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Errors, abuses and drought push food prices up

Bv Reaz Ahmad and Morshed Ali Khan
Misin.inageineni mislead Ing projections abuse of the government's open market operations by unscrupulous traders, compounded by a severe drought all contributed to whipping up rice prices, according to an investigation conducted by The Daily Star.
According to a highly placed source in the Directorate of Food, who spoke on condition of anonymity, the present crisis in the food market was unwittingly triggered in 1993 when, following two consecutive bumper crops, the government decided to dispose of a btrtk of its one million Ion reserve of toodgrain.
Thal decision was taken on the basis of the argument that most ol l hose reserves were rotting in the government godowns. However, certain quarters allege that even good quality foodgrain was certified as rotting' and sold out for a mere Tk 7 per kg. Inflicting a huge loss on the exchequer. The average price of rice in the open market then was around Tk 10 per kg.
Between October and December. 1993. 1.5 lakh tons of this rotting' rice was sold in tile open market, sources said.
Mir Shawkat -Ali. the then Food Minister, however, denied the allegation and said
that all necessary procedures were lollowed before determining the quality of the foodgrain sold.
Mir Shawkat. now in charge of the Manpower Ministry, referring to some press reports about rotten rice in government godowns, said that he had directed the officials to conduct an Investigation. It was found that over one lakh tons of rice were stocked in various godowns for over two years, he added.
"The Ministry of Finance fixed the selling price at Tk 7 per kg and the Prime Minister gave her approval. Only then the rice was sold through open tender,” Mir Shawkat added. "If there was any malpractice in the matter, (t is up to the law enforcing authorities to find out. As far as we are concerned, the sale was completed in accordance with the country's laws.”
Some traders in the Krishi Market. Mohammadpur, one of the city's rice wholesale bazars, said that during this time the hoarders took advantage of the government's move and stocked the available rice through cash purchase,
"The cash came from the government itself." said Bashiruilah Khan, vice president of the Krishi Market
which abolished the foodgrain licensing system, the godown owners were offered cash incentives to procure foodgrain from farmers."
Traders across ■ the city markets overwhelmingly, agreed that in this way the control of the foodgrain price remained within these 'CC parties' (cash credit parties).
"The whole foodgrain business has gone into the hands of influential people, who could manipulate the system to get huge loans from banks." said Shubal Chandra Saha, a rice trader from Naogaon. "In this way the prices remained under their control," he said.
The lack of the government's preparedness with an adequate buffer stock is attributive to a misleading early warning by the Department of Agriculture, according to Food Ministry sources.
In its projection following a drought in the northern zone of the country during the last Aman season, the Ministry of Agriculture had forecast that the foodgrain production
' deficit in the country would be around four per cent.
"In reality." a highly placed source in the Food Ministry
said, "the deficit ran to nearly 12 per cent."
This took the concerned ministry by surprise and officials became desperate. On January 10 last when Mir Shawkat All was moved out from the Food Ministry by an alarmed Prime Minister, the country's foodgrain reserves were at a record low — 1.26 lakh tons.
Faced with a severe drought, the farmers had to' dig deep into their pouches for irrlgational facilities to produce their crop. In addition, high prices of fertiliser and other agrl-inputs forced the country's poor farmers to sell their products at a higher price this year.
Under the current OMS (open market sale) programme. the authorities tried in vain to control the upward ‘ trend of food prices. According to the new Minister for Food. Abdul Mannan Bhuiyan, since March 1. the government has : increased the volume of sale in Its OMS programme by at least 25 per cent. Mannan Bhuiyan stressed that the volume would further go up, if necessary.
"The quality of the OMS foodgrain is so poor," said Abdul Monem, a presidium member of the Awami League and a former Food Minister (1973-1974), that after ridding the grain of small stones and pebbles .the 'political: price' of Tk ! I per kg no ' longer stands."'
Monem added that while waiting hours together for the OMS delivery for Just getting three kg of rice, poor people lose valuable working hours.
Mir Shawkat Ali is. how ever, of the opinion that the government should not have introduced the open market sale al all.
"This Is an open market," he said. "The whole market should be In the hands of the private entrepreneurs: the government has nothing to do." he concluded.
Abdul Mannan Bhuiyan told The Dally Star that the country requires 194.37 lakh tons of foodgrain per year, accounting for a per capita consumption of 16 ounces a day.
The government has a total stock capacity of 18.50 lakh tons and there are a number of storehouses including five silos. 13 CSDs (Central Storage Depot) and 624 LSDs (Local Storage Depot) for preserving the foodgrain.
According to a recent government Task Force report on the effects of the drought, some 11.15 lakh acres of boro cultivation land is expected to be affected by the shortage of irrigation water in 36 northern districts.
Rice output is also expected to suffer a shortfall of 5.72 lakh tons during fiscal 1994-95 owing to the shortage of irrigation water, said a recent Agriculture Ministry projection.
Foodgrain production Is estimated to be 186 lakh tons during the current fiscal, down from the 191.72 lakh metric tons of actual output in 1993-94.
To cope with the current uneasy situation in the food market and to arrest the unabated price spiral, the government has taken a number of steps including allowing rice import under private Initiative, exemption of tax on import of rice, prioritization of shipment of rice and carrying out open market sale operations.
• Despite the government's intervention, rice prices across the country have been steadily rising' The OMS programme is also reportedly hampered by various compli cations tn the rural areas.
(The Daily Star Marchi).
With modern communication and trade systems In the country there may not be a famine as such due to this cur rent crisis, but the credibill ties of many may be at stake when the crisis finally is overcome.