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Subsidy can boost production

The need for subsidising the agriculture sector, which includes crop, livestock and fisheries, and forestry subsectors, for some more years can hardly be overemphasised. The steps proposed by the finance minister in his budget speech to attain self-sufficiency in food need close attention a forimplementation.

M. Abdul Latif Mondal
ON November 2, the government announced reduction in the prices of major non-urea fertilisers -- triple super phosphate (TSP), muriate of potash (MOP) and diammonium phosphate (DAP). Under the revised rates, the prices of TSP, MOP and DAP have been reduced to Tk.22, Tk.25, and Tk.30 per kilogram from Tk.40. Tk.35 and Tk.40 per kilogram respectively. Subsidising the prices of the aforesaid fertilisers will minimise food production costs, particularly of food grains and vegetables, and thereby encourage the farmers to grow more food.
In his budget speech on June 11, Finance Minister A.MA. Muhith said that in order to attain self-sufficiency in food by 2012 the government had planned to undertake a number of steps, which included, inter alia. expansion of irrigation facilities, expansion of cultivable land, creation of opportunities for multiplecropping, continuation of subsidy on fertiliser and other agricultural inputs, emphasis on agricultural research and rehabilitation.
For providing subsidy on fertiliser and other agricultural inputs to help farmers, he proposed an allocation of Tk.36 billion for the current fiscal year. It is learnt that that the announced subsidy on the above mentioned three fertilisers would cost the national exchequerTk.5 billion.
Why is it necessary to subsidise the agriculture sector?
First, our economy is agro-based. According to the finance minister, the contribution of the agriculture sector to the economy is 22% of GDP.
Second, according to the latest Labour Force Survey (LFS) 2005-06 of Bangladesh Bureau of Statistics (BBS), our working age (15+) population stood at 61.59% and the agriculture sector employed over 48% of our labour force.
Third, in Bangladesh, food production or availability is normally thought of in terms of production or availability of food grain, that is, rice and wheat. Since rice and wheat provide respectively about 93% and 7% of the country's total cereal intake and together provide about 80% of calories in Bangladeshi diet, this view is easily understandable. Fertilisers play a very important role in the production of food grain.
Fourth, according to the latest Household Income & Expenditure Survey (HIES) 2005 of the BBS, the share of food was 53.81% of the total consumption expenditure at the national level in 2005. In the rural areas, where about 75% of our population lives, this share was 58.54% against 45.17% in urban areas.
Food grain alone constituted 39% of the expenditure, which exceeded 50% in 2007-08 due to very high prices. The most important domestic production is food grain, "the price of which carries nearly 60% weight in the estima-
tion of consumer price index (CPI) --the most widely used measure of inflation (Mirza Azizul Islam's article in The Daily Star of November 5)."
Fifth, subsidising the prices of fertiliser and other agricultural inputs and providing the other facilities mentioned in finance minister's budget speech to the fanners will help reduce the cost of production of food grain and other agricultural produce. This will benefit both the growers and the consumers.
Sixth, annual population growth rate is outpacing the food production growth rate in the country. According to various studies, the population will double to 280 million at the current rate of growth by 2080 and reach about 180 million as early as 2020. So the challenge for the country in this area is obvious.
Seventh, the developed western countries heavily subsidise their agriculture sector to the disadvantage of the developing countries. Available information suggests that under the Common Agricultural Policy (CAP), agricultural subsidies to European farmers and fisheries make up more than 40% of the EU budget. The US heavily subsidises grains, oilseeds, cotton, sugar and dairy products. The US farm programs have cost about $20 billion per year in government budget outlays in recent years.
Eighth, the most important component of food security is food availability, the other two being access to food and utilisation of food. Domestic production of food grain is the main source of food availability. Hence the need for subsidising agriculture sector for increasing food production.
Last but not the least, world population is growing at a rate which is faster than the food production rate. This has been a matter of great concern, particularly for the United Nations Food and Agriculture Organization (UNFAO). In his article titled "Food for the future" in The Daily Star of October 11, Jacques Diouf, Director-General of the UNFAO, writes: "For the next decades, the world's population will grow by 2.3 billion and become richer. Meeting the demand of the world's 9.1 billion inhabitants in 2050 will require 70% more food than we currently produce. So unless we take the right decisions today we risk finding the global cupboard dangerously bare tomorrow."
He has also cautioned that "in the years ahead the world food system must deal with the growing challenge of climate change, which may reduce potential agricultural output by up to 30% in Africa and by up to 21% in developing countries as a whole." Climate change has already started impacting the world's food production. Due to severe drought, India, the world's second largest rice grower, is going to join the club of rice importing countries. Media reports suggest that India may import as much as 3 million tonnes of rice next year, making it a net importer for the first time in 21 years.
The government decision for reducing the prices of non-urea fertilisers has been welcomed by the farmers, media and many others. While The Daily Star's editorial of November 4 termed the reduction in fertiliser prices as "a peasant-friendly move," it also cautioned the government to implement its well-intentioned move "through a fair and efficient distribution network that reaches out to the farmers in times of need."
It further stressed on "closer surveillance" to thwart the attempt of the
opportunist elements to smuggle cheap fertiliser into neighbouring countries. While welcoming the government decision to bring the prices of non-urea fertilisers down, The Independent's editorial of November 4 stressed the need for timely implementation of the decision with sincerity and seriousness.
In view of above, the need for subsidising the agriculture sector, which includes crop, livestock and fisheries, and forestry sub-sectors, for some more years can hardly be overemphasised. The steps proposed by the finance minister in his budget speech to attain self-sufficiency in food need close attention for implementation.
M Abdul Latif Mondal is a former Secretary E-mail: Iatifm43@gmail.com