up to an all time high.

 

As they say, it’s better late than never. Eventually, it occurred to the government that it must acknowledge crop loss, stock shortfall and go for food shopping in the international market. After signing a good many numbers of MoUs (memorandums of understanding) with many of its South and Southeast Asian neighbours, government is waiting in patience large shipments of imported rice to reach Bangladesh’s ports. Thanks to private initiatives that over 1.4 million metric tones of rice have been imported over the past four months and that helped stabilize rice price in the market to a large extent but, it’s still high by at least by Tk. 10 a kg on a year-on-year comparison.

 

Many poor and ultra-poor took brunt of flood damages this year. But largely because of low food stock it has government couldn’t provide them with as much supports as it intended. The official PFDS (public food distribution system) data reflects that. In the first four and half months of last fiscal (2016-17) government distributed over eight lakh metric tones of food among the safety net beneficiaries but during the corresponding period in the current financial year (2017-18), it could deliver only five lakh metric tones. In the very second year of its inception the government had to ditch the idea of providing the five million ultra poor with low-priced rice (Tk. 10-a-kg).

 

Poor took the brunt in a bad crop year as many of them had to buy rice in much higher prices when floods caused huge losses and government couldn’t of great help because of its incapacity to intervene owing to low food reserve. But there is a silver lining in this crisis – that is government’s new found realization that there must be a good food stock all the time. It’s is now working hard to build up a stock at least in excess of one million metric tones by January, 2018 so that it doesn’t loose the capacity to intervene when the market behaves bad.

 

(The writer is Executive Editor of United News of Bangladesh)

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