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The Financial Express

Is food security under threat?

| Updated: March 05, 2021 20:34:52


Is food security under threat?

Bangladesh, after many years, is not in the comfort zone as far as the food security issue is concerned.

A recent report of the Global Agricultural Information network of the United States Department of Agriculture (USDA) has predicted a notable increase in food deficit during the current financial year (FY 2020-21).

The USDA estimates the food deficit at 7.4 million tonnes---1.1 million tonnes of rice and 6.3 million tonnes of wheat---this fiscal. The government might be required to import nearly 7.7 million tonnes, the second-highest quantity since the country achieved its independence. At the current international prices of rice and wheat, the government will have to spend an estimated US$1.8 billion to import such a large quantity of cereals.

The highest quantity---nearly 9.8 million tonnes--- of food was imported in 2017-18. The factors such as the substantial cut in duty on rice and the natural calamities were held responsible for the huge shortfall in food production in that year.

The government is aware of the ongoing food supply situation that does not look good.  What emerged at the meeting held at the food ministry in the last week of last month was enough to cause further worries.

According to the revised demand for cereals, prepared by the directorate of food, the government has a plan to import nearly 2.5 million tonnes of food grains, including 0.59 million tonnes of rice and about 1.9 million tonnes of wheat. It has set a domestic food procurement target at 1.4 million tonnes.  But the procurement of Aman has been dismally low this season because of the large gap between the government-offered price and the market price.

The government's food stock at the moment is far lower than the requirement. Until June 30 next, the relevant government policy stipulates building a food stock of 2.5 million tonnes, including 1.6 million tonnes of rice and 0.46 million tonnes of wheat. But the government's current rice stock is as low as 0.53 million tonnes and wheat 0.12 million tonnes.

The import of such a large quantity of food grains within the last three months of the current FY seems almost impossible. The relevant government agency has reportedly opened letters of credit (LCs) for importing 0.25 million tonnes of rice and 0.15 million tonnes of wheat in the past few months. However, only 0.1 million (100,000) tonnes of rice has so far reached the country.

The state of affairs with the private import of rice is also not very encouraging. The government allowed 320 private traders to import more than 1.0 million tonnes of rice within a limited period. Despite extension of time thrice for the opening of LCs, the importers have opened LCs for only 0.6 million tonnes. So far, only 0.15 million tonnes of privately imported rice has reached the country. The high price of the item in India and the duty at over 25 per cent at home have emerged as major barriers to the normal import of the main staple. Slow import despite a cut in duty from 62.5 per cent to 25 per cent has kept the prices of rice soaring in recent weeks. Now that the food ministry has proposed bringing down the duty to 15 per cent, it remains to be seen what happens in the coming weeks.

Usually, the government is slow in making decisions. It is hard to believe that the government was not aware of the shortfall in Aman production and the fast depleting food stock in its silos. Yet the food ministry could not initiate steps on time for import of food grains, rice in particular. It could have built up a rice stock slowly. It may not be possible on the part of the government now to initiate its usual food intervention programme such as the open market sale (OMS) of rice countrywide because of insufficient food stock.

The government should, thus, take up the issue of food supply seriously and make arrangements for procuring the same from multiple sources on an urgent basis.

 

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