Agriculture Reference
In-Depth Information
and procurement prices have been higher than farmgate prices except in a few
cases. The quantity procured for two major rice crops, rain-fed (
aman
) and ir-
rigated (
boro
), has ranged between less than 1 and 9 percent of the total pro-
duction. The farmgate prices have been generally lower than the procurement
prices. However, it is not clear to what extent farmers benefited from higher pro-
curement prices. This conclusion is in accord with the findings of earlier re-
searchers on the subject (Dorosh and Shahabuddin 1999; Ahmed, Haggblade,
and Chowdhury 2000). It has been argued that the main objective of procure-
ment is to support prices for farm level incentives. Other objectives, such as es-
tablishing public stocks and distributional conditions, cannot be achieved by a
single policy instrument. The flaws of the current procurement system prevent
it from having an impact on prices. As a way out, it is suggested that procure-
ment should be through public bidding to influence market price and savings
(Ahmed, Chowdhury, and Ahmed 1993).
Available evidence indicates that the government has not accepted inter-
nal procurement through open tender because of the concern that foodgrains
from sources other than Bangladesh will flood the procurement center and cre-
ate political embarrassment for the government. The public procurement sys-
tem, therefore, rests on the perception that it helps the government in achieving
price stabilization for the consumer and meets the political objective to support
prices at farm level. It also helps the government to manage disaster situations.
No investigation has yet been carried out regarding whether the absence of pro-
curement might lead to a further fall in farmgate prices.
Regarding ceiling prices, the Ministry of Food and the Department of Food
argue that adequate public stock acts as a check on undue profiteering behav-
iors of grain traders. In particular, the agencies argue that in their experience,
release of grain from public stock for OMS has a sobering and positive effect
on the market. In fact, during the late 1980s and early 1990s, some researchers
(Chowdhury 1987; Shahabuddin 1991) concluded that despite the absence of
clear guidelines to reduce price variability, public interventions in the food mar-
ket through the PFDS have contributed to price stability. More discussions, and
empirics, on the price stability are presented in the next section.
Implementing Food Security and Poverty Alleviation Programs
Distribution of subsidized foods through rationing channels benefited principally
the relatively well-off sections of the urban population. There has been a major
shift in the composition of food aid through policy reforms centering on a tar-
geted pro-poor approach. Nearly half of the supplies of the PFDS were for per-
sons other than the poor from 1982/83 to 1991/92 (Table 5.4). During the postre-
form era (1992/93 to 2001/02) the share of the access to food resources for the
rural poor increased to 76 percent of the supplies from the PFDS. This increase
should indeed be recognized as an important and positive policy development.
However, the entitlements of the burgeoning urban poor continue to be ignored.
