Agriculture Reference
In-Depth Information
provide optimism that the current or future political authorities will accept such
a course of action. Since 2003, there have been a number of high-level discus-
sions on eliminating some of the commodities from the list of the Essential
Commodities Act of 1956, but rice and pulses have never been under consider-
ation.
8
Worse still, it has further been reported that the Anti-Hoarding Act will
be enforced to control price hikes of essential commodities (
Financial Express
2003). To our knowledge, there has been no change in this policy.
In terms of policy management for imports by the private sector, the gov-
ernment creates uncertainties by manipulating fiscal measures. More research
in this area is needed to create a legal and administrative environment that en-
courages the private sector to operate effectively in the foodgrain market. Based
on the outcome of research, further reform measures may be undertaken.
MINIMIZING COST OF OPERATIONS
. Recent research (Goletti 2000) has in-
dicated at least two areas in this regard. First, it relates to lowering the optimal
stock level to 0.7-0.8 million tons, which is a substantial reduction from the
1.2-1.5 million tons recommended during the late 1970s. It is, however, admit-
ted that the question of fixing a static level for the PFDS is a complex task in a
dynamic environment, as articulated in the proposed Food Policy. The policy af-
firms the need for 1 million tons of foodgrains for the public stock. Apparently
the government has not yet accepted the recommendation of the 2003 study
(Ahmed et al. 2003) that the public grain stock be reduced to 0.6 million tons.
The same research report has drawn attention to the need for reducing
costs associated with intradistrict movement and transit losses, improving stock
rotation system, timing food aid arrivals to avoid coincidence with the govern-
ment domestic procurement, and auctioning out high-quality wheat of hard
variety. The measures recommended in these areas need serious attention by the
government, as these are designed to yield substantial cost reduction in PFDS
operation.
Policy Management for Private-Sector Imports
With respect to policy management relating to import by the private sector, the
government often faces the conflicting needs to encourage or discourage im-
ports. In the wake of self-sufficiency in foodgrain production, after 1996 the
Awami League government discouraged imports of rice by increasing the mar-
gins for letters of credit. This move was taken ostensibly to ensure a floor price
for farmers. At the same time the government encouraged imports during 1998/
99 by lowering the margin of letters of credit for foodgrain imports. This action
helped the government to ensure increased availability and affordable prices for
the consumer. The next government, led by the Bangladesh Nationalist Party,
8. Reported in
The Financial Express,
Dhaka, August 11, 2003. The government intends to
reduce the list of commodities from 35 to 18. However, the draft law of 2003 includes rice, among
other commodities.
