Baffling paddy prices  

Abdul Bayes   | Published: May 24, 2019 22:12:48

Historically, agriculture in the subcontinent had been practised as a means of subsistence. Commercialisation of agricultural practices began to expand with the development of infrastructure and storage facilities, and marketing strategies occupied a respectable space in academic discourse. Two factors may be mentioned in this respect. First, rapid spread of modern technology in paddy cultivation led to more production per unit of land and a surplus over consumption. Technology also helped release land for non-paddy crops. Second, the agriculture-industry or rural-urban linkages got stronger over time leading to growing exchange of goods and services. But why was an efficient marketing system called for? It is because a good marketing network, yet out of our reach,  helps both producers and consumers in many ways:

* enables primary producers to get a better return or raise the farm gate price

* provides facilities for selling crops at an incentive price

* reduces the price-spread between the primary producers and the ultimate consumers

* makes all farm products available to consumers at reasonable price

* reduces the role of middlemen who steals a significant slice on the value chain

A glance at production and marketing of different crops reveals interesting insights to the emerging scenario in Bangladesh agriculture. Over 90 per cent of farms in Bangladesh grow paddy. The proportion of farms growing paddy has been rising over time, possibly reiterating the need for food security as mentioned earlier.  The average production of paddy per farm is estimated to be close to 3 tons in 2014 - marginally lower than that of 2000. Maize is a recent crop grown by one-tenth of the farmers, mostly meeting the needs of poultry industry. Pulses, onion and oilseeds seem to stage a comeback after a prolonged downturn in acreage and production. It may be mentioned here that these crops was forced to take a backseat in the wake of the advent of High Yielding Varieties (HYV) of rice and the need for food security. By and large, all these crops, excepting the cash crops, have historically been produced to cater to the needs of home consumption.

But things have changed as far as marketing of these crops is concerned. Take the case of paddy - the staple crop. About a half of the total output is being marketed in recent years against one-third in 2000 and one-fourth in 1988. Again, four-fifths of total maize and two-thirds of wheat now find ways to the market.  Historically, 80-95 per-cent of cash crops like jute and sugarcane were geared to the market to meet cash needs of households. However, the rise in the incidence of marketing of cereal crops seems to signal the dawn of a silver lining in the world of Bangladesh agriculture. It also shows that market related incentives matter for the producers of cereal crops. Likewise, increased incidence of marketing of crops like pulses, oilseeds and potato suggests that households growing these crops also need market related incentives to match supply with growing demand. A number of factors could be adduced to the growing market orientation on the part of the rural households: (a) an increase in land productivity resulting from new technology helped households reap a better harvest from the same amount of land, (b) improvements in communications, including telecommunications and media widened the base of market information, (c) reduction in household size reduced home consumption thus leaving some outputs for the market, and (d) perhaps, people are changing their pattern of consumption behaviour from paddy to non-paddy.

A cursory look at production and marketing of paddy/rice crop provides some interesting insights . First, participations of landless households in the production and marketing of rice have gone up over time. For example, this group now contributes to about one-third of total rice output as against one-tenth in 1988 and one-fifth in 2000. Again, they have been increasing participation in rice market. This possibly indicates a significant shift from the predominantly subsistence providing nature rice production by poor households. Second, large and medium land owning groups (1 hector+) contributes to about 30 per cent of total rice production as against about 50-60 per cent in compared periods. However, about two-thirds to three-fourths of their total production find ways to the market and the incidence has risen over time. By and large, rice is grown mostly by the landless, marginal and small farms and their market share has been going up over time. This trend warrants attention in devising incentive schemes for rice. Particularly, this group would benefit from a well-designed procurement drive whereas in the past only large and medium groups allegedly used to benefit.

The current low price of paddy in the country - much lower than cost of production -- is due mainly to augmented supply in the market from bumper harvest. The millers - from whom the government buys - are taking advantage of the market swings at the cost of the benefits of farmers. However, this downturn is likely to be over in a few months. Meantime, government should keep import duty at prohibitive level, explore export market to dispose off the surplus if possible and take to task the syndicate controlling the paddy market.

An Agricultural  Price Commission should be set up to deal with agricultural prices, farmers should be educated about the declining demand of rice in the economy, and provided with sufficient subsidy and infrastructural facilities to make a gradual shift from rice to non-rice crops. Such a policy to assist the paddy producers, roughly 80 per cent of whom are small and marginal farmers, will be egalitarian in nature. Political commitment is a must for this.


Abdul Bayes is a former Professor of Economics at Jahangirnagar University.


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