Public Food Distribution System in Bangladesh: Successful Reforms and Remaining Challenges - From Parastatals to Private Trade - page 106

TABLE 5.1 Chronology of food policy reforms, 1974-2002

Year Policy decision

1974 Food-for-Work introduced

1975 Vulnerable Group Feeding (later renamed Vulnerable Group

Development) introduced

Preparatory phases
1978 Planning Commission advocated phasing out ration subsidies

1981 Subsidy reduction

1981 Subsidy reduction began with Public Law 480 agreement linking

ration price to procurement price

1983 Rural Maintenance Programme introduced

1989 Modified Rationing system replaced by Rural Rationing system

1989 Restriction on in-country movement of foodgrain removed

1991 Rural Rationing suspended

Food policy reforms
1992 Rural Rationing abolished

1992 Private wheat import allowed

1992 Restrictions on foodgrain lending rescinded

1992 Domestic procurement stalled

1992 Mill gate contract abandoned

1992 Staff reduction proposed in the Directorate General of Food

1992 Rice distribution stopped in statutory rationing

1993 Private rice import allowed

1993 Wheat distribution stopped in statutory rationing

1993 Food for Education introduced

2002 Food for Education abolished

2002 Integrated Food Security program introduced

SOURCE : Chowdhury and Haggblade (2000) and updated by authors.

drawal of restrictions on grain movements. The Rural Rationing program, then
the largest program, was soon found to be inefficient and expensive. For in-
stance, an IFPRI study concluded that about 70 percent of the estimated annual
subsidy of US$60 million on foodgrain (mostly rice) leaked out of nonpoor
households; because of heavy leakage, the costs of transferring US$1 of bene-
fits was US$6.6 (Ahmed 1992).
These experiences convinced the government to change its policies, and a
host of reforms was undertaken in the early to mid-1990s. The most significant
of them are abolition of rationing, withdrawal of restrictions on private-sector
participation in export and import of cereals, and abandonment of public pro-
curement. Although these moves were welcomed, the abolition of rationing re-
sulted in a large stockpile of grain, and the government had to act quickly to
come up with alternative outlets of distribution. This challenge presented the