The Financial Express

Farmers in a price-trap: A year-long phenomenon

Farmers in a price-trap: A year-long phenomenon

If there was any doubt that farmers in Bangladesh are the most indifferently served groups of producers in the country, the record of rock-bottom price during the three seasons of paddy production should put paid to that. The ringing irony of the situation is that in numerical terms they are the largest of all producers catering to the health of the nation and the economy. Though they don't have any association or trade union of their own, there is no dearth of organisations and agencies, both in the public and private sectors, entrusted with the task of meeting their needs, including a fair price for their produce. And yet, they are often left to the lurch and made to suffer from the price trap laid out for them through the nexus of public-private sector collusion. Not infrequently, deprived of price-support programmes of the government, thanks to the venality of field-level staff of various government agencies and the machination of farias (middle men) and mill owners, they have no other way than to be at the mercy of the market. But market for them does not function efficiently, not to speak of perfectly because of distortions caused by rent-seekers, both in the public and private sectors. On the other hand, the adverse terms of trade between agricultural produce and agricultural goods inevitably place them at a disadvantage, as consumers of essentials and buyers of inputs. The secular stagnation of prices of agricultural goods that stem from increase in supply and inelasticity of demand erode their bargaining power in the market almost inexorably.

The plight of farmers of Bangladesh, as in many others countries, is as old as agricultural production. Freedom from the yolk of feudalism and its various forms of exploitation and the monopolistic stranglehold of money lender has not allowed them to eke out decent living ensured by fair return on their investment. Integration to the market economy, though an improvement over feudal barter system, has not worked to their benefit, particularly when they have small holdings and are dependent on a single crop. They have been given short shrift by market economy from the very beginning because of the superior bargaining power of urban producers and consumers. Being structurally week as a bargaining agent, farmers have required subsidies including minimum price from government, not only in Bangladesh but almost everywhere else. The needs of farmers are well-known to the government of Bangladesh and various programmes have been in place for a long time to take care of their needs of modern inputs and disposal of produces ensuring fair return. And yet, again and again, the support system put in place by government to help the farmers have failed to meet their needs, particularly in times of emergencies. It cannot be that the system of farmers' support is inherently inadequate or defective. For, if it were so, the shortcoming would have become known and remedied in time. It, therefore, boils down to unsatisfactory implementation of the various measures embodying the system. If the system is not working, it is because the functionaries entrusted with the task of implementation do not want to make it work. Rent-seeking by greedy and corrupt functionaries working in cohort with rapacious middle men out to make windfall gain, make a travesty of government programmes to support farmers.

The simmering discontent of farmers is not news. But when it boils over into sudden despair, unthinkable events can happen. While chronic discontent conveyed to media finds expression as mufassil (local) news in the inner pages, sensational actions taken by farmers may hog the headline in the front pages of national dailies, as it did this year. For the first time, farmers in some districts set fire to ripe paddy in their fields as protest to the abysmally low market price for Amon crop. It seems they came to their tether's end when they had to pay Tk 500 as wages for labour per maund of paddy, while offered almost the same price for the same quantity in the market. The price for a maund of Amon paddy last year was between Tk 850 to Tk 1000. At the outset of harvest, price in the market for one maund of Amon was as low as Tk 350. Even Tk 500 per maund that prevailed in the market for greater part of the season was not anywhere near covering all cost of production including wages for labour. The big farmers having holding capacity could refrain from selling paddy immediately after harvest and keep it in their godown. But the small and marginal farmers, accounting for the vast majority, could not afford to do so as they required immediate income to meet various needs. The government procurement programme for Amon this year reportedly started late and to make matters worse, did not offer a price much higher than the market price. But even at that low procurement price majority of small and marginal farmers did not have access to the government godowns because of purchase by middle men and mill owners. Out of sheer desperation, angry farmers set fire to their paddy field in protest. The conspiracy theorists lost no time in suspecting foul play by third parties who were seen as more than fishing in trouble water. However, it was quite a stretch to think that agent provocateurs would be engaged by any quarters at firm level to foment unrest among farmers. Experiences in Bangladesh abundantly show that agitation with the motive to make government unpopular does not start at grassroots level. Even if such agitation is fuelled by saboteurs, the urban population living away from villages is hardly touched by this making the event a mere flash in the pan. Given this experience and on the basis of reasoning, setting paddy field on fire appears to be a genuine expression of grievance and protest by farmers.

Market for Amon price this year behaved normally, even rationally. The price of Amon paddy fail because of over-production. Import of rice without carefully estimating demand and supply made the situation worse as market price responded to the signal of actual and potential supply by taking a dive. The government procurement programme could work as buffer but it predictably went awry. Firstly, the programme began late, much after harvest when majority of farmers want to sell. Secondly, the target quantity of procurement of Amon at little over 1.0 million (10 lakh) tonnes was much below the quantity offered by farmers. Thirdly, the price per maund of Amon in procurement  was not much above the prevailing market price which failed to achieve the secondary objective of procurement, viz. making market price higher. All this were made worse by the widespread incidence of buying from middlemen and mill owners. As a result, the benefit of procurement price, such as it was, went largely to the middlemen.

Jolted to their senses, government staff at the field level worked frantically to buy from farmers an additional 100 thousand (1.0 lakh) tonnes offering a price higher than the original one. At national level, decision was taken to immediately discontinue import of rice. But according to media report  (Amder Somoy, September 14) even this last-ditch effort to come to the rescue of farmers fell flat because by then Amon paddy has changed hands. Poor monitoring and the absence of a nationwide farmers' organisation have not been helpful in finding out if and how many farmers actually were beneficiaries from the well-intentioned step taken by the government at the eleventh hour.

The same crisis of low price occurred after the harvest of Boro that followed Amon cultivation. To make matters worse again, the procurement price offered for Boro has not been higher than in the market. From news in the media it is gathered that the Ministry of Agriculture has taken a decision to buy rice directly from the farmers for which a list will be prepared dividing them into big, middle and marginal farmers, with maximum procurement (50 per cent of total reserved for the last group and 20 per cent for the big farmers). It has also been announced by the Ministry that a paddy procurement policy will soon be finalised in this regard. Since the ministry has already a list of farmers giving details of land owned, size of land in the proposed list according to categories of farmers appears to be a fine-tuning exercise. What has not been mentioned is the problem of coordination between the ministry of agriculture responsible for production of rice and the ministry of food that takes decision to import rice and undertake procurement from farmers after each harvest. While this has been a problem off and on, for a long time, lack of supervision and monitoring of procurement programme at field level has been its Achilles' heel. There is very little that is wrong with the present system of procurement, the weakness lies in its implementation at the field level. Unless the problem of implementation is resolved realistically with a broad-based supervision and monitoring system comprising all stake-holders, no degree of fine-tuning the system will deliver results.

A report in Financial Express, September 14 reads: `After witnessing Boro price debacle, farmers have also been counting losses this Aus harvest time amid low prices of their produce'. When Amon is added to these, the price-trap for rice farmers appears not only firmly entrenched but more importantly, presents a phenomenon that is year-long, covering all the three seasons when paddy cultivation takes place.



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