‘To avoid rice shortage, markets must function well’

Dr Mohammad Jahangir Alam, professor at the Department of Agribusiness and Marketing of Bangladesh Agricultural University (BAU), discusses his latest research on the country's rice production with Anupam Debashis Roy of  The Daily Star.

Certain media reports have suggested there may be a shortfall in this year's rice production. Is that really the case?

We haven't reported that we will have a shortage of rice in our research, which was jointly conducted by the Bangladesh Rice Research Institute (BRRI), International Rice Research Institute (IRRI) and Bangladesh Agricultural University. We analysed data only till Boro season this year, without taking the Aman season into account. Our calculation was based on the last three seasons, and we found that we had 36.77 million metric tonnes of production. Also, our preliminary results showed that human food consumption demand in the country was 26.184 million metric tonnes and non-food consumption was 6.435 million metric tonnes, which means we are supposed to have a surplus of 3.458 million metric tonnes.

Dr Mohammad Jahangir Alam

In that case, what does your research imply about food security?

Food security means rice security in our country's perspective. The Aman harvest has started and about 20 percent of the total Aman crop is already harvested. Now, this year's Aman production is projected to exceed the target. Aman production constitutes about 39 percent of the total rice production in the country. This means we don't have any shortage. Boro contributes around 51 percent. If we can prepare a comprehensive plan on how to maintain this level of Boro production next season, we will have plenty of rice in the country, even if we don't consider imported stocks.

However, there will be some challenges due to the fact that imports are becoming expensive and we depend on international markets for agricultural inputs such as fertilisers, a lion's share of which was being imported from Ukraine. The government is proactively looking to other fertiliser-exporting countries such as Saudi Arabia and Canada to import urea and other fertilisers. To avoid any shortage at the household level, it has to be ensured that the markets function well. As the international markets are highly volatile, our government policies should focus on increasing the growth of major agricultural crops, including rice, at the domestic level.

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How will the production rate affect the lives of farmers who are cultivating rice? What can policymakers do right now to support them?

The price of rice normally goes down when there is a bumper production. The poor and marginal farmers sell paddy just after harvesting to meet their immediate cash needs, purchase inputs for the next season, cover their families' expenses, and also because of a lack of storage facilities at the household level. For a long time, we have seen this pattern. The government procures milled rice from the millers and a tiny amount of paddy from the farmers at predetermined prices, which are supposed to be higher than the existing market price. But this amount is very low. The share of total procurement is less than five percent.

So, what can be done? The government should increase storage capacities at the farmers' level, for one. And then they should procure at least 20 percent of the total rice production to help farmers. Another good strategy would be selling the procured rice at low prices when there is a price hike, to keep low-income consumers food-secure. This will create a balance between producers' and consumers' interests.

Why is the rice price so high at the consumer end? Are certain unscrupulous groups taking advantage of the situation to make profits?

In most cases, farmers can't sell the rice they produce directly to the consumers – especially urban consumers. There are many middlemen who are bridging producers and consumers. For example, in the rice market chain, there are as many as six actors involved. They are foria, paiker, millers, aratdar, wholesalers and retailers, and then the rice reaches the consumers. There are many hands in the middle adding to the cost. In addition, transportation costs and extortion are adding extra costs at every node in the value chain. There might be some big actors that influence the markets. We have found that millers make Tk 12-14 per kg of rice in the Boro season when we consider by-products and rice together, which is very high. The profit made is Tk 1.6-2.8 for wholesalers and Tk 2.7-5.6 for retailers. This happens for all agricultural commodities, particularly in developing countries, unless the whole value chain is shortened.

What steps can be taken to ensure that there is enough rice available to the people at affordable prices? What can the government do?

There are some obvious options. First, the government should continue supporting farmers through subsidies and ensuring availability of all agricultural inputs. This will help farmers to keep the cost of production at a reasonable level. Second, the government should ensure that the market functions well and the whole value chain performs well. No one should be able to hoard the produce and manipulate market prices. Law enforcement bodies should monitor the markets on a regular basis. Third, when there are bumper productions of rice, the government should purchase paddy directly from the farmers, at least a substantial amount, so the farmers don't suffer due to low market prices. Fourth, the government should increase the allocation of open market sales (OMS) so that low-income consumers can purchase rice at low prices. Also, the government should coordinate the timing of imports with the rice harvest seasons.