Agriculture Offers Hope for Early Economic Recovery

Dr Atiur Rahman

14th May, 2020 09:26:25 printer

Agriculture Offers Hope for Early Economic Recovery

Bangladesh like many other countries is going through twin-crisis. Firstly, we are struggling hard to save life from the onslaught of COVID-19 virus in the context of a weak health sector which has been perennially underfunded and unfocused. This deadly pandemic is letting us know through noses that a stronger health infrastructure could be so beneficial in facing this health disaster. Secondly, we are facing the paramount challenge of growing food insecurity due to sudden stoppage of the economy under lockdown leading to income loss of millions of labor engaged in informal sector and as well as in the services sector. Both these challenges need to be addressed simultaneously as one can reinforce the other.

The government has been trying to face the health challenge with its meager resources along with some fund redirected from the unspent budget of not so immediately essential programs and projects. Yet, the need for testing the presence of virus followed by isolation, tracing and treatment remains a huge task which is indeed daunting. The up-coming budget will have to be essentially a health budget with at least doubling, if not more, of the allocation for spending in health related infrastructures and added personnel.

It may be noted that in contrast to the desired 4 percent of GDP health expenditures we have been spending less than one percent for many years. This has to change in a fundamental way right from this year’s budget and continue for the coming years if we really want to keep such a health disaster at bay. On the other front, the budget has to be revamped for providing food security for all including the new poor which have been created due to sudden stoppage of the economy. The food support in the forms of a number of social safety net programs will have to not only continued but expanded to include the new poor who were slightly above the poverty line even a couple of months back. All the gains in consistent fall in poverty have just been washed away. We need to start afresh in bringing down the poverty level by strengthening our inclusive development policy supported by necessary financial inclusion strategy. In addition to food based social security programs we will have to go for cash based social safety net, particularly for the urban poor. We are happy to note that the government is already moving in that direction. The Local Government Ministry is already in the process of listing about five million households who are in a precarious condition right now. That means they want to reach nearly 20 million people through this new program. The local government elected representatives along with civil society members and credible NGO officials have been doing this listing. The district and upazila administrations are coordinating these activities. I understand four credible MFS operators will make the payment, about two and a half thousand Taka each before the Eid. That means all these five million families must have one or the other mobile financial services accounts. The proposed list must provide these account numbers as well. This is indeed a huge job and I only hope that all the preparations for this are completed soon to start the cash disbursements through digital financing. The central bank has already completed a similar heroic job for the RMG sector and I am sure they can do the same for this new social safety net program as well. This will give a huge boost to our drive for financial inclusion.

Simultaneously, we also need to enhance our food production to so that there is no sudden spike in the price of rice in the coming days. Fortunately, Bangladesh has been witnessing a bumper production of Boro paddy this year. The well managed full harvesting of Boro in the remote haor areas which accounts about a fifth of the total Boro production is indeed a news of comfort. The Ministry of Agriculture led a heroic battle in those areas in coordinating with the local administration, local government representatives, local activists, the school and college authorities to manage the migrant laborers from different parts of the country to make this happen. It was a pleasant scene to witness how these workers were treated like invited guests by these local officials and local government representatives along with all the necessary hygiene materials. The police were equally active in giving them the local law and order support in addition to facilitating their smooth transport to the harvesting spots. The health officials were also alert in maintaining the health protection requirements during a lockdown.

I am confident that similar orchestras will be played in different areas of the mainland as well in completing the harvesting season. The only headache is the danger of sudden hailstorm, if any. However, the quality of weather forecasting has improved significantly, thanks to our Bangabandhu satellite and massive presence of mobile phone network. The farmers can take some precautions to face a strong hailstorm if given prior notice by the weather forecasters.

The harvesting of the Boro paddy is only a part of the process. The farmers will have to process the paddy to get the rice out of it in due course. Of course, use of combined harvesters, nearly four hundred of them, in the haor areas have helped complete this processing job much faster. Hopefully, the mainland harvesting of Boro will have similar support from the harvesters as well. The private sector with a huge subsidy from the government for mechanization played a significant role in timely harvesting of Boro paddy in the haor areas. I am sure this will be replicated in the mainland as well. A sum of Taka two hundred has been allocated for paying subsidies for mechanization. This has to be enhanced significantly to get the harvesting and processing done within a short period of time beating the hailstorm and torrential rains, if any. The next budget must keep sufficient allocation for this segment of agricultural activities.

This year’s budget has also kept an allocation of Taka 150 crore for providing support to BADC to provide subsidized seeds to the farmers. Nearly 95 percent of seeds of jute, summer and winter vegetables, spices, pulses, maize and wheat are imported, mostly from India. The on-going lockdown is creating s huge barrier in importing of these seeds as truckers cannot make cross-border trips without going through mandatory isolation period. Both the governments of India and Bangladesh must work together to make the land ports user-friendly for quick movement of seeds. Similar attention must be given to other agricultural trades through the border to beat the lockdown complications.

