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One Year of The Government

Agriculture: Kudos to a passionate driver

Mamun Rashid
SHE is known as “Daughter of Fire’’ and she has been able to instill the fire in the minds millions of people in Bangladesh in 2009. Forty eight percent of the country's labour force is engaged in the agriculture sector. Mrs. Matia Chow'dhury. after taking over as minister of agriculture, has demonstrated strong commitment to provide a better life to these people by initiating policy reforms, providing easy access to agriculture inputs, lowering cost of production, focusing on higher production of food grains, and issuance of identity cards to 18.2 million farmers to reach subsidy to the target segment For the first time, we can see the development roadmap clearly.
Bangladesh faces a number of challenges in the agriculture sector, such as inadequate agriculture infrastructure, scarcity as well as gradual reduction of cultivable land, access and timely availability of agriculture inputs such as fertilizers, seeds etc., weak distribution management and network lack of storage capacity, lack of research and development etc.
With the government's renewed focus, food grain production in FY20O9 increased
by 8.1% over FY2008. The government actually turned out to be a quick fixer of a number of crises. First of all. it kept its promise to readjust fertilizer prices. During May-December 2008 farm level prices of all types of fertilizers increased significantly, with urea and TSP (triple super phosphate) prices doubling, because of global price hike.
The government took the right decisions at dire moments by providing subsidy on non-urea fertilizer to promote balanced fertilizer use, fixing supply side constraints and reducing the cost of production by providing and continuing the subsidy on diesel and kerosene. Not only had the government formulated the policy; it was also able to execute the policy measures by implementing the decisions at the field level and ensuring that farmers were able to obtain fertilizer at the declared prices.
The government confirmed its strong support to the agriculture sector throughout 2009. First of all, the sector was identified as one of the core sectors in the initial stimulus package of the government declared in 2009. Of the Tk3,424 crore stimulus package, Tk 1,500 crores was allocated as agriculture subsidy, Tk.500 crores for farm loan re-capitalisation and
Tk374 crores for social security (food), which constituted about 69% of the total stimulus package. In the FY2009-2010 budget, 7.8% of the proposed ADR Tk.30,500 crore was allocated for the development of the agriculture sector, including non-farm areas like fisheries, livestock, water resources etc.
The budget also highlights the need for developing agriculture infrastructure through expansion pf irrigatfojiinfrastructure, expansion of cultivable lands, prevention of river erosion etc., and allocated Tk 1,309 crores of ADP for agricultural and rural infrastructure development. The government also promised to continue agriculture subsidy to the tune of Tk.3,600 crores in FY 2009-10. In line with this the prices of fertilizer decreased further in November 2009. Prices of TSR MOP and DAP have been reduced toTk.22, Tk25 and Tk30 per kilogram from Tk40, Tk.35 and Tk40 per kilogram set in April 2009.
The government is planning to undertake a number of programs and projects for developing high yield variety seeds and storage capacity at a cost of Tk280 crores. Tk 185.21 crore has been allocated for agricultural research and agricultural rehabilitation assistance for maintaining the growth of crop production. The ministry of agriculture was able to draw Tk5,965 crore in FY 2009-10 budget for both development and non-development sectors.
The new government also refocused on agriculture lending and access to agriculture credit. Bangladesh Bank issued a detailed policy guideline, "Agriculture / Rural credit Policy and Programme," which emphasised area-based crop production approach, access to easy terms of credit, adequate lending to successful
farmers, transparency in extension of credit, etc. With these policy objectives the government has increased the agricultural loan disbursement target from Tk9,379 crores in FY 2008-09 to Tk. 10,000 crores in FY2009-10.
Under the leadership of Mrs. Matia Chowdhury, we are observing a number of positive changes in the policy measures. The government has taken initiatives to prepare a comprehensive user-friendly database on farmers. Research and development on mechanisation of agriculture and appropriate agricultural machinery and equipment will be carried out. The government is working at the policy level to develop market infrastructure to build up an effective value chain between producers and consumers. It is also planning to set up an agriculture price commission to provide guidelines to strengthen agricultural marketing and to ensure fair price for farmers and affordable price for consumers. Quality assurance in both the production and the supply ends is also set as a priority.
With the initiation of a number of innovative policy measures, renewed focus on market and infrastructure development, increasing commitment for easier access to credit, the government seems to be dedicated to ensuring food security and achieving self-sufficiency in food production by 2012.
While the government is focusing on rightly identified issues and working on the policy measures, we must not forget "where the shoe pinches." In the past, saw policies formulated without any effective monitoring process. A cohesive policy should be formulated to determine the terms of trade and pricing. The core chal-
lenges of the government will be to draw market-driven solutions in terms of managing the distribution network, creating a balance between market prices and consumer desired prices and, most importantly, timely availability of resources.
The government should encourage and engage the private sector to play a critical role in initiating reforms in the agriculture sector and managing the transition to commercial agriculture for optimum use of land and return on investments. The private sector can play a major role in terms of ensuring supply and distribution of agriculture inputs at the right time, which remains a major challenge for the government. Private sector commercial banks/ financial institutions can also play a pivotal role in terms of reaching the
subsidies to the target market, hence ensuring accountability.
The ministry of finance and the NGOs' wide network can be used for channeling the agriculture inputs. The core objective should be stick to the primary mission of attaining food security through offering right incentives to the growers, not tripping off from the path by creating pseudo employment and having policy and governance failure like in the past. I am sure, with "passion in the heart and fire in the belly," Mrs. Chowdhury appreciates all these and as usual will remain firm to ensure that "the terms of trade" always remain in favour of rural Bangladesh. Mamun Rashid is a banker and economic analyst The views expressed in this article are of hts own