Agriculture Reference
In-Depth Information
TABLE 5.8
Savings from reduced involvement of the Public Food Distribution System
International
Savings in terms of quantity
free-on-board price
Savings in terms of value
(million tons)
(US$ per ton)
(million US$)
Year
Rice
Wheat
Total
Rice
Wheat
Rice
Wheat
Total
1992/93
0.02
0.85
0.87
223.00
143.00
4.46
121.55
126.01
1993/94
0.15
0.52
0.67
243.00
143.00
36.45
74.36
110.81
1994/95
0.07
0.92
0.99
270.00
157.00
18.90
144.44
163.34
1995/96
-0.22
-0.03
-0.25
335.00
216.00
-73.70
-6.48
-80.18
1996/97
-0.24
0.98
0.74
303.00
181.00
-72.72
177.38
104.66
1997/98
-0.06
0.94
0.88
275.00
142.00
-16.50
133.48
116.98
1998/99
-0.19
1.37
1.18
261.00
120.00
-49.59
164.40
114.81
1999/2000
-0.30
0.70
0.40
209.00
112.00
-62.70
78.40
15.70
2000/01
0.32
0.60
0.92
167.00
128.00
53.44
76.80
130.24
2001/02
0.00
0.93
0.93
167.00
125.00
0.00
116.25
116.25
Total
-0.45
7.78
7.33
-161.96
1,080.58
918.62
SOURCE
: International prices based on actual procurement prices maintained by data from Food Policy and
Monitoring Unit, Government of Bangladesh.
NOTES
: Savings calculated from data in Table 7.4 using the corresponding periods of 10 years starting from
1982/83. Rice price = 15 percent parboiled Thai free-on-board. Wheat price = US$2 hard red winter U.S. Gulf
free-on-board.
Price Stability
Although the costs savings is important from the efficiency point of view, the
central question is whether reforms succeeded without jeopardizing price sta-
bility. The answer appears to be positive, as indicated earlier. The interyear vari-
ation of average wholesale prices for rice during the 1970s was about 28 per-
cent, which dropped to 8.2 percent during the 1990s and early 2000 (Table 5.5).
Viewed from this context, it can perhaps be concluded that the objective of price
stability has been achieved through the PFDS, although the size of the opera-
tion of OMS remains negligible (Table 5.10). During 1998/99 there was no
OMS, although the price was higher in that year. At the same time, the price did
not rise abnormally during that time, which was a year of devastating floods.
This stability is explained by large-scale imports by the private sector to the tune
of 3.47 million tons and commercial imports by the public sector of 0.77 mil-
lion tons. Additionally, the government expanded relief operation coupled with
an expanded VGD program.
A distinctive feature of the reform is the realignment of the policy focus
on poverty-alleviation programs that entails significant economic and social
gains. These gains are substantiated by the figures relating to the impact of
poverty-alleviation efforts centering on repairs and maintenance of rural infra-