The agriculture depends on a well developed supply chain network where a number of market-players including farias, aratders, retailers, transparent operators and local administration participate. The lockdown has suddenly disrupted this well known supply chain which is now gradually re-emerging with partial opening up of the economy. Indeed, the marketplaces are the other half of the agriculture. So if the markets can be made operational the agricultural economy will also rise up to the occasion. Currently, we are witnessing a huge dichotomy of the agricultural market system. While the farmers are selling their products at throwaway prices, the urban consumers are buying the same at an exorbitant price. Fortunately, a few e-commerce portals are getting engaged into vegetable marketing and farmers have started getting some good prices. Some district administrations have already started buying vegetables from the local farmers and providing the same to those who are getting relief as an added item. This cuts both ways. Farmers get some price and the poor get diversified relief. I think the government can provide a general instruction to all the Deputy Commissioners to buy vegetables from the local markets and then distribute among the poor. The prices of vegetables will get a local boost if this practice is followed throughout the country.

In order to keep the food distribution steady among the vulnerable, the government will have to procure Boro rice from the farmers at the pre-declared price. For that matter, the storage facilities will have to be kept ready for the smooth implementation of the procurement and processing of paddy. If not enough storage facilities are not available at the moment the farmers may be paid half the price in advance for the procured paddy which can be kept with the farmers. They can get the rest of the price at the final delivery of their products as negotiated between the parties depending on the availability of the storage space.

Adequate preparations must also be afoot to start the cultivation of upcoming Aush and summer vegetables. Then will come the turn of Aush, maize and wheat cultivation along with that of winter vegetables. The Department of Agricultural Extension must keep its field officials engaged for the next round of crop and vegetable cultivation as expected by the crop calendars. The farmers will need working capital for buying seeds, fertilizer, insecticide and as well as for providing irrigation water to the fields. The government may send a sum of money to the farmers through mobile financial services and bank branches in the rural areas which have already provided ten million plus Ten Taka no-frill accounts to the farmers. Government has already created stimulus funds for the farmers and MSMEs to get low cost credit from the banks and MFIs. These financial institutions must take necessary preparations to disburse these funds in an orderly manner so that the farmers and MSMEs get the money as planned. These are the hardworking people who have kept the economy afloat despite disasters. We must now stand by them so that they can keep on producing and servicing the real economy.

Keeping this background in mind let me outline a few policy suggestions for helping the bottom of the pyramid to thrive despite this pandemic:

1. The farmers must be given the cash support from the subsidy fund, perhaps only a part of it, to continue their farm cultivation as they will need money for buying seeds and other inputs for the next crops.

2. The poor including the new ones must continue to get the food support from the government along with vegetables bought from the local market by the administration to boost the local agricultural prices which are now lying flat. In addition, they may also be given some cash support to supplement their livelihoods.

3. The agricultural budget as a proportion of total budget must be doubled from its current level of 5.7 percent as this sector will determine the pace of economic recovery. Mind it agriculture still employs 40 percent of our laborers. And if you add those who are employed in non-farm but related to marketing of agricultural products the percentage may go up substantially. The additional budget can be spent on crating at least twenty storage facilities in different agro-ecological zones and as well as for developing rural modern agricultural market place as has been done in Khulna and Jessore by a Dutch NGO.

4. The government can establish an effective sustainable market linkage by piloting a few digital marketing platforms in partnership with private entities. The union Digital Centers can provide the agent banking facilities to facilitate these e-commerce activities. EK shops are already in action. Along with support from post offices and Union Digital Centers plus MFS agents who are plenty in number in the rural areas there can be robust e-marketing infrastructures developed in the rural area to cater to the urban consumers.

5. Additional funding facilities should be provided in the next budget to push the drive for mechanization with hundreds and thousands of combined harvesters and reapers in place in the rural areas. The private sector can deliver this service if it is duly subsidized as has been the case this year in the haor areas and some other areas of mainland as well.

6. The support for innovative and diversified social safety net programs including those in the urban areas will require additional budget allocations. These programs can be both food and cash based with huge implications for the agricultural sector.

I have not touched much on the livestock, fish and poultry sub-sectors of agriculture which will also need similar budget support particularly for feed, electricity and marketing of their products. I have also not talked about the budgetary support needed for facilitating agricultural exports in the post-pandemic situation for lack of space.

One can go on elaborating on these budgetary proposals for the quick recovery of the stalled economy of Bangladesh.

To conclude, we must appreciate the significance of agriculture in the post-pandemic Bangladesh which will have to readjust with a restrictive globalization. This is the sector which provides us most of the consumption and as well as the demand to drive inclusive drive of the growth of our economy. This is, therefore, the best bet for addressing the challenges of the ongoing disaster. Our agriculture has always been a major source of resilience in facing the challenges of all kinds of disasters. This time too agriculture will not fail us if we can be strategic in providing the necessary public expenditures to this open industry employing major proportion of our human resources. For that matter, central government, local governments, researchers, private sector and NGOs must put their hands together to help farmers play their destined role. Tagore rightly said, “farmers alone cannot develop agriculture. The educators and scientists must come forward to help them flourish”. This is the best time to reflect on what Tagore said on the peasantry.

The author is Bangabandhu Chair Professor, Dhaka University and former Governor, Bsngladesh Bank. He can be reached at [email protected].