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Agriculture in Budget 2008-09

Subash Dasgupta
THE annual Budget 2008-09 focuses on agriculture as a thrust area. Excessive price hikes of food grains and slow-down in food production, at both national and global levels, have made go back to agriculture again as the engine of growth. The World Bank's World Development Report 2008 emphasises that the GDP growth arising from agriculture is almost four times as effective in reducing poverty as GDP originating from outside the sec-
tor.
It is realised that the Millennium Development Goal (MDG) of halving extreme poverty and hunger by 2015 cannot be achieved unless the neglect and under-investment in the agricultural and rural development over the last two decades arc reversed. The recently concluded global summit on resolving the global food crisis, organised by EAO in Rome, set a target for its member nations to increase food production by 50 percent by the year 2030.
The annual budget is a document that states the government's policy and development direction on how the country is going to solve the current food problem, keeping in mind its long-term solution, in a sustainable manner.
This year, the budget has special significance due to the global turmoil in food availability. As expected, the government has increased budgetary allocation in this sector, compared to last year, although not at a significant level.
It appears that input subsidy, price controls and agricultural credit have been identified as the three main pillars for increasing food production. It is an established fact that such types of initiatives will bring only short-term success, and have not proved to be a good model for increasing agriculture production as well as food availability. It will help only to sustain subsistence-farming methods, which will ultimately increase poverty. Expanding safety-net programs is a manifestation of that.
While both public and private investment in the agriculture sector is dwindling rapidly, subsidy has been rising. Subsidy never played a big role in our agricultural development, or in increasing production and productivity. However, it has started rising rapidly since 2005. All coun-
tries provide subsidies to their producers in different forms. Some developed countries even provide subsidy for not producing particular type(s) of crop(s) in a particular year.
Subsidy per farmer in India rose from Silin 1986-88 to $66 in 1999. Japan provided subsidy of $26,000 per farmer in 1999, and it was $21,000 in US in the same year. If we compare these data with our situation, subsidy in Bangladesh is negligible.
However, providing subsidy is largely dependent on the affordability, and the ability to target beneficiaries who need it most. Here is the problem. In India, both state and strong local governments play a significant role in targeting actual beneficiaries. While in India, mainly in West Bengal, subsidy has a role in increasing agricultural growth; in Bangladesh it is the liberalisation of input supply systems that is behind the agricultural growth.
We have to remember that expanding subsidies means more expansion of governmental activities with generally low efficiency levels. It can sometimes distort a farmer's priority. Subsidy should be used as critical inputs and where maximum benefit can be ensured with minimum support. Subsidy cannot be a substitute for investment.
The question is; how will the budget help our poor farmers to increase food production? In this connection, the recent findings of Mr. Ashok Gulati, IFPR1, 2007 are relevant. Mr. Gulati showed that during the Green Revolution (GR) era in India, returns in agricultural
GDP, followed by education and R&D, were much higher than the subsidy, and now R&D has been playing a major role followed by education. The role of subsidy is negligible now compared to the GRera.
We have to see how the enhanced subsidy will facilitate increase in production. In the current budget, the government has allocated Tk. 350 cores for research, but due to a variety of problems not a single Taka was released. It may be mentioned that the total expenditure on research is not more than 20 percent of the total annual budget of the research institutes, which is extremely low.
If we add some emerging issues such as climate change, biotechnology, molecular and genomic research on rice, the allocated budget will not be adequate.
Reaping the maximum benefit from the allocated money for agricultural development is going to be a challenge. The best hope for the future is that we find the best way to make the best use of the limited resources.
My understanding is that the budget should be more focused on program-based lending. As for example, resources should be allocated to make national extension programs to spread BRRI Dhan47 in saline areas and BRRI Dhan33 in monga areas.
It is worth mentioning that BRRI spread very rapidly due to intensive extension programs undertaken in the 1980s. BRRI needs more support for transfer of flood sub-mergence gene to other varieties of rice. We also need
programs to develop climate resistant crop varieties.
A bench mark is essential to understand the current situation with regard to climate change in different farming typology. Programs in this regard should be chalked out as early as possible in order to use the Taka 300 cores reserved for climate changes properly and timely. The government should allocate a separate budget for biotechnology research and extension.
Setting up of early warning systems, data collection for monitoring climate behaviour over Bay of Bengal, necessary incentive to help the biotechnology research and extension, fund for national strategic agricultural research aimed at reviving and diversifying agricultural research, strengthening and modernising of agricultural universities, colleges and research institutions, establishing of rural knowledge centres, and use of modern information and communication technologies in each of Bangladesh's 68,000 villages, are pressing demands of the time.
We also need to develop innovative instruments for risk management and crop insurance for poor farmers. Resources required to implement the above said programs can be allocated in the proposed budget.
Debates on global price hikes are still going on at global level. The ultimate burden, out of all those debates, comes to the shoulders of our farmers, giving them target to increase food production further.
We are embracing more and
more reforms in this sector but it is unknown to us how our farmers are adapting with these new initiatives. They have survived the green revolution, liberalisation of input supply systems, globalisation, and they have to survive in open market economy. In India, the government constituted a "Farmers Commission'' to know the actual situation of Indian farmers in the face of the market economy.
The Commission was headed by the world-renowned scientist Dr. M.S. Swaminathan, and Dr. R.B. Singh was a member. The team produced a five-volume report, and the recommendations are under active consideration of the government of India. Our policy makers should think about forming a task force to know the real problems of our farmers. It should be supported by budget allocation.
The solution to the crisis is in our hands provided old policies and mind-sets can be left behind. Ultimately, the solution will not come as a miracle, but from our millions of poor farmers.
We need coordinated steps on policy, backed by resources. There must be a clear strategy for investment and resource accumulation in the agriculture sector to increase productivity and farm income, as well as smooth input delivery systems --which are missing in the proposed budget.